Jeremy Nemers

Following a merits decision finding that the respondents perpetrated a securities fraud and that Furtado misled the Commission, the Tribunal held a sanctions hearing.

The Tribunal found the misconduct to be very serious, though not the most egregious, as it involved a legitimate business and no registrable activity.

The Tribunal ordered 10-year market participation bans for all respondents, with a carve-out for Furtado's registered plans.

The respondents were ordered to jointly and severally disgorge $22,200,000, representing the amounts obtained from investors less redemptions and the investment of one fully informed investor.

Furtado was ordered to pay an administrative penalty of $1,000,000, and the corporate respondents $200,000 each.

Costs of $638,613.85 were awarded to the Commission.

The Ontario Securities Commission alleged that Oscar Furtado and his corporate entities defrauded investors in several real estate limited partnerships, traded securities without registration, and made misleading statements to the Commission.

The Capital Markets Tribunal found that Furtado perpetrated a securities fraud in five ways, including failing to disclose his intent to profit from a property acquisition, redeeming units contrary to representations, and misusing assets of other partnerships.

The Tribunal also found that Furtado made misleading statements to the Commission during its investigation.

However, the Tribunal dismissed the allegations that the respondents engaged in the business of trading securities without registration, finding they were raising capital for an underlying real estate business.

The Court-Appointed Receiver brought a motion seeking to uphold the disallowance of a claim by Oscar Furtado against Go-To Stoney Creek Elfrida LP and Inc. for guarantee fees.

The Receiver argued the fees were undisclosed, related-party agreements made in breach of Furtado's fiduciary duties and were not reasonable or competitive.

The court found that Furtado, as a fiduciary, failed to provide full disclosure of the lucrative guarantee fee arrangement to investors, as it was not adequately disclosed in the limited partnership agreement, marketing brochure, or the auditor-withdrawn financial statements.

The Receiver's disallowance of the claim was upheld.

The Court-appointed Receiver brought a motion to compel the principal of the Receivership Respondents to release approximately 11,271 emails.

The principal opposed the motion, claiming solicitor-client privilege.

The court held that the emails belonged to the corporate entities, not the principal personally, and that the Receiver was authorized under the Receivership Order to investigate the entities' affairs, which included reviewing the emails.

The motion was granted and the principal was ordered to release the emails.

The applicant, FUNG-BC Holdings Ltd., sought a bankruptcy order against Gary Man Kin Ng based on two outstanding debts: a $4 million guarantee and a $5.194 million IIROC financial penalty.

Mr. Ng disputed the guarantee debt, arguing it was covered by a prior settlement agreement and covenant not to sue with Bridging Finance Inc., and brought a cross-motion to dismiss the application as an abuse of process.

The court found the settlement documents unambiguously excluded the $4 million loan, and while the IIROC debt alone wouldn't suffice, it could be considered alongside the valid guarantee debt.

The court dismissed Mr. Ng's motion and granted the bankruptcy order, finding he had committed an act of bankruptcy by failing to meet significant liabilities.

The applicant brought a consent motion within its CCAA proceedings for approval of Sale Procedures and an extension of the Stay Period.

The court found the applicant acted in good faith and with due diligence, and granted the motion, extending the Stay Period to December 22, 2021, and setting a bid deadline of December 31, 2021.

The applicant, McEwan Enterprises Inc., sought approval of a related-party transaction under the Companies' Creditors Arrangement Act to sell substantially all of its assets to a newly formed company owned by its current shareholders.

The motion was opposed by a landlord who had not reached a consensual arrangement with the applicant.

The court dismissed the motion, finding that the mandatory requirements of section 36(4) of the CCAA were not met, as no good faith efforts were made to sell the assets to non-related persons and the consideration was not shown to be superior to a receivership and bankruptcy alternative.

The applicant, McEwan Enterprises Inc., sought an Amended and Restated Initial Order at a comeback hearing in its CCAA proceedings to extend the stay period and increase the administration and directors' charges.

A creditor opposed the motion, arguing the applicant should not be allowed to continue without a court-approved marketing and sale process and raising concerns about a proposed transaction.

The court granted the requested relief to allow the applicant to continue operations, finding the creditor's concerns raised arguable issues that were more properly addressed at an upcoming motion to approve the proposed transaction.

In a CCAA proceeding involving a condominium project, the debtor sought to disclaim pre-sale agreements with unit purchasers.

The purchasers brought a motion for the production of an unredacted appraisal report referenced in the debtor's affidavit.

The court held that while the mandatory production requirement under Rule 30.04(2) is subject to discretion in CCAA proceedings, fairness and transparency required production of the unredacted report to the purchasers, subject to a non-disclosure agreement.

Cross-motions by a contingent creditor and real estate brokers for production of the reports were dismissed due to their lesser need and potential conflicts of interest.

The Superior Court of Justice considered a motion by BCIMC and Otera Capital to approve a Sale and Investor Solicitation Process (SISP) for three condominium projects (Yorkville, Clover, Halo) under receivership.

The court approved the SISP for the Yorkville project.

For the Clover project, the court declined to approve the SISP, affirming the debtor's right of redemption after Concord Land Developments acquired the debtor's shares and offered to pay out all BCIMC debt and receivership costs.

For the Halo project, the SISP was approved, but without a stalking horse bid and without restrictions on communication between bidders and stakeholders, as the debtor was not yet able to pay out the debt.

This proceeding involved competing applications for the appointment of a receiver and manager under the Bankruptcy and Insolvency Act and the Courts of Justice Act, and an application for protection under the Companies’ Creditors Arrangement Act (CCAA).

The applicants, secured creditors, sought receivership over three residential condominium projects (The Clover, Halo, and 33 Yorkville) due to significant financial irregularities, lack of transparency, and loss of confidence in the debtors' management.

The debtors opposed receivership and sought CCAA protection, proposing a share sale to Concord Group Developments and a plan to disclaim existing purchase agreements.

The court dismissed the CCAA application and granted the receivership application, finding that receivership was the preferable route.

The court emphasized the secured creditors' blocking position, the absence of a concrete CCAA plan, and the debtors' deliberate financial misconduct, which outweighed any potential benefits of a CCAA proceeding.

In an insolvency proceeding involving syndicated mortgage investments, the court-appointed trustee brought a motion to dismiss a claim by an individual and his company for fees and a priority charge against the respondents' assets.

The claimant alleged he had an oral agreement to provide services to the Investors' Committee and sought approximately $103,000.

The court found no binding contract existed as the parties had not agreed on all material terms and the claimant had insisted on a signed agreement.

The court also rejected a quantum meruit claim, finding the claimant's services were provided gratuitously while pitching for a retainer.

Finally, the court held there was no basis under statute or inherent jurisdiction to grant a retroactive priority charge for the claimant's fees.

The claim was dismissed.

In an insolvency proceeding involving syndicated mortgage investments, a claimant sought approximately $103,000 in fees for services allegedly provided to the Investors' Committee, along with a court-ordered priority charge against the respondents' assets.

The court dismissed the claim, finding that no binding contract was ever formed as the parties had not agreed on all material terms and the claimant had insisted on a signed agreement.

The court also rejected a claim in quantum meruit, concluding the claimant provided services gratuitously while negotiating a retainer.

Finally, the court held there was no basis in its inherent jurisdiction to grant a retroactive priority charge for the claimant's fees.

The applicants (Algoma) sought two declarations: (i) that amounts owing under a promissory note from Portco to Algoma had been set off against amounts Algoma owed to Portco under a Cargo Handling Agreement; and (ii) that Algoma's right to terminate related Port Agreements was not subject to Portco's payment of the GIP Loan, which was tied to the set-off amounts.

The court granted the first declaration, finding that equitable set-off applied given the close connection between the parties and transactions, and the manifest inequity of requiring Algoma to pay Portco while the parent company (EGFL) failed to pay the promissory note.

However, the court denied the second declaration, holding that it would contradict a prior oppression judgment and an assignment agreement which explicitly required the GIP Loan to be paid in full in cash before Algoma could terminate the Port Agreements.

The City of Sault Ste.

Marie moved for immediate payment of Essar Steel Algoma Inc.'s outstanding and future post-filing property tax obligations, totaling approximately $10.8 million post-filing.

The court considered Algoma's precarious financial position, volatility of steel prices, and upcoming capital expenditures, including a significant blast furnace stove replacement.

While dismissing the City's motion for immediate payment of arrears, the court ordered Algoma to pay $350,000 per month for ongoing property taxes, acknowledging the City's difficulties and Algoma's assessment appeal.

The Superintendent of Financial Services initiated proceedings leading to the appointment of Grant Thornton Limited as trustee for several trustee corporations holding syndicated mortgage investments.

The trustee brought a motion seeking the appointment of KSV Kofman Inc. as receiver for six insolvent entities, an order for Mr. Davies to deliver documents, an injunction against Mr. Dennis Jewitt from communicating with investors (except for one project), approval of trustee fees, and costs against Mr. Jewitt.

The court granted the receiver appointment, the document delivery order, and awarded costs of $10,000 against Mr. Jewitt for vexatious conduct.

The request for an injunction against Mr. Jewitt was denied at this stage, with the court noting it could be revisited if his conduct continued to cause concrete impacts.

The Proposal Trustee sought court approval for the proposals of Wasaya Airways Leasing Ltd. (WALL) and the joint proposal of Wasaya Airways Limited Partnership (WALP) and Wasaya General Partner Limited (WGPL).

The court considered the appropriateness of a joint proposal for related corporations under the Bankruptcy and Insolvency Act (BIA), noting the lack of specific BIA provisions but relying on prior judicial interpretations.

The proposals, which offered unsecured creditors a better outcome than bankruptcy, were overwhelmingly approved by creditors.

The court found the proposals reasonable, beneficial to creditors, and made in good faith, also acknowledging the public interest in the debtors' essential services to remote First Nations communities.

In the context of a CCAA proceeding, Port of Algoma Inc. (Portco) brought a motion seeking an order compelling the debtor, Essar Steel Algoma Inc., to make post-filing payments under a Cargo Handling Agreement and for an administrative charge.

The court dismissed the motion, finding it premature as the Monitor was directed to commence an oppression proceeding regarding the underlying related party transactions.

The court also rejected Portco's renewed arguments under section 11.01(a) of the CCAA, noting they had been decided in a prior motion, and declined to lift the stay of proceedings, emphasizing that doing so would be contrary to the interests of the stakeholders and the restructuring process.

The Receiver brought a motion seeking a determination on whether the estates of Redstone Investment Corporation (RIC), Redstone Capital Corporation (RCC), and 1710814 Ontario Inc. o/a Redstone Management Services (RMS) should be substantively consolidated.

RIC and RMS Investors argued for consolidation, while RCC Investors opposed it, citing a General Security Agreement (GSA) granting RCC priority over RIC's assets.

The court found the founder's (Mr. So) evidence unreliable and dismissed subjective investor state of mind as irrelevant to the consolidation analysis.

Applying the Northland factors, the court determined that the elements of consolidation were not present, as assets were segregable, financial statements were separate, and significant prejudice would result to RCC Investors if consolidation were ordered.

The motion for substantive consolidation was denied.

The Toronto-Dominion Bank (TD) brought an application under the Personal Property Security Act for an order authorizing a private receiver to take possession and sell property of The Hockey Academy Inc. (the debtor).

The central dispute was whether rink equipment installed by the debtor became fixtures owned by the landlord, Champagne Centre Ltd. (CCL), or remained the debtor's property subject to TD's security interest.

The court interpreted the lease amendments, finding that the debtor was required to remove the rink equipment upon lease termination, which implied continued ownership by the debtor.

Consequently, TD's security interest had priority over CCL's claim.

The court granted TD possession of the equipment and ordered a reference to determine the value CCL owed TD for its wrongful use of the equipment.