H. Chaiton

The Judgment Creditors brought a motion within a receivership proceeding seeking a declaration that they held valid, independent unsecured debt claims against two insolvent corporations, 230 and MM, arising from a consent order and minutes of settlement.

The Receiver and a preferred shareholder opposed, arguing the claims were equity claims.

The court applied the Van Laun principle to look behind the consent order and found that the obligations to purchase the shares and pay accrued dividends contravened the solvency and cross-holding provisions of the Business Corporations Act.

Consequently, the claims were unenforceable as debt, except for the costs component, which was remitted to the Receiver for a reasonableness review.

The Receiver sought a declaration that a claimant did not hold an equitable mortgage against a property and had no claim against two related companies.

The claimant asserted an equitable mortgage, arguing his investment was intended for a pooled mortgage on the property.

The court found no objective evidence of a common intention between the claimant and the company's president to secure the investment with a mortgage on the property.

The claimant's request for an equitable mortgage or an equitable lien was denied, as there was no evidence that the funds reached the property-owning company.

The Receiver's motion was granted.

Two related companies filed notices of intention to make proposals under the Bankruptcy and Insolvency Act and sought administrative consolidation of their proceedings, approval of an administrative professionals’ charge, and authorization for the proposal trustee to act as foreign representative in Chapter 15 proceedings in the United States.

The court considered the integrated operations of the companies and the shared secured lender and held that administrative consolidation would promote efficient and cost‑effective management of the insolvency proceedings without merging the estates.

The court also approved a $250,000 administrative charge securing professional fees, noting compliance with statutory service requirements and the absence of opposition from the senior secured creditor.

Finally, the proposal trustee was authorized to act as foreign representative and seek recognition of the Canadian proceedings in the United States Bankruptcy Court.

In CCAA proceedings involving several affiliated corporate applicants, the monitor sought court approval of a settlement resolving competing priority claims over estate funds among pension plans, a U.S. bankruptcy trustee, secured lenders, and other creditors.

The settlement provided for partial distributions to pension beneficiaries and retired executives, with the remaining funds payable to the U.S. trustee for the bankruptcy estates of related U.S. debtors.

The court held the settlement was a reasonable and proportionate resolution that avoided costly and protracted litigation over competing statutory deemed trusts and secured claims.

A related motion by the pension plan administrator sought amendment of the salaried pension plan to implement the settlement distribution scheme.

Relying on its broad discretionary authority under s. 11 of the Companies’ Creditors Arrangement Act, the court ordered the amendment where notice had been given and no affected party objected.

A secured lender applied for the appointment of a receiver over two debtor corporations for the limited purpose of completing a sale of substantially all business assets through a pre-packaged transaction.

The debtors did not oppose the application and consented to early enforcement of the lender’s security.

Evidence showed the debt exceeded $2.9 million and that absent a sale the businesses would cease operations and liquidate.

The court found the marketing process fair and comprehensive and that the proposed purchase price exceeded liquidation valuations.

Applying the principles from Royal Bank of Canada v. Soundair, the court approved the receiver’s appointment, authorized the sale agreement, granted a vesting order, and sealed commercially sensitive valuation evidence.

The applicant debtor sought an urgent order appointing an interim receiver under s. 47.1 of the Bankruptcy and Insolvency Act during a Notice of Intention to Make a Proposal proceeding.

The motion requested authority for the interim receiver to borrow up to $1.5 million on a super‑priority basis to fund payroll and contractor obligations in order to maintain business operations.

The court held that the appointment was necessary to protect the debtor’s estate and the interests of creditors.

It further concluded that a super‑priority borrowing charge was appropriate despite the absence of explicit statutory authority for such financing in relation to interim receivers, relying on the court’s inherent jurisdiction.

The charges were granted with priority over construction lien and trust claims to avoid operational shutdown and preserve restructuring prospects.

A creditor moved to dismiss a trustee’s fraudulent preference motion under s. 95 of the Bankruptcy and Insolvency Act as statute‑barred.

The trustee argued that the two‑year limitation period under the Limitations Act, 2002 was suspended while an appeal from the bankruptcy order was pending due to the automatic stay under s. 195 of the BIA.

The court held that the BIA stay pending appeal does not suspend or extend the limitation period under the Limitations Act, 2002.

Because the trustee commenced the preference motion more than two years after the bankruptcy order, the claim was statute‑barred.

In obiter, the court further held that if the settlement payments had been voided as preferences, the creditor would have been entitled to file a proof of claim for the full amount of its original judgment rather than the compromised settlement amount.

The court-appointed receiver of a non-profit housing co-operative moved for approval of an agreement of purchase and sale with a non-profit corporation.

The sale would preserve the property as affordable housing but required an increase in occupancy fees to fund necessary repairs.

A competing bidder submitted a revised offer after the bid deadline, matching the financial terms and offering a one-year freeze on occupancy fees, but without a long-term commitment to affordable housing.

Applying the Soundair test and considering the special factors for co-operative housing, the court found the receiver's process was fair and the recommended offer was not improvident.

The motion to approve the sale was granted.