Andrew Hatnay

A former employee of The Body Shop Canada Limited brought a motion in the company's bankruptcy proceedings seeking to be appointed as the Representative for all terminated Canadian employees, and to have her counsel appointed as Representative Counsel.

The moving party sought an order that included a mandatory opt-out mechanism and broad immunity from liability for the Representative and Representative Counsel.

The court dismissed the motion, finding that the claims of the terminated employees were relatively straightforward, the class was small and easily identifiable, and the proposed opt-out mechanism and broad immunity were inappropriate in the circumstances.

The moving party sought an order appointing Representative Counsel and a Non-Union Employee Representative for non-unionized employees terminated by the debtor following its Notice of Intention to Make a Proposal under the BIA.

The motion was unopposed and supported by the debtor and the Proposal Trustee.

Applying the CanWest factors, the court found the non-union employees to be a vulnerable group requiring representation to advance their claims.

The court granted the order, finding it would benefit all stakeholders by streamlining the claims process and avoiding a multiplicity of legal retainers.

In the context of Laurentian University's CCAA proceedings, Thorneloe University appealed a Claims Officer's decision valuing its loss of commercial value claim at zero following the disclaimer of their Federation Agreement.

Thorneloe argued the Claims Officer erred by applying a lost profits approach rather than a loss of business value approach, relying on an expert report valuing the enterprise at $9.8 million.

The Superior Court dismissed the appeal, finding no palpable and overriding error in the Claims Officer's factual determination that Thorneloe was an unprofitable entity and his subsequent rejection of the expert's revenue multiplier methodology.

The court affirmed that expectation damages (lost profits) is the customary remedy for breach of contract, and a non-breaching party is not entitled to be put in a better position than if the contract had been performed.

In the context of Laurentian University's CCAA proceedings, the moving party brought a motion seeking an order to direct the Monitor to engage in mediation regarding its appeal of a Claims Officer's decision.

The Claims Officer had upheld the Monitor's disallowance of the moving party's $9.8 million claim for loss of commercial value.

The court dismissed the motion, finding that the existing claims process provided an adequate mechanism for resolving the dispute through the pending appeal.

The court also noted that the request for mediation was made too late, as it was brought only after the Claims Officer had already determined the matter on its merits.

Laurentian University brought a motion within its CCAA proceedings seeking the appointment of a Chief Redevelopment Officer, an increase in the fee cap for the Board of Governors' independent counsel, and approval of a claims process.

The court approved the appointment of the CRO and the fee increase.

Regarding the claims process, TD Bank proposed amendments to require consultation on claims over $5 million.

Balancing the need for efficiency with creditor involvement, the court modified the claims process to establish an 'Inspector Group' to authorize the compromise of material claims, drawing on principles from the Bankruptcy and Insolvency Act.

The applicant, Laurentian University, brought a motion within its CCAA proceedings to extend the stay of proceedings, approve an amendment to its DIP facility increasing the available funds by $10 million, and approve settlement agreements with its faculty association, staff union, and Huntington University.

The court found that the applicant had acted in good faith and with due diligence, making significant progress in its restructuring.

Despite opposition from Thorneloe University and the University of Sudbury regarding the DIP amendment, the court approved the requested relief, finding the DIP conditions reasonable and the extension necessary for the applicant's continued operations and restructuring efforts.

Thorneloe University brought a motion under section 32(2) of the CCAA to prohibit Laurentian University from disclaiming their Federation Agreement and Financial Distribution Notice.

Laurentian argued the disclaimer was necessary to achieve financial sustainability and present a viable restructuring plan, saving approximately $7.7 million annually.

Thorneloe argued the disclaimer would cause it significant financial hardship and force it into insolvency.

The court balanced the competing interests, giving significant weight to the Monitor's recommendation, and concluded that upholding the disclaimer was the least undesirable choice to prevent the potential collapse of Laurentian University.

The motion was dismissed.

Thorneloe University brought a motion under section 32(2) of the CCAA seeking an order that its Federation Agreement and Financial Distribution Notice with Laurentian University not be disclaimed or resiliated, and to amend the DIP Amendment Agreement.

The court dismissed the motion, with reasons to follow.

In the CCAA proceedings of U.S. Steel Canada Inc., its parent company, United States Steel Corporation, sought approval of several proofs of claim totaling over $2 billion.

Various stakeholders objected, arguing that the intercompany loans should be re-characterized as 'equity claims' under the CCAA and that the security granted for certain advances was void as a fraudulent preference or unenforceable for lack of consideration.

The court rejected the objections, finding that the parent company had a reasonable expectation of repayment when the advances were made, and that the security was validly granted for fresh consideration and did not constitute a fraudulent preference.

The claims were confirmed as debt claims.

In a CCAA restructuring proceeding, stakeholders sought disclosure of a settlement agreement between U.S. Steel, its Canadian subsidiary, and the Attorney General of Canada regarding undertakings under the Investment Canada Act.

The CCAA judge held that the agreement was entirely privileged under s. 36 of the ICA.

On appeal, the Court of Appeal found that while s. 36(5) protects the Crown from being compelled to disclose the agreement, this protection does not extend to the private corporations.

The appeal was allowed, and the issue of whether common law settlement privilege barred disclosure was remitted to the CCAA judge.

The appellant appealed a decision dismissing his application for a declaration that three retention bonuses totaling $475,000 constituted 'pensionable earnings' under the Healthcare of Ontario Pension Plan.

The Court of Appeal upheld the motion judge's finding that the bonuses were not a 'regular' part of the appellant's remuneration, as they were payable over three years only and did not continue during automatic renewal terms.

The Court also upheld the motion judge's discretionary refusal to award the appellant costs out of the pension plan, as the litigation was not brought for the benefit of all beneficiaries.

The appeal was dismissed with costs awarded to the respondents.

The appellants, representing unionized and non-unionized former employees of Nortel, appealed a decision dismissing their motions for directions to compel Nortel to pay severance, termination, and retirement benefits during its CCAA restructuring.

The appellants argued that the payments were protected under s. 11.3(a) of the CCAA as compensation for ongoing services, and that the CCAA stay could not override provincial Employment Standards Act obligations.

The Court of Appeal dismissed the appeals, holding that the payments were for past services and that the doctrine of federal paramountcy allowed the CCAA stay to suspend the immediate payment obligations under the provincial legislation to facilitate the restructuring.

The Superintendent of Financial Services appealed an order lifting a CCAA stay and permitting bankruptcy petitions to proceed against the insolvent Ivaco companies.

The Superintendent argued that unpaid pension contributions subject to a deemed trust under the Pension Benefits Act should have been paid or segregated before bankruptcy.

The Court of Appeal dismissed the appeal, holding that the CCAA and BIA create a comprehensive federal insolvency scheme that leaves no gap for provincial deemed trusts to operate outside of bankruptcy.

The court also upheld the motions judge's discretionary decision to lift the stay and his order transferring the companies' head offices to Toronto under the Canada Business Corporations Act.

The appellant trustee was successful on appeal and sought costs against the respondent employees.

The employees argued they should be shielded from costs as public interest litigants or under the principles of the Class Proceedings Act.

The Court of Appeal rejected these arguments, finding the employees had a direct financial stake and the matter was not a class action.

The court awarded the trustee costs for the proceedings before the registrar, the Superior Court, and the Court of Appeal, totaling approximately $24,000.

Prior to its bankruptcy, the bankrupt company deducted pension contributions from its employees' pay but failed to remit them, instead commingling the funds in its general bank account.

The account balance subsequently fluctuated and went into a negative balance before returning to a positive balance on the date of bankruptcy.

The employees claimed the unremitted contributions as trust property under s. 67(1)(a) of the Bankruptcy and Insolvency Act.

The Court of Appeal held that while a trust was initially created, the trust property ceased to be identifiable and could not be traced once the account went into overdraft.

Consequently, the funds in the account at the date of bankruptcy were not trust funds, and the Trustee's disallowance of the employees' claim was upheld.

The union brought a motion for leave to appeal an order that amended a receivership order to protect the receiver from successor employer status and denied the union leave to proceed against the receiver before the Ontario Labour Relations Board.

The Court of Appeal granted leave to appeal, finding that the legal issues regarding the relationship between bankruptcy courts and labour boards, and the status of a receiver as a successor employer, were significant to commercial practice and warranted consideration by the appellate court.