Jane O. Dietrich

In a CCAA proceeding, Synaptive Medical Inc. underwent a reverse vesting transaction where its unwanted assets and liabilities, including the employment contracts of 48 terminated employees, were transferred to ResidualCo.

Synaptive and ResidualCo sought a declaration that ResidualCo is a 'former employer' under the Wage Earner Protection Program Act (WEPPA) so the terminated employees could access WEPPA benefits.

The Attorney General opposed, arguing the employees never provided services to ResidualCo.

The court granted the declaration, finding that under the common employer doctrine and the purpose of WEPPA, ResidualCo qualifies as a former employer, and the court has jurisdiction to make this determination for both CCAA and bankruptcy purposes.

The plaintiffs invested $17.8 million with a mortgage broker, who fraudulently used the funds to repay an unauthorized overdraft at TD Bank caused by a cheque kiting scheme.

The plaintiffs sued TD Bank for negligence, knowing receipt, conversion, and unjust enrichment.

The court dismissed the negligence claim, finding TD Bank lacked actual knowledge of the fraud and thus owed no duty of care.

However, the court found TD Bank liable for knowing receipt, conversion, and unjust enrichment, as the bank had constructive knowledge of the fraud due to multiple red flags requiring enhanced due diligence, and the tort of conversion was held to apply to funds on deposit.

TD Bank was ordered to pay damages of over $16.3 million.

In NOI proceedings under the Bankruptcy and Insolvency Act, the debtors sought approval of interim financing, a forbearance arrangement, a CRO engagement, an employee retention plan, court-ordered charges, a stalking horse SISP, administrative consolidation, a stay extension, and limited sealing relief.

The court held that the proposed restructuring steps were appropriate and supported by the proposal trustee, the secured lender, and the evidentiary record, and that the debtors required the DIP facility and sale process to preserve operations and maximize stakeholder recoveries.

The court also approved a customer accommodation agreement and related intellectual property transfer as value-maximizing transactions outside the ordinary course.

Applying the statutory extension criteria and the Sherman Estate sealing framework, the court extended the stay and sealed confidential employee compensation information.

The applicant sought a declaration regarding the interpretation of a unanimous shareholders agreement for a family-owned steel distribution business.

The applicant argued the agreement required the board of directors to consist of the registered holders of voting shares, while the respondent argued the board was to be elected by a resolution of those shareholders.

Applying the principles of contractual interpretation, the court found the ordinary and grammatical meaning of the provision, read in context with the surrounding circumstances, supported the respondent's interpretation.

The application was dismissed.

The Applicants sought an Amended and Restated Initial Order in their CCAA proceedings during a 10-day comeback motion.

The requested relief included extending the stay period, approving a Key Employee Retention Plan (KERP) and corresponding charge, appointing a Chief Restructuring Officer, approving financial advisor engagements, and sealing the unredacted KERP.

The court found the relief appropriate and necessary for the restructuring process, noting the support of the Monitor and the majority of secured noteholders.

The motion was granted in its entirety.

The applicants sought a final order approving a proposed arrangement under section 192 of the Canada Business Corporations Act to effect a recapitalization transaction.

A group of Class B shareholders opposed the arrangement, arguing the dilution of existing shareholders to 1% of new shares was unfair.

The court found the arrangement was put forward in good faith, had a valid business purpose, and was fair and reasonable given the company's financial distress and the lack of viable alternatives other than CCAA proceedings.

The court also granted a sealing order over confidential exhibits containing third-party bids, finding disclosure would pose a serious risk to important commercial interests.

The Applicants, operating a fully integrated cannabis business across the United States, sought an Initial Order under the CCAA due to severe liquidity constraints and an inability to meet interest obligations on senior notes.

The court granted the Initial Order, including a 10-day stay of proceedings, which was extended to non-applicant subsidiaries to maintain stability and preserve value for pending sale transactions.

The court also appointed FTI Consulting Canada Inc. as Monitor, authorized the payment of certain pre-filing arrears to critical suppliers, approved Administration and Directors' Charges, granted a limited sealing order for confidential commercial information, and authorized the Parent Company to act as foreign representative for Chapter 15 proceedings in the United States.

The applicant appealed an arbitration award ordering it to pay damages for breach of a commercial parking management contract.

The applicant argued the arbitrator erred in law by failing to apply proper contractual interpretation principles to a force majeure clause regarding the COVID-19 pandemic, and by failing to apply the correct test for equitable set-off.

The Superior Court of Justice dismissed the appeal, finding the arbitrator correctly focused on the words of the contract and made factual findings that precluded the equitable set-off defence.

The arbitration award was upheld.

The moving party, a shareholder and creditor in CCAA proceedings, sought to vary a prior order requiring him to post security for costs before proceeding with a motion.

He argued that new facts had arisen regarding a promissory note issued during the proceedings.

The court dismissed the motion, finding that the evidence relied upon was either available at the time of the original hearing or could have been discovered with reasonable diligence, and would not have probably affected the result.

The court also declined to exercise its discretionary authority under section 11 of the CCAA, noting that reopening a final order would encourage litigation by installment.

An insolvent cannabis contract manufacturer filed a notice of intention to make a proposal under s. 50.4(1) of the Bankruptcy and Insolvency Act and sought orders approving DIP financing, a further stay extension, a SISP with a stalking horse bid, and related charges.

The court raised concerns about the SISP because the stalking horse agreement had not yet been executed, the milestones were abbreviated, the treatment of employees and contracts was uncertain, and a break fee was contemplated before any definitive agreement existed.

Following a standdown, the company abandoned pursuit of the full relief and requested only a brief stay extension to February 17, 2026.

The court was satisfied that the three-part test under s. 50.4(9) of the BIA was met and granted the short extension, finding no evidence of bad faith, no material prejudice to creditors, and sufficient liquidity for the brief period.

The moving parties sought to set aside two international arbitral awards under Article 34 of the UNCITRAL Model Law, alleging inability to present their case, excess of jurisdiction, and inadequate reasons.

The court found a procedural fairness breach where the arbitrator made a proper-party finding without submissions, but held the issue was not material in context because separate findings eliminated personal liability on other grounds.

The court rejected the jurisdiction and insufficiency-of-reasons challenges, emphasizing the narrow scope of intervention and deference to international arbitral awards.

Exercising discretion under Article 34, the court declined to order a new arbitration.

The application was dismissed.

The moving parties sought a finding that the respondents breached an interim order restraining the founder and controlling shareholder from participating in management of a publicly traded company and restraining the shareholder from using voting shares to remove directors.

The court found the founder in contempt for communications to the SEC that constituted indirect participation in management, but declined to find contempt against the shareholder and company, finding the relevant order provision was declaratory rather than directive.

The court scheduled a penalty phase to consider purging of contempt.

The Monitor and the Van Iersel Parties brought motions for security for costs against Kenneth Schaller, a former shareholder of three debtor companies in a CCAA proceeding.

Schaller filed a wide-ranging motion seeking to reopen the CCAA proceedings, set aside the approval and reverse vesting order, and replace the Monitor, alleging fraud and misconduct.

The court found that Schaller appeared to be ordinarily resident outside Ontario and that there was good reason to believe the motion was frivolous and vexatious.

The court ordered Schaller to post security for costs totalling $400,000 ($250,000 to the Monitor and $150,000 to the Van Iersel Parties).

The decision also addressed Schaller's submission of AI-hallucinated case citations, finding this to be a serious breach of his obligation to verify authorities submitted to the court.

The applicant sought to enforce paragraph 7 (the "Comeback Provision") of an arbitral award dated June 20, 2024, which permitted any party to bring the matter back before the arbitrator for guidance regarding the sale process of real property.

The respondents opposed enforcement, arguing the provision fell within the exceptions under section 50(7) of the Arbitration Act because it was not a remedy a court would grant.

The court found that the provision was made on consent, was limited to matters involving the property sale process, did not limit counsel rights, and did not require expedited hearings.

The court distinguished the case from Thompson v. Thiessen and enforced the Comeback Provision.

The Estate Trustee of a deceased shareholder sought oppression remedy relief and alleged breach of natural justice regarding the valuation of the deceased's 50% shareholding in a steel fabrication company.

The valuation was conducted by a professional valuator (Crowe) pursuant to a shareholders agreement.

The Estate Trustee challenged the valuation methodology, claiming the respondent director provided inaccurate and self-serving information regarding holdback amounts, related party expenses, and goodwill attribution.

The Estate Trustee also claimed it should have been involved in the valuation process.

The court dismissed the application, finding no oppression and holding that natural justice principles do not apply to expert determinations under commercial contracts.

The applicants sought to convert an application into an action and consolidate it with a related action.

The respondents opposed, seeking to strike the action for lack of corporate authority and arguing against consolidation.

The court found that while the action was technically deficient due to improper director authorization, the appropriate remedy was a stay pending delivery of a properly authorized resolution, not dismissal.

The court granted consolidation and conversion of the application to an action, finding substantial overlap in the pleadings and common factual and legal issues.

The applicants were substantially successful and awarded costs of $75,000.

The interim receiver sought an order to release holdback funds totaling $449,881.87 to be added to the proposal fund for distribution among creditors.

The respondent claimed the funds based on a mortgage that had been discharged and alternatively sought a constructive trust.

The court found that the mortgage constituted both a fraudulent conveyance under the Fraudulent Conveyances Act and an unjust preference under the Assignments and Preferences Act.

The court dismissed the respondent's motion and granted the interim receiver's motion, allowing the holdback funds to be distributed to creditors in accordance with the approved proposal.

A defendant sought to vary a Mareva injunction and Norwich order granted in connection with allegations of a fraudulent scheme involving the misappropriation of public funds earmarked for homelessness relief.

The defendant sought to exclude future income from the Mareva Order's scope, obtain monthly releases for living expenses and a one-time release for outstanding debts, remove the passport surrender requirement, and remove a phone number from the Norwich Order.

The court dismissed all aspects of the motion, finding the defendant had not met the required test for varying the Mareva Order due to lack of full and frank disclosure, and that the passport requirement and Norwich Order remained appropriate given the circumstances.

The court considered a motion for summary judgment by Jonathan Rosenthal, in his personal capacity, seeking dismissal of the oppression claim brought against him by Paragon Protection Ltd. and Rosencrantz & Guildenstern Inc. The central issue was whether the plaintiffs were proper "complainants" under section 245 of the Ontario Business Corporations Act and thus had standing to advance an oppression remedy claim.

The court found that the plaintiffs, not being current or former security holders or creditors of Tamstu-Harjon Holdings of Canada Limited, could not qualify as proper complainants based solely on their status as potential creditors arising from the litigation itself.

The motion for summary judgment was granted, dismissing the claim against Mr. Rosenthal personally.

The decision concerns the interpretation of a settlement agreement between siblings Marvin Rubner, Joseph Rubner, and Brenda Bistricer regarding the division of special shares in Kalber Developments Incorporated, a family corporation, and the estate of their mother, Eda Rubner.

The court finds that the Kalber Settlement Agreement and the Will Settlement Agreement do not operate as a disclaimer or renunciation by Brenda of her interest in the special shares, and that Joseph, not being a party to the agreements, cannot claim a benefit under them.

The application by Marvin is granted, and costs are fixed against Joseph.