The proposal trustee moved for court approval of a bankruptcy proposal for the debtor company.
The debtor's parent company, which held the largest monetary claim, opposed the proposal, but its vote was disregarded by the chair of the creditors' meeting as a related party under s. 109(6) of the Bankruptcy and Insolvency Act.
The parent company objected to the scope of the release granted to the debtor's sole director, specifically regarding potential claims for preferences and transfers at undervalue.
The court upheld the exclusion of the related party's vote, finding it would defeat the purpose of the proposal and harm unrelated trade creditors.
Applying the Metcalfe criteria, the court found the director releases to be fair and reasonable, and approved the proposal.
