On an unopposed insolvency motion under Part III of the Bankruptcy and Insolvency Act, the moving parties sought sanction of an amended consolidated proposal with substantive consolidation and a broad third-party release.
The court applied the section 59(2) reasonableness-and-benefit test, considered good faith and creditor voting support, and accepted that the proposal met statutory requirements.
The court held that third-party releases were permissible in the circumstances and interpreted the statute harmoniously with restructuring principles applied under related insolvency legislation.
Applying the Metcalfe criteria, the court found the release was necessary, supported by tangible contributions, and beneficial to creditors generally compared with bankruptcy alternatives.
The sanction order was granted.
