IN THE MATTER OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED

AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF PSINET LIMITED, PSINETWORKS CANADA LIMITED, PSINET REALTY CANADA LIMITED and TORONTO HOSTING CENTRE LIMITED

DOCKET: C37687

February 19, 2002

We would grant leave to appeal to the appellants in this court, but we would dismiss their appeals.

The crucial question in the exercise of Farley J’s discretion was whether Cisco suffered prejudice. Apart from any CCAA considerations, Cisco was not prejudiced, because Inc. was entitled to re-register under s. 30(6) of the PPSA and because, in our view, Cisco did not “[acquire] rights in all or part of the collateral” during the lapse period under the agreement referred to in Farley J.’s order of September 26, 2001. Within the context of the ongoing CCAA proceedings, on the state of the evidence before him, Farley J. was entitled to conclude, as he did, that Cisco had not established any prejudice as a result of the late discovery of Inc.’s security interest and the nature and extent of its secured position. His reasons indicate that he was aware of, and considered, all of the competing interests on Inc.’s request to lift the stay against registration, and we see no error in principle in his having reached the conclusion he did.

The appeals are dismissed. Inc. is entitled to its costs against Cisco, which we fix in the sum of $15,000, inclusive of G.S.T. We make no order for costs for or against any of the other parties.

M.A. Catzman J.A.

J.-M. Labrosse J.A.

D.H. Doherty J.A.