Maria A. Konyukhova

The applicants, Aralez Pharmaceuticals Inc. and Aralez Pharmaceuticals Canada Inc., sought court approval for Key Employee Retention Plans (KERPs) and Key Employee Incentive Plans (KEIPs) within their Companies' Creditors Arrangement Act (CCAA) proceedings.

The court approved both programs, finding that the design process involved significant arm's length oversight, the programs were necessary to retain and incentivize key employees during the restructuring and sales process, and the design was reasonable.

The Official Committee of Unsecured Creditors opposed the KEIP, arguing the bonuses were too high and easily earned, but the court dismissed these objections, emphasizing the circumstances prevailing when the plans were initially offered and the employees' good faith efforts.

The Liquidator of Maple Bank GmbH brought a motion seeking approval of a Settlement Agreement and a Sale Transaction with the Bank of Montreal, as well as an order sealing a Confidential Supplement containing unredacted transaction details.

The court applied the Soundair principles and the Sierra Club test, finding the settlement and sale to be fair, reasonable, and beneficial to the estate.

The court also granted the sealing order to protect commercially sensitive information that could prejudice ongoing negotiations with other parties.

The motion was granted on consent.

The moving party, Zayo Inc., previously had its motion dismissed.

The motion sought an order for the Monitor to pay Zayo $1,228,799.81 from the proceeds of the sale of the applicants' assets.

In this costs endorsement, Zayo argued that costs are not the norm in CCAA proceedings.

The court disagreed, finding this to be an exceptional case where the normal rule of costs should apply, as the real opponents (the secured lenders and the purchaser) were not insolvent.

The court awarded costs against Zayo, fixing them at $30,000 each for Primus and BMO, and $20,000 each for Birch and the Monitor.

Zayo Inc. brought a motion seeking an order for FTI Consulting Canada Inc., as Monitor for the Primus Entities, to pay Zayo $1,228,799.81 from asset sale proceeds.

This amount represented pre-CCAA filing arrears owed to Zayo under contracts assigned to Birch Communications Inc. Zayo argued the consent process for assignment was not transparent or fair, alleging it was misled into consenting without realizing it could have leveraged Section 11.3(4) of the CCAA to demand full payment of arrears.

The court dismissed the motion, finding the consent process fair and transparent, noting Zayo's sophistication and lack of due diligence.

The court also found that granting the order would cause prejudice to secured lenders and Birch, as it would require varying existing orders and disrupt a closed transaction.

Portco sought orders for immediate and future payments under a Cargo Handling Agreement, and a US$5 million charge on Algoma's assets, arguing the payments were required post-filing in a CCAA proceeding.

The CCAA Applicants (Algoma) and DIP lenders opposed, citing the DIP Agreement's budget approval requirement and an arguable right to equitable set-off against a promissory note owed by Portco's parent company (EGFL) to Algoma.

The court found that the DIP Agreement and Initial Order did not mandate payments without DIP lender approval and that an arguable case for equitable set-off existed.

The motion was dismissed as premature, pending determination of the set-off issue and other concerns raised by the Monitor regarding the Portco transaction and recapitalization.

The moving parties sought directions on whether they required leave to appeal an order made by a CCAA judge dismissing their jurisdictional challenge to a contract dispute motion brought by the responding parties.

The moving parties also sought a stay of the contract dispute motion pending their appeal.

The responding parties brought a cross-motion to expedite the hearing of the leave to appeal motion.

The Court of Appeal held that the CCAA judge's order was 'made under' the CCAA, meaning leave to appeal was required under s. 13.

The Court expedited the leave to appeal motion and granted a stay of the contract dispute motion pending the determination of the leave motion, finding that the balance of convenience favoured a stay.

The Attorney General of Canada, at the request of the Superintendent of Financial Institutions, applied for a winding-up order under the Winding-up and Restructuring Act in respect of the Canadian business of an authorized foreign bank.

The bank had admitted insolvency following the emergence of significant German tax claims and the imposition of a moratorium by German regulators.

The court found that the Superintendent had ample basis to take control of the bank's Canadian assets under the Bank Act.

Given the bank's admitted insolvency and the appointment of a German insolvency administrator, the court concluded it was just and equitable to grant the winding-up order and appoint a liquidator.

In a CCAA restructuring proceeding, the moving parties (Cliffs) brought a motion objecting to the jurisdiction of the Ontario Superior Court to hear a dispute over a terminated iron ore supply contract.

Cliffs argued that the contract was governed by Ohio law and that Ohio was the convenient forum.

The court dismissed the motion, finding that it had jurisdiction simpliciter because the contract was made in Ontario and Cliffs carried on business in Ontario.

Applying the single control model for insolvencies, the court held that the dispute should be resolved within the CCAA proceedings.

The court also found that Cliffs failed to establish that Ohio was clearly a more appropriate forum.

The applicants, a group of integrated telecommunications companies operating in Canada and the US, sought an initial order under the CCAA.

Facing declining revenues and defaults on secured credit agreements, the companies required protection to implement a pre-filing sales process.

The court granted the initial order, finding the applicants were insolvent debtor companies.

The court also approved an Administration Charge of $1 million, a Directors' and Officers' Charge of $3.1 million, and authorized FTI Consulting Canada Inc. to act as the foreign representative to seek recognition of the proceedings in the United States under Chapter 15 of the Bankruptcy Code.

A secured creditor applied for the appointment of a receiver over the assets of an insolvent mining company following defaults under a secured credit facility.

The debtor had failed to make scheduled interest payments, was unable to obtain further financing, and its financial position had deteriorated significantly.

The lender had security over all assets and shares of a Colombian subsidiary holding the company’s principal mining properties, but governance disputes and creditor protection proceedings in Colombia created uncertainty and risk to asset value.

The court considered the statutory authority under s. 243 of the Bankruptcy and Insolvency Act and s. 101 of the Courts of Justice Act, along with established principles governing when it is “just or convenient” to appoint a receiver.

Finding that the debtor was in default and that a receivership was necessary to stabilize governance and preserve enterprise value, the court appointed KPMG as receiver.

In CCAA proceedings involving a mining company, competing motions were brought concerning the restructuring process.

The debtor sought directions regarding the procedure for resolving noteholder claims and the alleged misuse of confidential information by certain creditors, while the noteholders sought an order convening a meeting of creditors to vote on their proposed plan of arrangement.

The court held that calling a creditors’ meeting was premature because the proposed plan conflicted with the debtor-in-possession financing facility, had been introduced without meaningful consultation, and unresolved claims and litigation issues could affect voting rights and recoveries.

The court dismissed the noteholders’ motion without prejudice and declined to order disclosure sought by the debtor.

The stay of proceedings was extended to facilitate continued negotiations and mediation.

In a CCAA proceeding, the Applicants (Hollinger Inc. et al.) sought approval of settlement agreements with their former auditors (KPMG) and lawyers (Torys).

The Non-Settling Defendants, including Conrad Black and David Radler, opposed the settlements, arguing the court lacked jurisdiction and that the included third-party releases and bar orders would deprive them of procedural rights to discovery.

The court held it had jurisdiction under the CCAA to manage litigation as a corporate asset.

The court approved the Pierringer-style settlements, finding that the procedural rights of the Non-Settling Defendants could be adequately protected through active case management and the application of the principle of proportionality in discovery.

In Companies’ Creditors Arrangement Act proceedings, the applicant debtor entities sought authorization to pay pre-filing invoices owed to a foreign supplier of critical components necessary for ongoing aerospace manufacturing.

The supplier had refused to continue supplying goods despite a critical supplier provision in the initial CCAA order requiring continued supply.

The court reviewed the jurisprudence recognizing inherent jurisdiction to authorize payment of pre-filing obligations to critical suppliers where necessary to maintain operations during restructuring.

Given the debtor’s dependence on the supplier, the lack of alternative sources, the risk to a major customer’s production lines, and the monitor’s support, the court held that business realities justified authorizing payment notwithstanding concerns about rewarding the supplier’s non-compliance with the order.

In a CCAA proceeding, a former CEO moved for an order compelling the debtor company to continue paying his monthly consulting fees under a 1996 agreement.

The debtor company brought a cross-motion declaring the obligations were pre-filing obligations stayed by the Initial Order, or alternatively, seeking to disclaim the agreement under s. 32 of the CCAA.

The court held that the consulting fees were in substance termination or retirement benefits, constituting unsecured pre-filing obligations that were stayed.

Alternatively, the court found that disclaiming the agreement was advantageous to the restructuring and would not cause significant financial hardship to the former CEO.

The applicants, comprising the First Leaside group of companies, sought an Initial Order under the Companies' Creditors Arrangement Act (CCAA) to conduct an orderly wind-down of their operations.

The court found that the applicants, viewed as a group, were insolvent and that the CCAA could be appropriately used for a liquidating proceeding.

The court also granted super-priority Administration and D&O Charges, dismissing arguments from secured creditors that provincial paramountcy issues precluded such priorities without further notice.

In CCAA proceedings, the debtor companies sought approval of a debtor-in-possession (DIP) financing facility and a super-priority DIP lenders’ charge ranking ahead of other encumbrances, including potential pension-related claims.

Two unions opposed the motion, arguing that granting super priority would undermine fiduciary duties owed to pension plan beneficiaries and that the evidentiary record was insufficient to justify the relief.

The court held that the statutory requirements under s. 11.2 of the Companies’ Creditors Arrangement Act were satisfied and that DIP financing was necessary to maintain operations and conduct a sales or restructuring process.

Applying the doctrine of federal paramountcy, the court found that the CCAA could override conflicting provincial pension legislation where necessary to avoid bankruptcy and facilitate restructuring.

The DIP facility and super-priority charge were approved.

The applicants, Timminco Limited and Bécancour Silicon Inc., sought orders in their CCAA proceedings to suspend special payments to their pension plans, grant super priority to Administration and D&O Charges over provincial pension deemed trusts, approve Key Employee Retention Plans (KERPs), and seal the KERP details.

The unions opposed the super priority and suspension of pension payments, arguing it violated provincial pension legislation and fiduciary duties.

The court granted the motion, applying the doctrine of paramountcy to find that enforcing the provincial pension obligations would force the companies into bankruptcy and frustrate the CCAA restructuring.

The court also approved the KERPs and sealed the confidential supplement.

The applicants, Timminco Limited and Bécancour Silicon Inc., sought initial protection under the Companies' Creditors Arrangement Act (CCAA) due to severe liquidity issues and an inability to meet financial obligations.

The court found the applicants to be insolvent debtor companies and granted the initial CCAA order.

The court also extended the stay of proceedings to certain directors, officers, and specific partnership agreements, and approved an Administration Charge of $1 million and a Directors' and Officers' Charge of $400,000.

The appellant appealed an order resolving a priority dispute between two secured creditors of an insolvent corporation.

The dispute involved a circular priority problem created by multiple financing agreements.

The motion judge applied a partial subordination theory, finding that the respondent intended to subordinate its interest only to a third-party lender, not to the appellant.

The Court of Appeal upheld the motion judge's decision, agreeing that partial subordination produced an equitable result and that complete subordination would confer an unintended windfall on the appellant.

The appeal was dismissed.

The appellant appealed a motion judge's decision, arguing that there were material facts in dispute and a trial of the issue should have been directed.

The Court of Appeal dismissed the appeal, noting that the appellant had previously taken the position that no material facts were in dispute and could not now seek a trial of an issue.

The court further held that, in any event, there were juristic reasons for the deprivation in the context of the insolvency proceedings.