Murray Gold

In a CCAA restructuring of Stelco Inc., the appellants, representing subordinated debenture holders, sought to be classified as a separate class of creditors for voting purposes on the proposed plan.

They argued their interests conflicted with senior debt holders due to a turnover payment provision requiring them to remit distributions to senior debt holders until the senior debt was paid in full.

The supervising judge dismissed the motion, finding no material distinction in their legal rights vis-à-vis the debtor company.

The Court of Appeal granted leave but dismissed the appeal, affirming that creditor classification under the CCAA is determined by the creditors' legal rights in relation to the debtor company, not their rights as creditors in relation to each other.

In a CCAA proceeding regarding Stelco Inc., the Informal Independent Converts' Committee appealed an order denying them a separate class of creditors.

The Court of Appeal granted leave but dismissed the appeal, finding no legal error or error in principle in the motion judge's conclusion that the appellants lacked a different legal or practical interest from other unsecured creditors vis-à-vis the debtor.

The appellant, an informal committee of senior debenture holders, sought leave to appeal orders made by the supervising judge in a CCAA restructuring.

The orders authorized the debtor company to enter into agreements with stakeholders and a finance provider to facilitate a proposed plan of arrangement.

The appellant argued the judge lacked jurisdiction to make orders that entrenched elements of a plan before creditor approval and that the plan was doomed to fail.

The Court of Appeal dismissed the appeal, holding that the supervising judge had broad jurisdiction under s. 11 of the CCAA to move the restructuring process forward, provided the creditors retained their final right to vote on the plan under s. 6.

The applicants sought a stay of the Court of Appeal's order, which had reversed a supervising judge's decision to remove two directors from the board of a company undergoing CCAA restructuring, pending their application for leave to appeal to the Supreme Court of Canada.

The Court of Appeal first determined it had jurisdiction under s. 65.1(1) of the Supreme Court Act to consider the stay application.

Applying the RJR-MacDonald test, the court found that while there was a serious issue to be tried, the balance of convenience and the interests of justice favoured denying the stay, as granting it would effectively implement the supervising judge's order that the court had already found was made without jurisdiction.

During a CCAA restructuring of Stelco Inc., the board of directors appointed two new directors who were associated with major shareholders.

Employee stakeholders, fearing the new directors would favour shareholder interests over employee interests in the restructuring, successfully applied to the supervising judge to have the directors removed based on a reasonable apprehension of bias.

The Court of Appeal granted leave to appeal and allowed the appeal, holding that the supervising judge lacked inherent jurisdiction or statutory authority under section 11 of the CCAA to remove duly appointed directors.

The Court further held that the administrative law concept of reasonable apprehension of bias does not apply to corporate directors, whose conduct is governed by fiduciary duties and the business judgment rule.