John R. Varley

The appellant, an informal committee of senior debenture holders, sought leave to appeal orders made by the supervising judge in a CCAA restructuring.

The orders authorized the debtor company to enter into agreements with stakeholders and a finance provider to facilitate a proposed plan of arrangement.

The appellant argued the judge lacked jurisdiction to make orders that entrenched elements of a plan before creditor approval and that the plan was doomed to fail.

The Court of Appeal dismissed the appeal, holding that the supervising judge had broad jurisdiction under s. 11 of the CCAA to move the restructuring process forward, provided the creditors retained their final right to vote on the plan under s. 6.

The applicants sought a stay of the Court of Appeal's order, which had reversed a supervising judge's decision to remove two directors from the board of a company undergoing CCAA restructuring, pending their application for leave to appeal to the Supreme Court of Canada.

The Court of Appeal first determined it had jurisdiction under s. 65.1(1) of the Supreme Court Act to consider the stay application.

Applying the RJR-MacDonald test, the court found that while there was a serious issue to be tried, the balance of convenience and the interests of justice favoured denying the stay, as granting it would effectively implement the supervising judge's order that the court had already found was made without jurisdiction.

During a CCAA restructuring of Stelco Inc., the board of directors appointed two new directors who were associated with major shareholders.

Employee stakeholders, fearing the new directors would favour shareholder interests over employee interests in the restructuring, successfully applied to the supervising judge to have the directors removed based on a reasonable apprehension of bias.

The Court of Appeal granted leave to appeal and allowed the appeal, holding that the supervising judge lacked inherent jurisdiction or statutory authority under section 11 of the CCAA to remove duly appointed directors.

The Court further held that the administrative law concept of reasonable apprehension of bias does not apply to corporate directors, whose conduct is governed by fiduciary duties and the business judgment rule.

The moving parties, two directors who were removed from the board of a company undergoing restructuring under the Companies' Creditors Arrangement Act, sought an order expediting the hearing of their motion for leave to appeal the removal order.

The court granted the motion to expedite, finding that the fast-moving and unpredictable nature of CCAA proceedings required a generous view of urgency to provide the board with certainty regarding its composition during a critical phase of restructuring.

In the context of Air Canada's CCAA restructuring, the appellant sought leave to appeal an order approving an equity investment agreement with Trinity Time Investments Limited and denying an adjournment to consider a competing proposal.

The Court of Appeal dismissed the motion for leave, finding no error in the supervising judge's decision to approve the agreement, which contained a 'fiduciary out' clause allowing the board to consider superior proposals.

The court held that the test for leave to appeal in CCAA proceedings—requiring serious and arguable grounds of real and significant interest—was not met.