Jay Anthony Carfagnini

The Monitor of Target Canada Co. and its affiliates, undergoing CCAA proceedings, sought advice and directions from the court regarding the treatment of several late-filed claims.

The court applied the four-part test from *Blue Range Resource Corp. Re*, considering inadvertence, good faith, and prejudice to other creditors.

The court found that five claimants (Fruits & Passion, Lou Pharma, Kulwinder Kaur Rai, Capital Brands Inc., and Mohammad Alam) satisfied the test, allowing their claims against Target Canada Co. However, claims against Target Corporation and Target Brands were barred due to the prejudice caused by disturbing the sanctioned plan and releases, which Target Corporation relied upon for its significant contributions.

The court also provided directions on distributions for allowed late claims and a framework for addressing future unknown late claims, emphasizing the finality of the sanctioned plan.

The Monitor brought a motion to sanction the Canadian Debtors' Plan of Compromise and Arrangement under the CCAA, which implemented a settlement allocating $7.3 billion in sale proceeds.

Two self-represented long-term disability (LTD) beneficiaries objected, arguing the Plan was unfair and violated sections 7 and 15 of the Charter by treating their claims pari passu with other unsecured creditors.

The court found the Plan fair and reasonable, noting it was approved by 99.7% of creditors.

The court dismissed the Charter arguments, holding that section 7 does not protect pure economic interests and that equal treatment of creditors in insolvency does not constitute discrimination under section 15.

The Plan was sanctioned.

In CCAA proceedings involving the liquidation of a national retail chain, the court considered a motion by the court-appointed monitor seeking approval of its reports and activities.

Certain landlord creditors opposed the request, arguing that broad approval could prejudice creditor rights and improperly create issue estoppel or res judicata effects in future disputes.

The court held that while approval of monitor activities serves useful procedural and policy purposes in CCAA proceedings, caution is required where approval is sought in a general sense without full fact-finding.

The court approved the monitor’s reports but limited the effect of the approval so that only the monitor, in its personal capacity and regarding its own potential liability, could rely on the approval.

This approach balanced protection for the monitor with preservation of creditor rights.

The EMEA Debtors sought leave to appeal an order approving an Allocation Protocol that provided for a joint trial by the Ontario Superior Court of Justice and the US Bankruptcy Court for the District of Delaware to allocate over US$7 billion in proceeds from the sale of Nortel assets.

The moving parties argued the joint trial violated the Ontario court's independence and that the parties had previously agreed to binding arbitration.

The Court of Appeal dismissed the motion for leave to appeal, finding the proposed appeal lacked prima facie merit as the joint trial did not infringe judicial independence and the relevant agreement did not mandate arbitration.

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 U.K. Pensions Regulator and Pension Protection Fund Trustee appealed an order finding that their service of a Warning Notice breached the stay provisions in the Initial Order under the Companies' Creditors Arrangement Act.

The Court of Appeal dismissed the appeal, agreeing that the service of the Notice was a nullity.

The Court clarified that the order below does not preclude the appellants from seeking to assert a claim in the CCAA process for pension contribution shortfalls.