Kenneth David Kraft

The moving party, Foreign Representative of Urbancorp Inc., sought leave to appeal a distribution order from the Supervising Judge in Companies’ Creditors Arrangement Act (CCAA) proceedings.

The order authorized a distribution to King Towns North Inc. (KTNI) related to the sale of "Bridge Geothermal Assets" and the interpretation of a "Transfer Provision" in a lease.

The core issue was whether the Transfer Provision violated the pari passu or anti-deprivation rules, particularly in light of Chandos Construction Ltd. v. Deloitte Restructuring Inc. The Supervising Judge found the provision valid, as it was triggered by a lease transfer, not insolvency, and did not violate the rules.

The Court of Appeal dismissed the motion for leave to appeal, finding no prima facie meritorious issue or error in the Supervising Judge's application of the anti-deprivation rule as clarified in Chandos, and that the appeal would unduly hinder the proceedings.

The Monitor sought an order authorizing distributions from the sale of Geothermal Assets.

KTNI disputed the Monitor's recommended disallowance of its claim to a portion of the proceeds based on a transfer provision in the Berm Lease.

The court found that the plain language of the lease reserved the transfer value to KTNI and that the provision was not invalidated by the pari passu or anti-deprivation rules.

The Monitor was directed to distribute $2,049,000 to KTNI, but no funds were to be distributed to Doreen Saskin until her claim in the bankruptcy of KTNI's parent company was accepted.

This motion sought a stay pending leave to appeal an order authorizing the sale of a 51% interest in Downsview Homes Inc. (DHI) within ongoing CCAA proceedings.

The moving party, the Foreign Representative of Urbancorp Inc., argued the sale process should be postponed until a related arbitration regarding a disputed payment was resolved, fearing a chilling effect on potential bids.

The supervising judge had previously dismissed these concerns as speculative.

The Court of Appeal applied the three-part RJR-MacDonald test for a stay, finding the grounds for appeal weak, no irreparable harm to the moving party, and the balance of convenience favoring the respondents (the Monitor and Mattamy Homes Limited, the debtor-in-possession lender).

Consequently, the motion for a stay was dismissed.

Following a decision permanently staying the plaintiffs' second action for abuse of process, the successful defendants sought costs on a substantial indemnity basis.

The court rejected the request for substantial indemnity, finding that the defendants' Rule 49 offer was not beaten and the plaintiffs' fraud claim was never adjudicated.

The court awarded costs on a partial indemnity basis, reducing the requested amounts by 25% to account for issues that were deferred to a potential future motion.

Costs were fixed at $34,608 for the main group of defendants and $13,722 for Dr. Kajdehi.

The plaintiff commenced a wrongful dismissal action in 2015 against his former employer, which was stayed when the employer declared bankruptcy.

In 2019, the plaintiff commenced a second action against the bankrupt employer and several new defendants, alleging oppression, common employer, and improper transfer of assets.

The newly added defendants moved to strike or stay the second action.

The court permanently stayed the second action as an abuse of process, finding that it improperly circumvented the comprehensive regime of the Bankruptcy and Insolvency Act for challenging asset transfers, as well as the Rules of Civil Procedure regarding the addition of parties to an existing action.

The court-appointed Receiver brought a motion for directions regarding an offer to purchase a large Muskoka property en bloc.

The original buy-out order directed the Receiver to sever the property to allow departing members of the corporation to be paid their share while remaining members kept a retained parcel.

After four years of delays and significant expenses, the severance process was incomplete.

The court found it had jurisdiction to vary the original order due to materially changed circumstances.

The court directed the Receiver to halt the severance process and accept the en bloc purchase agreement, which had the support of the vast majority of stakeholders and represented fair market value.

The moving parties (debtors) sought leave to appeal under s. 193(e) of the Bankruptcy and Insolvency Act from an order approving a court-appointed receiver's proposed sale process and list prices for five commercial properties.

The debtors argued the motion judge failed to apply the correct legal test (the Soundair test) and was unduly deferential to the receiver's business judgment.

The Court of Appeal dismissed the motion for leave, finding that the motion judge had implicitly applied the Soundair test, the proposed appeal lacked prima facie merit, did not raise an issue of general importance, and would unduly hinder the progress of the receivership proceedings.

The court heard competing applications regarding the insolvent Urbancorp Management Inc. (UMI).

The Monitor sought a Bankruptcy Order, while a secured creditor sought the appointment of a receiver.

The court granted the Bankruptcy Order, appointing the Monitor as trustee, finding that the bankruptcy administration would provide a codified route to assess the secured creditor's non-arm's length claim.

The receivership application was stayed pending the trustee's review of the secured claim.

The moving parties sought a stay pending appeal of a lower court's decision to permanently stay their underlying action in Ontario on the basis of forum non conveniens and forum selection clauses.

They also sought an order expediting the appeal.

The motion judge dismissed both requests, applying the three-part RJR-MacDonald test for stays pending appeal.

The court found that while the appeal raised a serious question, the moving parties failed to demonstrate irreparable harm or that the balance of convenience favoured granting the stay.

The court also denied the request to expedite the appeal, finding no urgency.

In the context of CCAA proceedings for the Urbancorp entities, the Monitor brought a motion for an order approving and directing distributions from the sale of geothermal assets.

The court approved two unopposed distributions recommended by the Monitor in its Forty-Fifth Report, specifically regarding VII - Curve and UNKI.

The balance of the requested relief was adjourned to a date to be set.

The court-appointed Monitor in a CCAA proceeding brought a motion to approve a third amendment to a DIP credit facility to allow the debtor to contribute required equity to a real estate development project.

The Foreign Representative raised concerns about the lender's conduct and lack of information, but the Monitor recommended approval as there were no alternative funding options and the lender agreed to reduce the maximum charge and set a short maturity date.

The court approved the amendment, noting it was necessary to preserve the project and that outstanding issues could be addressed prior to maturity.

In a CCAA proceeding involving a condominium project, the debtor sought to disclaim pre-sale agreements with unit purchasers.

The purchasers brought a motion for the production of an unredacted appraisal report referenced in the debtor's affidavit.

The court held that while the mandatory production requirement under Rule 30.04(2) is subject to discretion in CCAA proceedings, fairness and transparency required production of the unredacted report to the purchasers, subject to a non-disclosure agreement.

Cross-motions by a contingent creditor and real estate brokers for production of the reports were dismissed due to their lesser need and potential conflicts of interest.

The Trustee in bankruptcy sought court orders for access to the bankrupt's leased premises and an extension of the three-month period under s. 38(2) of the Commercial Tenancies Act to elect to retain or assign the lease.

The Landlord opposed, arguing the Trustee had no right to access or assign the lease, and no legal basis existed to extend the period.

The court found that the Trustee, distinct from the Receiver, retained its rights under the CTA, including access for marketing the lease.

The court also held it had jurisdiction to extend the s. 38(2) period, not through inherent jurisdiction, but by applying s. 2 of Ontario Regulation 73/20 (the COVID-19 Suspension Order), which suspends periods for steps in proceedings.

The court granted a 90-day extension, subject to conditions regarding occupation rent, and ordered the parties to bear their own costs due to the mixed result.

The Court of Appeal for Ontario issued a costs endorsement following an appeal hearing related to the Companies’ Creditors Arrangement Act (CCAA) proceedings of Urbancorp Cumberland 2 GP Inc. and related entities.

The panel reviewed the costs requests from the appellants and respondents and found the amounts reasonable.

Specific costs were ordered to be paid out of the Estate of the Cumberland Group to the appellants (Toro Aluminum, Speedy Electrical, Dolvin Mechanical) and two respondents (Guy Gissin, Tarion Warranty Corporation).

The Monitor and the Attorney General of Ontario did not seek costs.

This appeal concerns the effectiveness of a statutory trust under s. 9(1) of Ontario's Construction Lien Act (CLA) in Companies' Creditors Arrangement Act (CCAA) insolvency proceedings.

Unpaid contractors (appellants) claimed a trust over proceeds from the sale of condominium units by the insolvent developer (Cumberland Group).

The motion judge denied the trust, relying on Re Veltri Metal Products Co., reasoning that the CCAA Monitor's involvement prevented the trust from arising.

The Court of Appeal allowed the appeal, clarifying that a s. 9(1) CLA trust can be effective in CCAA sales processes and is only displaced by federal paramountcy if it conflicts with a specific CCAA priority.

The court distinguished Veltri, stating it did not prevent a s. 9(1) trust when proceeds exceed mortgage debt and expenses, and confirmed the "deemed receipt" rule.

In a CCAA proceeding, the Functionary and Terra Firma brought a motion to late file a claim and to approve a settlement agreement between them regarding the distribution of the debtor's funds.

The court allowed the late filing of the claim but ruled the Functionary's unsworn report inadmissible.

The court dismissed the motion to approve the settlement, finding that a settlement of claims against the debtor requires the consent of the debtor or the Monitor, neither of which had agreed to the settlement.

The court addressed the issue of who should pay costs previously awarded after dismissing a motion brought by Bending Lake Iron Group Limited (BLIG).

The BLIG motion was deemed an abuse of process, a collateral attack on prior orders, and res judicata, with BLIG lacking standing due to its bankruptcy.

The court ordered that the costs be paid jointly and severally by BLIG's lawyer, Robert MacRae, and its directors and officers (Henry Grant Wetelainen, J. Chris Bailey, Dawn Elaine Mackay-Daynes, and Henry Clayton Wetelainen), citing the broad discretion under the Bankruptcy and Insolvency Act and Rule 57.07 of the Rules of Civil Procedure for personal costs against lawyers.

The Foreign Representative of Urbancorp Inc. (UCI) moved to set aside the Monitor's disallowance of UCI's $6 million promissory note claim against Bay LP and sought a declaration confirming the validity of a companion $2 million note.

The notes were issued in connection with management fees and replaced an earlier $8 million note.

The court found that the notes were not independent obligations but were issued for tax purposes, and the underlying management fees had been paid through intercompany accounting entries.

The court rejected the argument that UCI was a holder in due course, noting that the notes were not intended to be binding and the assignees (UCI and Realtyco), controlled by the same individual, had actual notice of the intercompany affairs and payment status.

The motions were dismissed.

The applicants sought orders under section 61 of the CCAA to recognize and give effect in Canada to two orders made in their US Chapter 11 bankruptcy proceedings.

The US orders established a claims bar date and discharged claims not filed by that date.

The applicants sought to use these orders to bar the respondents' claims in an ongoing Ontario tort action.

The court dismissed the application, holding that the applicants should seek enforcement of the US orders within the specific Ontario action rather than seeking a general recognition order under section 61 of the CCAA.

This approach allows the court in the action to assess the equities on a party-by-party basis.

This decision addresses the costs arising from a receivership application, specifically motions to approve an asset purchase agreement and a cross-motion to postpone the sale.

The court awarded substantial indemnity costs to the Receiver due to unfounded allegations impugning its integrity.

Partial indemnity costs were awarded to the Secured Creditor and Legacy Hill Resources Ltd. The court declined to hold Mr. Wetelainen, a principal of the respondent, personally liable for costs, finding no evidence of fraud or abuse of the bankruptcy process for a wrongful collateral purpose, despite his breach of a prior order and the respondent's inability to pay.