Bankruptcy and Insolvency Law - OCA

The appellants appealed a motion judge's order calculating the Amended DIP Deficiency in a CCAA proceeding.

They argued that an Accommodation Agreement required the respondents to contribute up to $2,000,000 of the deficiency before recourse could be had to the appellants' collateral.

The Court of Appeal dismissed the appeal, finding that the Accommodation Agreement did not require the respondent to forego recovery of its responsible amount and that it was entitled to look to the collateral held by the first secured creditors without first foregoing $2,000,000 of the money advanced pursuant to the DIP Facility.

The respondent in an appeal brought a motion for security for costs.

The appellant, an impecunious corporation, had originally brought a motion in bankruptcy proceedings claiming its pre-bankruptcy judgment against the respondent survived his discharge.

The court held that the Rules of Civil Procedure apply to security for costs on appeal in bankruptcy matters.

The court found that the appellant's original motion was sufficiently analogous to an action to be treated as a discrete proceeding under rule 56.01, entitling the respondent to security for costs.

The applicants sought leave to appeal a discretionary order denying them leave to file a representative claim on behalf of uncertified classes in ongoing CCAA proceedings.

The Court of Appeal found no error in the motion judge's exercise of discretion, noting she properly considered the forum of future class certification, the absence of individual claims, and the prejudice of altering the claims process after the claims bar date.

Leave to appeal was refused.

The appellants sought to amend their statement of defence to allege an improvident sale and de facto foreclosure by the respondent credit union.

The motion judge dismissed the motion on res judicata and abuse of process grounds.

On appeal, the Court of Appeal upheld the dismissal but on different grounds, finding that the claims could not provide a defence or set-off to the respondent's action under section 38 of the Bankruptcy and Insolvency Act, and that any separate counterclaim belonged to the trustee in bankruptcy, not the appellants.

The trustee in bankruptcy appealed an order restricting it from providing the bankrupt estate's inspectors and creditors with access to the bankrupt's documents.

The restriction was initially imposed due to concerns that an inspector, representing a competitor creditor, would use the information for collateral purposes.

The Court of Appeal allowed the appeal, holding that inspectors require access to documents to fulfill their statutory supervisory duties.

The court ruled that the proper remedy for concerns about misuse of information is to restrain the collateral use of the documents or remove the inspector, rather than denying access entirely.