Robin B. Schwill

An appeal from a Superior Court decision regarding the provability of a former employee's profit-sharing claim in the bankruptcy of a real estate development company.

The trustee disallowed the claim on the grounds that it was an equity claim and too contingent and remote.

The appeal judge allowed the appeal, finding the profit-sharing claim was a claim for unliquidated damages for breach of contract, not an equity claim, and was therefore provable.

The Court of Appeal dismissed the appeal, upholding the lower court's decision and confirming that the profit-sharing claim is a provable claim that takes priority over the limited partners' equity claims.

The Monitor in the Companies' Creditors Arrangement Act (CCAA) proceedings for Urbancorp Toronto Management Inc. and affiliated entities sought court approval for a settlement agreement and an amendment to the Initial Order.

The settlement resolved a dispute over a $5.9 million consulting fee with Mattamy (Downsview) Limited, resulting in a $2.9 million asset for Urbancorp Toronto Management Inc. (UTMI).

The amendment increased the authorized intercompany loan limit from $1 million to $4.7 million to reflect actual advances to UTMI.

The court approved both the settlement and the amendment, finding them fair, reasonable, and consistent with the CCAA's purpose, but made the approvals conditional upon obtaining corresponding approval from the Israeli Court, given the intertwined nature of the foreign proceeding.

This endorsement addresses an unopposed motion brought by the Applicants in a Companies’ Creditors Arrangement Act (CCAA) proceeding.

The Applicants sought an order extending the stay period until January 31, 2024, approving the Monitor’s 58th Report and its activities, and approving the fees and disbursements of the Monitor, Monitor’s counsel, and Applicants’ counsel.

The court found that the Applicants continued to work in good faith and with due diligence, had sufficient resources for the extension period, and that the requested extension and fee approvals were reasonable.

The motion was granted in its entirety.

The Limited Partners of YG Limited Partnership appealed a motion judge's order denying them standing to oppose a creditor's (CBRE Limited) appeal of a disallowed proof of claim under s. 135(4) of the Bankruptcy and Insolvency Act (BIA).

The Court of Appeal for Ontario dismissed the appeal, holding that limited partners do not possess a direct economic interest in the claim sufficient for common law standing, nor are they granted standing under s. 135(4) or s. 37 of the BIA.

The court emphasized that the BIA is a complete code designed for expeditious resolution of bankruptcy matters, and equity owners are generally excluded from direct participation in creditor claim appeals.

The appellants, Limited Partners of a debtor in a bankruptcy proposal, appealed an order for directions regarding the process for an appeal of a proof of claim.

The Court of Appeal dismissed the appeal as premature, finding that the motion judge had not made any final orders regarding the appellants' standing in the anticipated claim appeal, but rather had made directions "subject to the discretion of the judge hearing the appeal." The court held that the possibility of influence or an incorrect underlying conclusion on discretionary standing was not a basis for appeal.

Mattamy (Downsview) Limited sought to set aside an arbitration award under s. 46 of the Arbitration Act, 1991, arguing the arbitrator exceeded jurisdiction and committed procedural unfairness by refusing to admit relevant evidence.

The court found the arbitrator did not exceed jurisdiction as the "New Issue" fell within the broad scope of the arbitration.

However, the court found procedural unfairness and a failure of natural justice due to the arbitrator's refusal to admit the "REALPAC Handbook" evidence, which was relevant to the "New Issue" he himself raised, especially given the respondents did not object and no formal motion was allowed.

The court emphasized that procedural fairness is an independent right, and its denial invalidates the decision regardless of the likely outcome.

The Proposal Trustee brought a motion to compel the Proposal Sponsor to fund the Trustee's continuing work to resolve outstanding proofs of claim, specifically the Athanasoulis Claim, via a two-phase arbitration.

The Sponsor objected to funding phase 2 of the arbitration, arguing it was an improper delegation of the Trustee's duties under s. 135 of the BIA.

The court agreed with the Sponsor, finding that while phase 1 (fact-finding) was acceptable, phase 2 (final adjudication of damages) improperly delegated the Trustee's statutory responsibility to determine and value the claim.

The Sponsor was not ordered to fund phase 2 of the arbitration but remains obligated to fund the Trustee's reasonable expenses to determine the claim through an alternative process.

This motion arose in a bankruptcy proceeding where the Trustee sought an order compelling a secured claimant to provide information regarding her claim and a direction to keep this information confidential from a foreign representative who had an indirect financial interest in the estate and was involved in collateral litigation against the claimant.

The claimant refused to provide the information without strict confidentiality, while the foreign representative sought to reserve rights to access it later.

The court declined to issue the requested directions, emphasizing that the Trustee should follow the statutory process for claim adjudication and that issues related to collateral litigation should be addressed in those separate proceedings.

The moving party, Foreign Representative of Urbancorp Inc., sought leave to appeal a distribution order from the Supervising Judge in Companies’ Creditors Arrangement Act (CCAA) proceedings.

The order authorized a distribution to King Towns North Inc. (KTNI) related to the sale of "Bridge Geothermal Assets" and the interpretation of a "Transfer Provision" in a lease.

The core issue was whether the Transfer Provision violated the pari passu or anti-deprivation rules, particularly in light of Chandos Construction Ltd. v. Deloitte Restructuring Inc. The Supervising Judge found the provision valid, as it was triggered by a lease transfer, not insolvency, and did not violate the rules.

The Court of Appeal dismissed the motion for leave to appeal, finding no prima facie meritorious issue or error in the Supervising Judge's application of the anti-deprivation rule as clarified in Chandos, and that the appeal would unduly hinder the proceedings.

The Monitor sought an order authorizing distributions from the sale of Geothermal Assets.

KTNI disputed the Monitor's recommended disallowance of its claim to a portion of the proceeds based on a transfer provision in the Berm Lease.

The court found that the plain language of the lease reserved the transfer value to KTNI and that the provision was not invalidated by the pari passu or anti-deprivation rules.

The Monitor was directed to distribute $2,049,000 to KTNI, but no funds were to be distributed to Doreen Saskin until her claim in the bankruptcy of KTNI's parent company was accepted.

This motion sought a stay pending leave to appeal an order authorizing the sale of a 51% interest in Downsview Homes Inc. (DHI) within ongoing CCAA proceedings.

The moving party, the Foreign Representative of Urbancorp Inc., argued the sale process should be postponed until a related arbitration regarding a disputed payment was resolved, fearing a chilling effect on potential bids.

The supervising judge had previously dismissed these concerns as speculative.

The Court of Appeal applied the three-part RJR-MacDonald test for a stay, finding the grounds for appeal weak, no irreparable harm to the moving party, and the balance of convenience favoring the respondents (the Monitor and Mattamy Homes Limited, the debtor-in-possession lender).

Consequently, the motion for a stay was dismissed.

The Applicants brought an unopposed motion in their CCAA proceedings seeking an extension of the Stay Period to August 31, 2021, and authorization for the Monitor to effect the return of trust property to Lien Claimants and Trust Claimants.

The court found the Applicants were acting in good faith and with due diligence, and that the return of trust property did not constitute a distribution or dividend under the Bankruptcy and Insolvency Act.

The court granted the stay extension, authorized the distributions, and approved the Monitor's activities and fees.

The Applicants brought an unopposed motion in their CCAA proceedings to extend the Stay Period to August 31, 2021, assign certain letters of credit to the Israeli Functionary, and approve the Monitor's Forty-Sixth Report along with professional fees.

The court found the Applicants were acting in good faith and with due diligence, and that they had sufficient resources to continue functioning during the proposed stay period.

The motion was granted in its entirety.

The court heard competing applications regarding the insolvent Urbancorp Management Inc. (UMI).

The Monitor sought a Bankruptcy Order, while a secured creditor sought the appointment of a receiver.

The court granted the Bankruptcy Order, appointing the Monitor as trustee, finding that the bankruptcy administration would provide a codified route to assess the secured creditor's non-arm's length claim.

The receivership application was stayed pending the trustee's review of the secured claim.

In the context of CCAA proceedings for the Urbancorp entities, the Monitor brought a motion for an order approving and directing distributions from the sale of geothermal assets.

The court approved two unopposed distributions recommended by the Monitor in its Forty-Fifth Report, specifically regarding VII - Curve and UNKI.

The balance of the requested relief was adjourned to a date to be set.

Crystallex International Corporation and Tenor Special Situation I, LP sought leave to appeal a motion judge's order that partially dismissed Crystallex's request to seal certain financial information in the Monitor's Thirty-Third Report.

The motion judge had applied the Sierra Club test and found the evidence for sealing speculative.

The Court of Appeal refused leave, finding the proposed appeal was not prima facie meritorious and the case was not of significance to the practice, upholding the motion judge's discretionary order.

The Receiver and Monitor sought court approval for the sale of geothermal assets and an order compelling the assignment of a long-term lease (the "Berm Lease") to the purchaser.

King Towns North Inc. (KTNI), the landlord under the Berm Lease, opposed the assignment order, arguing that the Bankruptcy and Insolvency Act (BIA) does not grant receivers statutory authority to compel assignments and that the assignment was inappropriate given the nominal rent and a lease clause allowing unreasonable withholding of consent.

The court found jurisdiction to grant the assignment order under BIA s. 243(1)(c) in conjunction with s. 100 of the Courts of Justice Act, or alternatively, through its inherent jurisdiction, emphasizing a purposive approach to Canadian insolvency laws.

The court concluded that the assignment was appropriate, as it was critical to the transaction, the assignee's financial obligations were nominal, and KTNI's allocation entitlements could be addressed at a later date.

The sale transaction and a sealing order for confidential information were also approved.

The court-appointed Monitor in a CCAA proceeding brought a motion to approve a third amendment to a DIP credit facility to allow the debtor to contribute required equity to a real estate development project.

The Foreign Representative raised concerns about the lender's conduct and lack of information, but the Monitor recommended approval as there were no alternative funding options and the lender agreed to reduce the maximum charge and set a short maturity date.

The court approved the amendment, noting it was necessary to preserve the project and that outstanding issues could be addressed prior to maturity.

The Monitor and Receiver in the CCAA proceedings of Urbancorp Toronto Management Inc. and affiliated entities brought three unopposed motions.

The court granted an extension of the stay period, finding the parties were working in good faith and had sufficient cash flow.

The court also granted a vesting order resolving a dispute over Fuzion Geothermal Room Units and approved a settlement between the Receiver and TS Sports Consulting Inc. regarding advisory fees, finding the settlement fair and commercially reasonable.

Crystallex International Corporation brought a motion for a sealing order to keep confidential certain financial information and strategic details contained in the Monitor's 33rd Report, including cash balance, litigation expenses, sanctions impact, and confidential mediation disputes.

The Ad Hoc Committee of senior noteholders and the Trustee opposed the sealing of financial information, arguing for the importance of disclosure in CCAA proceedings.

The court applied the Sierra Club test, which requires demonstrating a real and substantial risk to an important commercial interest, no reasonable alternative to sealing, and the salutary effects outweighing the deleterious effects on the open-court principle.

The court found Crystallex's evidence, consisting of bald and speculative statements, insufficient to meet this high evidentiary burden, and therefore dismissed the motion for a sealing order.