Robin B. Schwill

In ongoing proceedings under the Companies’ Creditors Arrangement Act, the applicants sought approval of an Employee Hardship Application Process and an extension of the stay of proceedings.

The requested hardship process was unopposed and approved.

Certain noteholders sought conditions requiring enhanced reporting and procedural safeguards in relation to the claims process and employee claims.

The court held that the statutory test under s. 11(6) of the CCAA was satisfied because the circumstances warranted the extension and the applicants had acted in good faith and with due diligence.

The stay extension was granted, while proposed procedural changes to the claims process were found more appropriately addressed through a motion to vary existing orders.

In a CCAA proceeding, a former CEO moved for an order compelling the debtor company to continue paying his monthly consulting fees under a 1996 agreement.

The debtor company brought a cross-motion declaring the obligations were pre-filing obligations stayed by the Initial Order, or alternatively, seeking to disclaim the agreement under s. 32 of the CCAA.

The court held that the consulting fees were in substance termination or retirement benefits, constituting unsecured pre-filing obligations that were stayed.

Alternatively, the court found that disclaiming the agreement was advantageous to the restructuring and would not cause significant financial hardship to the former CEO.

In a corporate liquidation proceeding, the inspector moved for declarations approving a second claims bar process and authorizing distribution of funds held by the liquidator.

Several foreign claimants attempted to pursue litigation in a United States court without filing a proof of claim in the liquidation or seeking leave from the Ontario court, despite notice of the claims bar process and an existing stay of proceedings.

The court held that the claimants’ failure to participate in the claims process barred their claims and constituted a breach of the stay of proceedings.

The court approved the second claims bar process, declared the foreign claims extinguished, and authorized distribution of the indemnification fund.

The liquidator was also directed to take no action in response to the foreign proceeding.