Justin Fogarty

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.

In a complex receivership and bankruptcy-related proceeding involving a charitable foundation and associated corporations, the applicants brought a motion relating to governance and procedural matters in ongoing litigation.

The court addressed scheduling issues arising after a prior endorsement and dealt with a motion seeking removal of the remaining director of the foundation.

The court directed that the director indicate whether she would consent to removal and scheduled further steps if consent was not provided.

The court also rescheduled examinations and cross-examinations of two individuals in Buffalo, New York, set procedural timelines, and confirmed certain agreed limitations on director liability and additional costs awards.

In an inspection proceeding under the Ontario Business Corporations Act, the court addressed competing motions to approve professional fees incurred during an investigation of several corporations connected to development projects and investment solicitations.

The applicants and the court-appointed inspector sought approval of their accounts and an increase to the existing administrative charge securing payment of investigation costs.

The court assessed the inspector’s fees, legal fees, and applicants’ counsel fees under Rule 57, reducing certain amounts for duplication, clerical work, and excessive rates.

The administrative charge was increased from $200,000 to $399,398 to cover the approved costs.

While the respondents, including a controlling director, were held liable for the costs, the court declined to expand the administrative charge to include the director’s personal assets.

Investors sought the appointment of a receiver over several related corporations and continuation of restraining orders against individuals and entities associated with a charitable foundation alleged to have received investor funds.

The court reviewed the procedural history of inspection, receivership, and bankruptcy proceedings, including interim orders restraining dissipation of assets and permitting limited use of funds for legal and living expenses.

Evidence suggested that investor funds from Ontario real estate projects had been transferred to a charitable foundation and subsequently moved to the United States, including property transactions shortly before asset-freezing motions.

In the absence of opposing materials from several respondent corporations, the court confirmed the appointment of a receiver over certain corporations and extended the interim receivership and restraining orders affecting the foundation and related individuals.

In complex receivership and bankruptcy-related proceedings involving a charitable foundation and associated corporations, the court addressed scheduling and procedural issues arising after prior bankruptcy orders.

Motions concerning the removal of directors and issues involving a third-party entity were adjourned on consent to dates to be set by the trial coordinator.

Examinations of certain responding parties were cancelled due to immigration concerns relating to re-entry into the United States.

The court directed that the examinations proceed in Buffalo, New York under Ontario procedural law, ordered the responding parties to seek necessary U.S. visa permissions, and required advance funding of travel costs for opposing counsel and the receiver.

The endorsement also addressed potential venue issues in a related promissory note action.

Investors and related applicants brought proceedings seeking receivership and related relief against several corporations and individuals connected to a charitable foundation.

Evidence showed the foundation transferred a Florida property to its directors shortly after learning of a pending motion seeking to restrain asset dissipation and appoint a receiver.

The court continued interim restraining and receivership orders and granted a full receivership order against certain corporate respondents other than the foundation.

The issue of whether the property transfer constituted a void transfer under s. 95(2) of the Bankruptcy and Insolvency Act was adjourned to the scheduled bankruptcy trial.

The court also prohibited the release of funds held in a lawyer’s trust account and approved the receiver’s reports.

Investors brought an ex parte motion to amend a prior receivership order and expand the powers of an Interim Receiver in proceedings concerning corporations involved in Ontario real estate development projects.

Evidence from an appointed inspector indicated that investment funds raised for development projects had been diverted, including funds used to renovate a Florida property and transferred through corporate accounts controlled by the directing individual.

Additional evidence suggested asset transfers, movement of funds to foreign accounts, and restructuring of corporate holdings while insolvency proceedings were pending.

Relying on statutory authority under the Courts of Justice Act, the Ontario Business Corporations Act, the Canada Business Corporations Act, the Canada Not-for-profit Corporations Act, and the Bankruptcy and Insolvency Act, the court amended the pleadings to add additional respondents and expanded the interim receiver’s authority to protect assets pending further proceedings.

Investors brought an application seeking the appointment and confirmation of an inspector to investigate several corporations involved in investment development projects.

An interim order had already appointed an inspector ex parte and required service of the application on the respondents.

At the return hearing, the inspector sought confirmation of the appointment, expanded investigative authority including examinations of additional individuals, and a non‑publication order for investigative reports.

The respondents requested an adjournment to file responding materials and raised jurisdictional issues concerning whether a charitable foundation governed by federal not‑for‑profit legislation could be subject to the inspection.

The court adjourned the application, continued most provisions of the interim order, authorized examinations of specified individuals, and granted a temporary non‑publication order regarding the inspector’s reports.