Ontario Securities Commission v. Bridging Finance Inc., 2025 ONSC 539
Court File No.: CV-21-661458-00CL
Date: 2025-01-27
Court: Superior Court of Justice - Ontario
Parties
Applicant:
Ontario Securities Commission
Respondents:
Bridging Finance Inc., Bridging Income Fund LP, Bridging Mid-Market Debt Fund LP, SB Fund GP Inc., Bridging Finance GP Inc., Bridging Income RSP Fund, Bridging Mid-Market Debt RSP Fund, Bridging Private Debt Institutional LP, Bridging Real Estate Lending Fund LP, Bridging SMA 1 LP, Bridging Infrastructure Fund LP, Bridging MJ GP Inc., Bridging Indigenous Impact Fund, Bridging Fern Alternative Credit Fund, Bridging SMA 2 LP, Bridging SMA 2 GP Inc., and Bridging Private Debt Institutional RSP Fund
Counsel
- Adam Driedger, for the Receiver PricewaterhouseCoopers Inc.
- David Ullmann, for Thomas Canning Limited
- Robert Staley, Unitholder Representative Counsel
Judge
Geoffrey B. Morawetz
Date Heard
2025-01-27
Endorsement
Introduction
The Receiver brings this motion seeking an Approval and Vesting Order (the “AVO”):
(a) authorizing and directing the Receiver to enter into the Loan Purchase Agreement between the Receiver, as seller, and 2190330 Ontario Ltd. or a nominee to be named, as Purchaser (the “Purchaser”), dated January 7, 2025 (the “LPA”) and to take such steps as are necessary to carry out the transaction contemplated thereunder (the “Canning Transaction”);
(b) vesting all the right, title and interest of Bridging Finance Inc., as agent on behalf of Bridging Income Fund LP (the “Bridging Lender”) in the Assigned Rights (as defined below) in and to the Purchaser on closing;
(c) sealing from the public record until closing of the Canning Transaction the unredacted copy of the LPA; and
(d) approving the Twenty-Fifth Report, and the activities of the Receiver as set out therein.
Unitholder Representative Counsel supported the motion.
Background
The Canning Transaction forms part of a broader settlement between the Receiver and the Canning Claimants (the “Canning Settlement”) which includes the dismissal of an approximately $50 million claim asserted by the Canning Claimants in the Receivership proceeding.
The Canning Transaction is a sale by the Receiver to the Canning Claimants of two charges (the “Maidstone Charges”) held by the Bridging Lender against the Maidstone Property and the corresponding indebtedness owing to the Bridging Lender by 2581150 Ontario Inc. (“258 Ontario”) under the Maidstone Charges (the “Assigned Indebtedness”, and together with the Maidstone Charges, the “Assigned Rights”). The sale price represents a discount relative to what the Receiver considers to be the fair market value of the Assigned Rights. The amount of the discount is equal to a settlement payment for the Receiver to the Canning Claimants.
Each of the Canning Claimants submitted a proof of claim against each of the Respondents claiming, among other things, $50 million in damages (collectively, the “Canning Claim”).
The Canning Claim relates to the Bridging Lender’s prior involvement in providing secured financing to certain Canning Claimants, and providing indirect secured financing to 258 Ontario to fund 258 Ontario’s acquisition of the Canning Business and the Maidstone Property from the Canning Receiver in 2017.
The Receiver disallowed the Canning Claim in its entirety which disallowance was upheld by Order of the Claims Officer. The Canning Claimants then appealed the decision of the Claims Officer.
Settlement discussions then ensued as between the Receiver and the Canning Claimants which ultimately resulted in this proposed settlement.
The Settlement
The Canning Settlement contemplates the dismissal of the Canning Claim on a with prejudice basis. As part of the Canning Settlement, the Canning Claimants shall choose one of the following mutually exclusive settlement payment options by March 28, 2025, in full and final satisfaction of the Canning Claim:
(a) the payment of a fixed amount in cash by the Receiver to the Canning Claimants (the “Cash Option”); or
(b) the purchase by the Canning Claimants of the Maidstone Charges and the Assigned Indebtedness from the Receiver for a fixed amount in cash (the “Loan Purchase Option”).
The Receiver anticipates that the Canning Claimants will elect to choose the Loan Purchase Option.
The LPA has been redacted to preserve the confidentiality of the Purchase Price and other monetary amounts or percentages that reveal the economic terms of the LPA. The unredacted LPA has been filed, together with a request for a limited sealing order until Closing.
Issue
The issue on the motion is whether the relief sought pursuant to the proposed AVO should be granted.
Legal Principles
In determining whether to approve a settlement in the context of a receivership or insolvency proceedings, courts generally consider the following factors:
(a) whether the settlement is fair and reasonable;
(b) whether the settlement provides substantial benefits to other stakeholders; and
(c) whether the settlement is consistent with the purpose and spirit of the relevant legislation.
(See: Maple Bank GmbH (Re), 2016 ONSC 7218 at para 8.)
In receivership proceedings, courts frame the test for settlement approval with reference to the principles set out in Royal Bank of Canada v. Soundair Corp. (collectively, the “Soundair Principles”):
(a) whether the party made a sufficient effort to obtain the best price and has not acted improvidently;
(b) the interests of all parties;
(c) the efficacy and integrity of the process by which the party obtained offers; and
(d) whether the working out of the process was unfair.
Application of Principles
The Receiver submits that the factors from Maple Bank and the Soundair Principles have been satisfied for the following reasons:
(a) the Canning Transaction is fair and reasonable;
(b) the Canning Transaction benefits all stakeholders;
(c) the Canning Transaction is consistent with the Securities Act;
(d) sufficient effort was made to obtain the best price; and
(e) the process was carried out with integrity and no unfairness.
The Receiver takes the position that the Canning Settlement and Canning Transaction eliminate the costs and risks associated with the Canning Appeal and will result in material and immediate recoveries for the Bridging Lender.
I accept the submissions of the Receiver.
Sealing Order
The Receiver also seeks a sealing order in respect of Confidential Appendix “A” to the Twenty-Fifth Report. Confidential Appendix “A” contains the unredacted LPA which redacts the purchase price and other applicable monetary amounts that reveal the economic terms of the Canning Transaction (the “Economic Terms”). The Receiver only seeks to seal the Economic Terms until Closing.
The applicable legal test for granting a sealing order as set out in Sherman Estate v. Donovan, 2021 SCC 25 at para 38 is that the person requesting the court to exercise discretion in a way that limits the open court presumption must establish that:
(a) court openness poses a serious risk to an important public interest;
(b) the order sought is necessary to prevent this serious risk to the identified interest because reasonably alternative measures will not prevent this risk; and
(c) as a matter of proportionality, the benefits of the order outweigh its negative effects.
The Receiver submits that the request for sealing order satisfies the Sherman Estate test. The Receiver submits that disclosure of the Economic Terms would prejudice recovery for Bridging stakeholders in the event that the Canning Transaction does not close because the disclosure of such terms would effectively create a “price ceiling” on the amount that a new Purchaser would be prepared to pay for the Assigned Rights.
I agree.
I am satisfied that the Receiver has satisfied the Sherman Estate test and that it is appropriate in the circumstances to grant the limited sealing order.
Conclusion
The motion is granted and the order has been signed.
**Geoffrey B.```yaml
citation: "Ontario Securities Commission v. Bridging Finance Inc., 2025 ONSC 539" parties: "Ontario Securities Commission v. Bridging Finance Inc., Bridging Income Fund LP, Bridging Mid-Market Debt Fund LP, SB Fund GP Inc., Bridging Finance GP Inc., Bridging Income RSP Fund, Bridging Mid-Market Debt RSP Fund, Bridging Private Debt Institutional LP, Bridging Real Estate Lending Fund LP, Bridging SMA 1 LP, Bridging Infrastructure Fund LP, Bridging MJ GP Inc., Bridging Indigenous Impact Fund, Bridging Fern Alternative Credit Fund, Bridging SMA 2 LP, Bridging SMA 2 GP Inc., Bridging Private Debt Institutional RSP Fund" party_moving: "Ontario Securities Commission" party_responding: "Bridging Finance Inc., Bridging Income Fund LP, Bridging Mid-Market Debt Fund LP, SB Fund GP Inc., Bridging Finance GP Inc., Bridging Income RSP Fund, Bridging Mid-Market Debt RSP Fund, Bridging Private Debt Institutional LP, Bridging Real Estate Lending Fund LP, Bridging SMA 1 LP, Bridging Infrastructure Fund LP, Bridging MJ GP Inc., Bridging Indigenous Impact Fund, Bridging Fern Alternative Credit Fund, Bridging SMA 2 LP, Bridging SMA 2 GP Inc., Bridging Private Debt Institutional RSP Fund" court: "Superior Court of Justice" court_abbreviation: "ONSC" jurisdiction: "Ontario" case_type: "motion" date_judgement: "2025-01-27" date_heard: "2025-01-27" applicant:
- "Ontario Securities Commission" applicant_counsel:
- "Adam Driedger (for the Receiver PricewaterhouseCoopers Inc.)"
- "Robert Staley (Unitholder Representative Counsel)" respondent:
- "Bridging Finance Inc."
- "Bridging Income Fund LP"
- "Bridging Mid-Market Debt Fund LP"
- "SB Fund GP Inc."
- "Bridging Finance GP Inc."
- "Bridging Income RSP Fund"
- "Bridging Mid-Market Debt RSP Fund"
- "Bridging Private Debt Institutional LP"
- "Bridging Real Estate Lending Fund LP"
- "Bridging SMA 1 LP"
- "Bridging Infrastructure Fund LP"
- "Bridging MJ GP Inc."
- "Bridging Indigenous Impact Fund"
- "Bridging Fern Alternative Credit Fund"
- "Bridging SMA 2 LP"
- "Bridging SMA 2 GP Inc."
- "Bridging Private Debt Institutional RSP Fund" respondent_counsel:
- "David Ullmann (for Thomas Canning Limited)"
judge: "Geoffrey B. Morawetz"
year: 2025
decision_number: 539
file_number: "CV-21-661458-00CL"
source: "https://www.canlii.org/en/on/onsc/doc/2025/2025onsc539/2025onsc539.html"
cited_cases:
legislation:
- title: "Securities Act, RSO 1990, c S.5" url: "https://www.ontario.ca/laws/statute/90s05" case_law:
- title: "Maple Bank GmbH (Re), 2016 ONSC 7218, para 8" url: "https://www.canlii.org/en/on/onsc/doc/2016/2016onsc7218/2016onsc7218.html#par8"
- title: "Royal Bank of Canada v. Soundair Corp." url: "https://www.canlii.org/en/on/onca/doc/1991/1991canlii2727/1991canlii2727.html"
- title: "Sherman Estate v. Donovan, 2021 SCC 25, para 38" url: "https://www.canlii.org/en/ca/scc/doc/2021/2021scc25/2021scc25.html#par38" summary: > The Receiver sought and obtained an Approval and Vesting Order (AVO) in connection with a settlement involving the sale of certain secured interests (the Maidstone Charges) and related indebtedness to the Canning Claimants. The settlement resolved a $50 million claim in the receivership proceedings. The court found the transaction fair, reasonable, and beneficial to stakeholders, and granted a limited sealing order over confidential economic terms of the transaction until closing, applying the test from Sherman Estate v. Donovan. interesting_citations_summary: > The decision applies the Soundair Principles and the Maple Bank factors for settlement approval in receivership, and provides a clear application of the Sherman Estate test for sealing orders, balancing openness with commercial sensitivity. keywords:
- Approval and Vesting Order
- Receivership
- Settlement approval
- Maidstone Charges
- Canning Claim
- Sealing order
- Soundair Principles
- Sherman Estate test
- Bridging Finance Inc.
- Ontario Securities Commission areas_of_law:
- Insolvency Law
- Civil Procedure
Ontario Securities Commission v. Bridging Finance Inc., 2025 ONSC 539
Court File No.: CV-21-661458-00CL
Date: 2025-01-27
Court: Superior Court of Justice - Ontario
Parties
Applicant:
Ontario Securities Commission
Respondents:
Bridging Finance Inc., Bridging Income Fund LP, Bridging Mid-Market Debt Fund LP, SB Fund GP Inc., Bridging Finance GP Inc., Bridging Income RSP Fund, Bridging Mid-Market Debt RSP Fund, Bridging Private Debt Institutional LP, Bridging Real Estate Lending Fund LP, Bridging SMA 1 LP, Bridging Infrastructure Fund LP, Bridging MJ GP Inc., Bridging Indigenous Impact Fund, Bridging Fern Alternative Credit Fund, Bridging SMA 2 LP, Bridging SMA 2 GP Inc., and Bridging Private Debt Institutional RSP Fund
Counsel
- Adam Driedger, for the Receiver PricewaterhouseCoopers Inc.
- David Ullmann, for Thomas Canning Limited
- Robert Staley, Unitholder Representative Counsel
Judge
Geoffrey B. Morawetz
Date Heard
2025-01-27
Endorsement
Introduction
The Receiver brings this motion seeking an Approval and Vesting Order (the “AVO”):
(a) authorizing and directing the Receiver to enter into the Loan Purchase Agreement between the Receiver, as seller, and 2190330 Ontario Ltd. or a nominee to be named, as Purchaser (the “Purchaser”), dated January 7, 2025 (the “LPA”) and to take such steps as are necessary to carry out the transaction contemplated thereunder (the “Canning Transaction”);
(b) vesting all the right, title and interest of Bridging Finance Inc., as agent on behalf of Bridging Income Fund LP (the “Bridging Lender”) in the Assigned Rights (as defined below) in and to the Purchaser on closing;
(c) sealing from the public record until closing of the Canning Transaction the unredacted copy of the LPA; and
(d) approving the Twenty-Fifth Report, and the activities of the Receiver as set out therein.
Unitholder Representative Counsel supported the motion.
Background
The Canning Transaction forms part of a broader settlement between the Receiver and the Canning Claimants (the “Canning Settlement”) which includes the dismissal of an approximately $50 million claim asserted by the Canning Claimants in the Receivership proceeding.
The Canning Transaction is a sale by the Receiver to the Canning Claimants of two charges (the “Maidstone Charges”) held by the Bridging Lender against the Maidstone Property and the corresponding indebtedness owing to the Bridging Lender by 2581150 Ontario Inc. (“258 Ontario”) under the Maidstone Charges (the “Assigned Indebtedness”, and together with the Maidstone Charges, the “Assigned Rights”). The sale price represents a discount relative to what the Receiver considers to be the fair market value of the Assigned Rights. The amount of the discount is equal to a settlement payment for the Receiver to the Canning Claimants.
Each of the Canning Claimants submitted a proof of claim against each of the Respondents claiming, among other things, $50 million in damages (collectively, the “Canning Claim”).
The Canning Claim relates to the Bridging Lender’s prior involvement in providing secured financing to certain Canning Claimants, and providing indirect secured financing to 258 Ontario to fund 258 Ontario’s acquisition of the Canning Business and the Maidstone Property from the Canning Receiver in 2017.
The Receiver disallowed the Canning Claim in its entirety which disallowance was upheld by Order of the Claims Officer. The Canning Claimants then appealed the decision of the Claims Officer.
Settlement discussions then ensued as between the Receiver and the Canning Claimants which ultimately resulted in this proposed settlement.
The Settlement
The Canning Settlement contemplates the dismissal of the Canning Claim on a with prejudice basis. As part of the Canning Settlement, the Canning Claimants shall choose one of the following mutually exclusive settlement payment options by March 28, 2025, in full and final satisfaction of the Canning Claim:
(a) the payment of a fixed amount in cash by the Receiver to the Canning Claimants (the “Cash Option”); or
(b) the purchase by the Canning Claimants of the Maidstone Charges and the Assigned Indebtedness from the Receiver for a fixed amount in cash (the “Loan Purchase Option”).
The Receiver anticipates that the Canning Claimants will elect to choose the Loan Purchase Option.
The LPA has been redacted to preserve the confidentiality of the Purchase Price and other monetary amounts or percentages that reveal the economic terms of the LPA. The unredacted LPA has been filed, together with a request for a limited sealing order until Closing.
Issue
The issue on the motion is whether the relief sought pursuant to the proposed AVO should be granted.
Legal Principles
In determining whether to approve a settlement in the context of a receivership or insolvency proceedings, courts generally consider the following factors:
(a) whether the settlement is fair and reasonable;
(b) whether the settlement provides substantial benefits to other stakeholders; and
(c) whether the settlement is consistent with the purpose and spirit of the relevant legislation.
(See: Maple Bank GmbH (Re), 2016 ONSC 7218 at para 8.)
In receivership proceedings, courts frame the test for settlement approval with reference to the principles set out in Royal Bank of Canada v. Soundair Corp. (collectively, the “Soundair Principles”):
(a) whether the party made a sufficient effort to obtain the best price and has not acted improvidently;
(b) the interests of all parties;
(c) the efficacy and integrity of the process by which the party obtained offers; and
(d) whether the working out of the process was unfair.
Application of Principles
The Receiver submits that the factors from Maple Bank and the Soundair Principles have been satisfied for the following reasons:
(a) the Canning Transaction is fair and reasonable;
(b) the Canning Transaction benefits all stakeholders;
(c) the Canning Transaction is consistent with the Securities Act;
(d) sufficient effort was made to obtain the best price; and
(e) the process was carried out with integrity and no unfairness.
The Receiver takes the position that the Canning Settlement and Canning Transaction eliminate the costs and risks associated with the Canning Appeal and will result in material and immediate recoveries for the Bridging Lender.
I accept the submissions of the Receiver.
Sealing Order
The Receiver also seeks a sealing order in respect of Confidential Appendix “A” to the Twenty-Fifth Report. Confidential Appendix “A” contains the unredacted LPA which redacts the purchase price and other applicable monetary amounts that reveal the economic terms of the Canning Transaction (the “Economic Terms”). The Receiver only seeks to seal the Economic Terms until Closing.
The applicable legal test for granting a sealing order as set out in Sherman Estate v. Donovan, 2021 SCC 25 at para 38 is that the person requesting the court to exercise discretion in a way that limits the open court presumption must establish that:
(a) court openness poses a serious risk to an important public interest;
(b) the order sought is necessary to prevent this serious risk to the identified interest because reasonably alternative measures will not prevent this risk; and
(c) as a matter of proportionality, the benefits of the order outweigh its negative effects.
The Receiver submits that the request for sealing order satisfies the Sherman Estate test. The Receiver submits that disclosure of the Economic Terms would prejudice recovery for Bridging stakeholders in the event that the Canning Transaction does not close because the disclosure of such terms would effectively create a “price ceiling” on the amount that a new Purchaser would be prepared to pay for the Assigned Rights.
I agree.
I am satisfied that the Receiver has satisfied the Sherman Estate test and that it is appropriate in the circumstances to grant the limited sealing order.
Conclusion
The motion is granted and the order has been signed.
Geoffrey B. Morawetz
Date: January 27, 2025