The debtor applicants sought court approval for a pre-packaged sale ('quick flip') of their assets to a new company owned by existing management, pursuant to section 36 of the CCAA.
The proposed transaction was supported by the senior secured creditor but opposed by a subordinate secured creditor, BDC Capital Inc., who was excluded from the sales process and given minimal notice.
The Superior Court of Justice dismissed the motion, finding that the debtor failed to meet its burden under sections 36(3) and 36(4) of the CCAA.
The court held that the sales process lacked transparency, failed to make good faith efforts to sell to unrelated parties after the senior debt was purchased at a discount, and did not demonstrate that the proposed consideration was superior to other potential offers.
