Kenneth David Kraft

This endorsement addresses a case conference requested by Sergio Grillone, an undischarged bankrupt, seeking directions regarding his proposed appeal from a scheduling endorsement and related matters in ongoing bankruptcy proceedings.

The court finds that Mr. Grillone has no right of appeal from the scheduling endorsement, as no order has been made from which an appeal lies, and dismisses his proposed motion as frivolous, vexatious, or an abuse of process under rule 2.1.01.

The decision details the procedural history, the positions of the parties, and the court’s reasoning for dismissing the motion.

The Court of Appeal for Ontario addressed the disposition of $30,000 posted by the appellant, Sergio Grillone, as security for costs on appeal, following his bankruptcy.

The appellant argued the funds were assets of his estate to be distributed to creditors, while the respondent, Bluecore Capital Inc., sought payment of outstanding costs from the security.

The court rejected the appellant's submission, concluding that the security for costs was not an asset of the bankruptcy estate but was specifically posted to secure the costs of the appeal and related motions.

The respondent was found entitled to the full amount of the security to cover its outstanding costs.

The appellant, Sergio Grillone, brought a motion to vary a previous decision.

The Court of Appeal dismissed the motion, finding that the appellant failed to demonstrate any error of law or misapplication of discretion by the motion judge.

Costs of $10,000 were awarded to the respondent.

The bankrupt, a former real estate developer, sought an absolute discharge from bankruptcy.

The discharge was opposed by the Trustee, the Canada Revenue Agency, and several creditors, who argued that the bankrupt's assets were less than 50 cents on the dollar for reasons he could be held responsible for, and that he failed to perform his duties under the Bankruptcy and Insolvency Act.

The court found that the bankrupt had engaged in an asset protection strategy, incurred significant personal liabilities without the means to pay them, and failed to disclose his true post-bankruptcy lifestyle and use of a corporate credit card.

The court declined to refuse the discharge entirely but imposed a substantial conditional order requiring the bankrupt to pay $960,000 and fulfill various outstanding duties.

The applicant, an experienced litigation lawyer, sought leave to bring a motion to set aside the Registrar's dismissal of his appeal in a bankruptcy proceeding.

The appeal had been dismissed for failure to perfect it within the ordered timeframe.

The court found that the applicant's conduct, including repeated delays and failure to comply with rules, indicated an attempt to stall the enforcement of the bankruptcy order.

The motion for leave was dismissed with costs.

Bluecore Capital Inc., the respondent on appeal, brought a motion to lift the automatic stay of a bankruptcy order against Sergio Grillone, the appellant, and for an order requiring Mr. Grillone to post security for costs of the appeal.

The motion judge granted the motion, finding that Mr. Grillone had not diligently prosecuted his appeal, his grounds of appeal were very weak, he had failed to satisfy previous cost orders, and the relative prejudice strongly favoured lifting the stay to allow a trustee to manage his assets for the benefit of creditors.

The court also ordered Mr. Grillone to post $30,000 as security for costs.

PricewaterhouseCoopers (PwC), as the court-appointed Liquidator for the winding-up of Silicon Valley Bank's Canadian business, brought a motion seeking approval for a Claims Procedure, the appointment of Employee Representative Counsel, and authorization for interim distributions to the United States Federal Deposit Insurance Corporation (FDIC).

The motion was unopposed and supported by the FDIC and proposed Employee Representative Counsel.

The court approved all requested relief, finding the proposed procedures fair, efficient, and appropriate for the Winding-up and Restructuring Act (WURA) proceedings.

The applicants, senior secured lenders, sought the appointment of a receiver over the assets of "The One" mixed-use construction project due to financial and covenant defaults by the borrower.

The project, significantly delayed and over budget, had outstanding debt of approximately $1.235 billion.

The appointment of Alvarez & Marsal Canada Inc. as receiver was unopposed by any key stakeholder.

The court granted the application, appointed the receiver, approved a super-priority receivership funding credit agreement of up to $315 million, and issued a stay of proceedings, finding it just and convenient to stabilize the situation and maximize recovery for all stakeholders.

The applicant, Bluecore Capital Inc., brought a bankruptcy application against the respondent, Sergio Grillone, a former lawyer, based on his failure to repay a litigation funding loan.

The respondent brought a motion for a mis-trial, alleging evidence tampering and perjury by the applicant's counsel and witness regarding the version of the loan agreement entered into evidence.

The court dismissed the mis-trial motion, finding the evidentiary irregularities were inadvertent and did not cause a miscarriage of justice.

The court granted the bankruptcy application, finding the applicant proved a debt exceeding $1,000 and an act of bankruptcy.

The court held that special circumstances existed to allow a single creditor application due to the respondent's litigious conduct and the multiplicity of claims against him, making a bankruptcy proceeding the most efficient way to manage his estate.

The Monitor in a CCAA proceeding brought an unopposed motion to extend the stay period, approve its activities, and approve its fees and those of its counsel.

The court found that the applicants had acted in good faith and with due diligence, and that the applicants had sufficient cash flow to operate during the proposed stay period.

The motion was granted, extending the stay period to January 31, 2024, and approving the Monitor's activities and fees.

The Monitor in the Companies' Creditors Arrangement Act (CCAA) proceedings for Urbancorp Toronto Management Inc. and affiliated entities sought court approval for a settlement agreement and an amendment to the Initial Order.

The settlement resolved a dispute over a $5.9 million consulting fee with Mattamy (Downsview) Limited, resulting in a $2.9 million asset for Urbancorp Toronto Management Inc. (UTMI).

The amendment increased the authorized intercompany loan limit from $1 million to $4.7 million to reflect actual advances to UTMI.

The court approved both the settlement and the amendment, finding them fair, reasonable, and consistent with the CCAA's purpose, but made the approvals conditional upon obtaining corresponding approval from the Israeli Court, given the intertwined nature of the foreign proceeding.

This endorsement addresses an unopposed motion brought by the Applicants in a Companies’ Creditors Arrangement Act (CCAA) proceeding.

The Applicants sought an order extending the stay period until January 31, 2024, approving the Monitor’s 58th Report and its activities, and approving the fees and disbursements of the Monitor, Monitor’s counsel, and Applicants’ counsel.

The court found that the Applicants continued to work in good faith and with due diligence, had sufficient resources for the extension period, and that the requested extension and fee approvals were reasonable.

The motion was granted in its entirety.

The applicant sought specific performance of an alleged agreement to purchase the respondents' shares in a corporation involved in the Thai medical cannabis industry.

The court found that the email correspondence between the parties constituted an agreement in principle, but not a binding contract, as essential terms regarding due diligence and disclosure remained unresolved.

However, the court found that a subsequent rights offering proposed by the respondents, which would have significantly diluted the applicant's minority shareholding at a below-market price, was oppressive.

The application for specific performance was dismissed, but the rights offering was permanently enjoined.

The Liquidator of Silicon Valley Bank Canada sought court approval of an asset purchase agreement with National Bank of Canada, as well as a sealing order over the unredacted agreement and a confidential comparative analysis.

The court applied the Soundair principles and found that the Liquidator made substantial efforts to canvass the market, the transaction was in the best interests of stakeholders, and the process was fair and efficacious.

The court also granted the sealing order, applying the Sherman Estate test, to protect the maximization of recovery in the event the transaction did not close.

PricewaterhouseCoopers Inc. (PwC), as the court-appointed Liquidator of Silicon Valley Bank (SVB) Canada, sought court approval for the sale of the Clearco Credit Facilities, a sealing order for confidential transaction documents, and approval of its activities, fees, and disbursements.

The court applied the Soundair Principles to evaluate the sale, finding that the Liquidator made sufficient efforts to obtain the best price and that the process was fair and efficacious.

The Clearco Transaction, which provided the highest value for the assets, was approved.

A sealing order was granted for the confidential appendices due to their commercial sensitivity and potential negative impact on the ongoing sales process and future recoveries, with an unusual extended duration.

The Liquidator's activities, fees, and disbursements were also approved as appropriate given the complexity of the matter.

Nanopay Corporation, a startup providing embedded payment solutions, filed a Notice of Intention to Make a Proposal under the Bankruptcy and Insolvency Act (BIA).

The company moved for an extension of time to file a proposal, authority to borrow under a DIP (Debtor-in-Possession) credit facility, and approval to engage a Chief Restructuring Officer (CRO).

The court granted the motion, approving the DIP Term Sheet, appointing the CRO, and extending the proposal filing deadline to August 2, 2023, finding that the company acted in good faith and with due diligence, and no creditor would be materially prejudiced.

An interim limit was placed on initial DIP advances.

The bankrupt brought a motion to compel a lawyer representing certain creditors to answer questions refused during a cross-examination on his affidavit.

The bankrupt alleged that the lawyer and his client obtained confidential information about the bankrupt's assets through unauthorized access to his email.

The lawyer refused to disclose the identity of his client or the client's source, claiming solicitor-client privilege.

The court dismissed the motion, finding that the identity of the client and the communications were presumptively privileged, the privilege had not been waived, and compelling the answers would violate the fairness and proportionality principles, especially given the bankrupt's failure to disclose an exculpatory expert report.

The Monitor in CCAA proceedings moved for an extension of the stay of proceedings, approval of its activities as described in its Fortieth Report, and approval of its fees and disbursements.

The motion was unopposed.

The court found that the applicants had acted in good faith and with due diligence, and that the extension was reasonable.

The court also approved the Monitor's activities and found the fees and disbursements to be reasonable.

The motion was granted.

This appeal concerned the sale of Lash Point, a family cottage property owned by a non-profit corporation (LPAC).

Family members were divided between "Remainers" (who wanted to keep the property) and "Departers" (who wanted to sell their interests).

A lower court initially ordered a staged buy-out, but due to delays, a motion judge later approved an en bloc sale of the entire property to third parties, reversing the original plan.

The appellants (Remainers and LPAC) appealed, arguing the motion judge lacked jurisdiction to vary the original order and erred in approving the sale without satisfying the principles for sale approval in receivership contexts (Soundair principles).

The Court of Appeal affirmed the motion judge's jurisdiction to vary the order but found that the sale approval was flawed as it did not meet the Soundair principles, particularly regarding efforts to obtain the best price and the integrity of the sales process.

The appeal was allowed, the sale order set aside, and the Receiver was directed to develop a proper sales process for the entire property.

This motion arose in a bankruptcy proceeding where the Trustee sought an order compelling a secured claimant to provide information regarding her claim and a direction to keep this information confidential from a foreign representative who had an indirect financial interest in the estate and was involved in collateral litigation against the claimant.

The claimant refused to provide the information without strict confidentiality, while the foreign representative sought to reserve rights to access it later.

The court declined to issue the requested directions, emphasizing that the Trustee should follow the statutory process for claim adjudication and that issues related to collateral litigation should be addressed in those separate proceedings.