Jane O. Dietrich

In CCAA proceedings involving a mining company, competing motions were brought concerning the restructuring process.

The debtor sought directions regarding the procedure for resolving noteholder claims and the alleged misuse of confidential information by certain creditors, while the noteholders sought an order convening a meeting of creditors to vote on their proposed plan of arrangement.

The court held that calling a creditors’ meeting was premature because the proposed plan conflicted with the debtor-in-possession financing facility, had been introduced without meaningful consultation, and unresolved claims and litigation issues could affect voting rights and recoveries.

The court dismissed the noteholders’ motion without prejudice and declined to order disclosure sought by the debtor.

The stay of proceedings was extended to facilitate continued negotiations and mediation.

The applicant lender sought declaratory relief confirming the validity and priority of its security interests under a general security agreement granted by the respondent corporations, including over precious metals and a cause of action assigned to a third party.

The assignee opposed the declaration, arguing that a security agreement should not permit a creditor to control litigation brought by the debtor against the creditor itself.

The court accepted that causes of action may fall within the definition of collateral under a general security agreement but emphasized that control of the litigation would be exercised by the court‑appointed receiver rather than the secured creditor.

In those circumstances, the court found no unfairness or absurdity in including the assigned cause of action within the secured collateral.

Declaratory relief was granted confirming that the cause of action formed part of the collateral subject to the security.