Court of Appeal for Ontario

Citation: IceGen Inc. (Re), 2016 ONCA 902 Date: 2016-11-28 Docket: M46307 (C61444)

Before: Gillese J.A. (In Chambers)

In the Matter of the Bankruptcy of IceGen Inc. of the City of Markham, in the Province of Ontario

and

In the Matter of the Bankruptcy of 1807983 Ontario Limited of the City of Markham, in the Province of Ontario

Counsel: George Benchetrit, for the moving party KSV Kofman Inc., in its capacity as Trustee in the Consolidated Bankruptcy of IceGen Inc. and 1807983 Ontario Limited Catherine Francis, for the responding party Dr. Lionel Gerber Tony Reyes, for the responding party Rushlade Investments Limited

Heard: April 11, 2016

Endorsement

[1] The trustee in the consolidated bankruptcy Estate of IceGen Inc. and 1807983 Ontario Limited (the “Trustee”) moves for an order requiring Dr. Lionel Gerber to obtain leave to appeal the order of Penny J. dated December 2, 2015, pursuant to s. 193(e) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (the “BIA”). Dr. Gerber opposes the motion on the basis that leave is not required pursuant to s. 193(c) of the BIA which provides there is a right to appeal “if the property involved in the appeal exceeds in value ten thousand dollars.”

[2] In my view, this court’s recent decision in 2403177 Ontario Inc. v. Bending Lake Iron Group Limited, 2016 ONCA 225, 35 C.B.R. (6th) 102, is a full answer to Dr. Gerber’s objections to the motion.

[3] In Bending Lake, at para. 53, Justice Brown states that s. 193(c) does not apply to (i) orders that are procedural in nature, (ii) orders that do not bring into play the value of the debtor’s property, or (iii) orders that do not result in a loss. The Penny Order approved the auction process recommended by the Trustee. Dr. Gerber’s complaints relate to the process leading to the Penny Order and to the auction process. The Penny Order is procedural in nature.

[4] In Bending Lake, Justice Brown found that the order approving the sale of the debtor’s assets and vesting title in the purchaser marked the final step in the receiver’s monetization of the debtor’s assets and so did not bring into play the value of the debtor’s property. The Penny Order contains the same wording as that considered by Justice Brown in Bending Lake. Therefore, the Penny Order did not “put into play” the value of the debtor’s property.

[5] For the same reason, the Penny Order did not result in a gain or loss. The wording of the Penny Order is identical to that in Bending Lake for the purpose of this analysis. It did not determine the entitlement of any party with an economic interest in the debtor to the sale proceeds.

[6] A major plank in Dr. Gerber’s submissions relates to the question of the return of his deposit in the first auction. Counsel for Dr. Gerber contends that the Penny Order has the effect of barring the return of that deposit. (The deposit was for almost $500,000.)

[7] I do not accept this submission. There is nothing in the Penny Order to that effect. Furthermore, the reasons given by Justice Penny for the order do not say that. The reasons, at p. 5, identify two main issues, the first of which is whether “additional” deposits would have to be tendered. Read in context, it is clear that Penny J. was considering whether a new deposit would be required as a condition of bidding. Indeed, shortly below that on p. 5 of the reasons, Penny J. states:

Both parties paid deposits previously. Without in any way prejudicing the outcome, both parties arguably defaulted on their obligations during the first auction.

[8] The Trustee submits that in these two sentences, Penny J. was expressly recognizing that the issue of entitlement to the return of the first deposits was a matter to be determined, but not on the motion or by the court at that time.

[9] I agree. Indeed, para. 82 of the Responding Party’s factum essentially concedes this point, as it says that unless the Penny Order is reversed, Dr. Gerber will be unable to obtain the return of his deposit without “lengthy and messy litigation with the Estate.”

[10] Accordingly, I have concluded that the Penny Order does not fall within s. 193(c) of the BIA and Dr. Gerber requires leave to appeal the Penny Order. Dr. Gerber has asked that leave be sought from the panel scheduled to hear the appeal on June 9, 2016. Given that the appeal is scheduled to be heard in less than two months and as the materials necessary to argue the leave motion will duplicate much that has already been done by Dr. Gerber in preparation for the appeal and that must be done by the Trustee in responding on the leave motion, I accept Dr. Gerber’s submission. Dr. Gerber may seek leave to appeal from the panel on June 9, 2016. If the panel sees fit to grant leave to appeal, the appeal shall also be heard that day.

[11] The parties should consider the time they have been allotted on June 9. If the time appears insufficient to argue both the leave motion and the appeal, they should contact Court of Appeal staff to seek additional time.

[12] Costs of the motion are reserved to the panel hearing the leave motion.

“E.E. Gillese J.A.”