DATE: 20020410 DOCKET: M28397 (C37881)
COURT OF APPEAL FOR ONTARIO
FINLAYSON J.A. (in chambers)
IN THE MATTER OF THE BANKRUPTCY AND INSOLVENCY ACT, R.S.C. 1985, c. B-3, SECTION 47.1, AS AMENDED
AND IN THE MATTER OF BATTERY PLUS INC. and 127273 ONTARIO INC.
Harvey G. Chaiton and George Benchetrit, for Deloitte & Touche Inc., in its capacity as court-appointed interim receiver of Battery Plus Inc. and 1271273 Ontario Inc.
Melvyn Solman and Stuart Chelin, for Battery Plus Inc. and 1271273 Ontario Inc. and Antoine Chaine Badr
Aubrey E. Kauffman and Stuart Brotman, for the Laurentian Bank of Canada
Peter-Paul E. DuVernet, for 2008612 Ontario Limited
Heard: April 8, 2002
FINLAYSON J.A.:
- [1] This is a motion by Deloitte & Touche Inc. (“D&T”) in its capacity as court appointed interim receiver of Battery Plus Inc. (“BPI”) and 1271273 Ontario Inc. (“127”) (collectively, the “Companies”), for:
(a) an order lifting the stay pending appeal, if any, of the order of the Honourable Mr. Justice Spence dated February 26, 2002 approving the sale of the Companies’ assets and ordering certain ancillary relief; and
(b) an order, if necessary, authorizing and directing D&T to complete the sale of the Companies’ assets notwithstanding any appeals which may be taken from the order of Spence J. dated March 22, 2002 authorizing the assignment of the purchase agreement (as defined herein) to Intertan Canada Ltd. (“Intertan”) and granting a vesting order in favour of Intertan.
[2] D&T was appointed as interim receiver pursuant to the order of the Honourable Mr. Justice O’Driscoll dated November 15, 2001 (the “Receivership Order”). The Receivership Order was made upon motion by Laurentian Bank of Canada (the “Bank”) pursuant to s. 47(1) of the Bankruptcy and Insolvency Act (“BIA”).
[3] Following its appointment as interim receiver, D&T continued to manage the business of the Companies and quickly implemented a strategy to sell the assets of the Companies en bloc to maximise realization for the benefit of stakeholders. The sale process culminated with the execution of an Asset Purchase Agreement between D&T and LEAP Energy and Power Corporation, subject to court approval. It was this approval that was sought and obtained from Spence J. Antoine Chahine Badr, the principal of BPI and 127, the principal shareholder, appeal the decision of Spence J. and maintain that by reason of the appeal there is an automatic stay of the judgment.
[4] Counsel for the moving party, D&T and counsel for the Bank argued persuasively that the order in appeal was interlocutory and that leave was required to appeal the judgment of Spence J. approving the sale of assets by an interim receiver. They referred to Re: Dominion Foundry Co. (1965), 1965 596 (MB CA), 52 D.L.R. (2d) 79 (Man. C.A.) and Alternative Fuel Systems Inc. v. Edo (Canada) Ltd. (Trustee of) (1977), 1997 ABCA 273, 48 C.B.R. (3d) 171 (Alta. C.A.). As a single judge of this court I do not think it appropriate to respond directly to this argument but I am persuaded that whatever its consequences to a right of appeal, the judgment of Spence J. is a matter of procedure and there is considerable doubt in my mind that it can be the subject of an automatic stay. I should add that I do not believe that the fact that the above cited cases involved sales of assets by trustees as opposed to interim receivers is of any consequence: see Re Israel (Ike) Katz (1991), 6 C.B.R. (3d) 211 (O.C.J. (Gen. Div.) [In Bankruptcy]).
[5] Looking at the judgment itself, it is apparent that Spence J. spent six full days hearing the matter and in full and complete reasons responded to all the issues raised by those interested in the sale. He cited as his guideline the decision of this court in Royal Bank of Canada v. Soundair Corporation (1991), 1991 2727 (ON CA), 4 O.R. (3d) 1. No objection was taken to this approach. Rather those opposed to the sale took various exceptions to some of the actions and non-actions of D&T in the process of advertising and conducting the sale. These are repeated as grounds of appeal but it is obvious that even if they are accepted as valid they could only result in sending the matter back with instructions to D&T to enter into another sale, a consequence that invites no favourable comment.
[6] It is relevant to a consideration of the merits of the appeal that Spence J. held that no one suggested that there was any alternative to a sale, although arguments to the contrary were advanced before me. Looking at this matter as an interim receiver realizing on the assets of a bankrupt for the benefit of its creditors, there is very little likelihood of the Court of Appeal interfering with the judgment of Spence J. This is particularly the case here when one looks at some of the language of Spence J. at paragraph [19]:
It is not disputed that the circumstances of the Companies are such that a sale of the business is the appropriate way to address the interests of the parties. The alternatives to the sale now proposed are said to include the holding of a new sale conducted differently from the present one, or a judicial sale, but there is no proposal that would obviate the need for a sale of some kind. Accordingly, it is appropriate to address the sale now proposed in terms of the tests set out in the Soundair decision, as stated above.
[7] I have come to the conclusion that the responding parties are simply repeating before me the same arguments (supplemented to some extent by fresh evidence) that were rejected by Spence J. There is no basis for sustaining the stay even if in law there is one. While I am reluctant to say that the appeal is frivolous, it is certainly of questionable merit and highly unlikely to succeed. On the other hand the prejudice caused by delay in completing the sale is manifest. This is the sale of a business as a going concern and delay can only jeopardise the prospect of completing the transaction.
[8] Accordingly, the motion is allowed, the stay of the judgment of Spence J. is lifted and the moving party D&T is authorised to complete the sale of the Companies’ assets.
[9] I invite written submissions on the subject of costs.
Released: APR 10 2002
Signed: “G.D. Finlayson J.A.”