CITATION: Canrock Ventures LLC v. Ambercore Software Inc., 2011 ONCA 414
DATE: 20110531
DOCKET: C53668
COURT OF APPEAL FOR ONTARIO
Goudge, MacPherson and Karakatsanis JJ.A.
IN THE MATTER OF the receivership of Ambercore Software Inc. and Terrapoint Canada (2008) Inc.
AND IN THE MATTER OF the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, s. 243(1), as amended
BETWEEN
Canrock Ventures LLC
Applicant(Respondent)
and
Ambercore Software Inc. and Terrapoint Canada (2008) Inc.
Respondents(Respondents)
Fred E. Seller and Marcia A.Green, for Quorum Oil and Gas Technology Fund Limited, appellant
J. Brian Casey and Frank Spizzirri, for Shimmerman Penn Title & Associates Inc., receiver of the respondents
E. Patrick Shea and Calvin J. Ho, for Canrock Ventures LLC
Andrea Rush and Renée Brosseau, for GeoDigital International Inc.
Heard and released orally: May 20, 2011
On appeal from the judgment of Justice David M. Brown of the Superior Court of Justice dated April 13, 2011, with reasons reported at 2011 ONSC 2308.
ENDORSEMENT
[1] The appellant, the third ranked secured creditor of the respondents, appeals the order of Brown J. dated April 13, 2011, granting the motion of the respondents’ court appointed receiver for approval of a proposed purchase agreement and technology license agreement and approving the reports, activities, conduct and decisions of the receiver.
[2] On February 18, 2011, Newbould J. rejected the receiver’s proposal to sell en block the assets of Ambercore, and its wholly owned subsidiary, Terrapoint. The appellant says that nothing has changed between that date and the order appealed from. We do not agree. We see the proposal that was approved by Justice Brown as being different from the proposal before Justice Newbould. The new proposal is different in several respects. For example, the receiver retains Terrapoint’s accounts receivable, cash, and work in progress; Ambercore retains ownership of its intellectual property; and time has passed, so much so that the time to conduct a new sales process would preclude sale of Terrapoint as a going concern.
[3] The motion judge considered the receiver’s conduct and the reasons for not engaging in a further sales process (but rather pursuing the sale of Terrapoint on its own), the submissions of other creditors and the sale price in light of the valuation of the most significant asset. He considered the expert evidence led by the appellant and the receiver’s report outlining the change in circumstances from February 2011. He concluded as follows at paras. 33, 34 and 41:
I am satisfied that since the release of the Reasons of Newbould J., the Receiver has used sufficient efforts, appropriate in the circumstances, to pursue the sale of the assets. Some degree of urgency surrounded the need to secure the sale of Terrapoint while still a going concern, so the Receiver’s decision to pursue the sale of Terrapoint on its own was reasonable. Further, it is apparent that the Receiver has tried to take into account the interests of all parties, giving due recognition to the overall amount of liabilities attaching to both companies and the priorities amongst the secured creditors, and it has attempted to consult with the secured parties to ensure a fair sales process.
As to the proposed transaction, I am satisfied that the price in the Purchase Agreement, together with the allocation of the purchase price, when measured against the valuations obtained by the Receiver, is reasonable in the circumstances.
Balancing all these factors, I conclude that the Receiver has acted prudently and reasonably in its efforts to secure the sale of some of the assets since the release of the decision of Newbould J. and that the sale process, and the resulting proposed Purchase Agreement and associated Technology License Agreement, satisfy the principles set out in the Soundair decision. Accordingly, I approve the proposed sale.
[4] The motion judge appropriately applied the analysis in Royal Bank v. Soundair in approving the sale agreement and technology license agreement. He explained why the proposed transaction was reasonable in the new circumstances, including why the earlier concerns were either addressed by the receiver’s subsequent actions or outweighed by the changed facts at the time of the motion before him. Given the deference that must be given to his decision, we see neither an error in principle nor any reason to interfere with his exercise of discretion.
[5] The appeal is dismissed. Costs of $20,000 to be paid by the appellant to the receiver inclusive of disbursements and applicable taxes.
“S.T. Goudge J.A.”
“J.C. MacPherson J.A.”
“Karakatsanis J.A.”