Kate Stigler

In CCAA proceedings involving a debtor company whose assets had already been sold and where no plan of arrangement was contemplated, the representative plaintiff in a proposed securities class action moved to lift the stay of proceedings and to amend the claims procedure order after failing to file a proof of claim by the claims bar date.

The directors argued that the claims procedure barred the class action against them and extinguished related claims, including access to insurance proceeds.

The court held that both the stay and the claims bar order are discretionary tools intended to facilitate restructuring or liquidation objectives under the CCAA.

Because the restructuring process had effectively concluded and no plan was forthcoming, using the claims bar order to extinguish the class action would serve no functional purpose under the CCAA.

The court exercised its discretion to lift the stay and modify the claims procedure order to permit the plaintiff to proceed with the class action.

The applicant first mortgage creditor sought declarations confirming the validity and priority of its registered security over multiple real estate development properties subject to receivership, and an order directing distribution of sale proceeds by the court‑appointed receiver.

Various investors holding undivided interests and lot purchasers opposed the motion, arguing that their prior contractual interests and alleged breaches of trust by the debtor should defeat the applicant’s mortgage priority.

Relying on Alberta land titles legislation, the court held that registered interests take priority over unregistered interests absent fraud, and that mere knowledge of unregistered claims does not amount to fraud or equitable subordination.

The court also rejected arguments that postponements granted by mortgage investment corporations were invalid.

The applicant’s priority was confirmed and the requested declaratory and distribution relief granted.