The appellant trustee appealed the dismissal of an application seeking approval of three proposed assignees of leased commercial premises under s. 38(2) of the Commercial Tenancies Act.
The proposed assignees were newly incorporated numbered companies created to hold individual leases after the trustee sold the bankrupt’s assets to a related purchaser controlled by an established gas retail operator.
The court held that, although backing and guarantees from related corporations may in principle be considered when assessing a corporate assignee’s fitness, the landlords were entitled to look to the named tenants as the primary obligors under the leases.
On the evidentiary record, the motions judge was entitled to conclude that the assignees were shell corporations designed to insulate the real operators from liability and were therefore not fit and proper persons.
The appeal was dismissed with costs.
