Robin B. Schwill

In a CCAA proceeding, the Functionary and Terra Firma brought a motion to late file a claim and to approve a settlement agreement between them regarding the distribution of the debtor's funds.

The court allowed the late filing of the claim but ruled the Functionary's unsworn report inadmissible.

The court dismissed the motion to approve the settlement, finding that a settlement of claims against the debtor requires the consent of the debtor or the Monitor, neither of which had agreed to the settlement.

The Monitor in a CCAA proceeding brought a motion to disallow a $2.3 million secured claim filed by a creditor.

The Monitor argued the secured guarantee given by the insolvent debtor was a transfer at undervalue under s. 96 of the BIA or a fraudulent conveyance.

The court dismissed the motion, finding that the debtor and creditor were operating at arm's length and that the Monitor failed to prove the debtor granted the guarantee with the intent to defraud, defeat, or delay creditors.

In the context of Target Canada's CCAA proceedings, the Monitor sought advice and directions on whether to accept amended claims filed by Bell Canada and Bell Nexxia.

Bell sought to increase its original claims by approximately $4.1 million due to inadvertent calculation errors discovered after the claims bar date and after the original claims were admitted.

Target Corporation opposed the amendment.

Applying the Blue Range test, the court found that Bell acted in good faith, the errors were inadvertent, and admitting the amended claims would not cause relative prejudice to other creditors.

The court directed the Monitor to accept the amended claims for review, with Bell to bear the reasonable costs incurred by the Monitor and Target Canada due to the error.

The Foreign Representative of Urbancorp Inc. (UCI) moved to set aside the Monitor's disallowance of UCI's $6 million promissory note claim against Bay LP and sought a declaration confirming the validity of a companion $2 million note.

The notes were issued in connection with management fees and replaced an earlier $8 million note.

The court found that the notes were not independent obligations but were issued for tax purposes, and the underlying management fees had been paid through intercompany accounting entries.

The court rejected the argument that UCI was a holder in due course, noting that the notes were not intended to be binding and the assignees (UCI and Realtyco), controlled by the same individual, had actual notice of the intercompany affairs and payment status.

The motions were dismissed.

The Monitor of Target Canada Co. and its affiliates, undergoing CCAA proceedings, sought advice and directions from the court regarding the treatment of several late-filed claims.

The court applied the four-part test from *Blue Range Resource Corp. Re*, considering inadvertence, good faith, and prejudice to other creditors.

The court found that five claimants (Fruits & Passion, Lou Pharma, Kulwinder Kaur Rai, Capital Brands Inc., and Mohammad Alam) satisfied the test, allowing their claims against Target Canada Co. However, claims against Target Corporation and Target Brands were barred due to the prejudice caused by disturbing the sanctioned plan and releases, which Target Corporation relied upon for its significant contributions.

The court also provided directions on distributions for allowed late claims and a framework for addressing future unknown late claims, emphasizing the finality of the sanctioned plan.

A motion was brought by 40 purchasers of residential units from various Urbancorp entities in CCAA and BIA NOI proceedings.

The purchasers sought the appointment of Dickinson Wright LLP as their representative counsel and an order for their legal fees, capped at $150,000, to be paid and secured by an administrative charge against the four properties.

The properties were vacant land, and the significant deposits received by Urbancorp companies were not held in trust and had been spent.

The motion was supported by Tarion but opposed by the Monitor, the Foreign Representative of Urbancorp Inc., the Urbancorp entities, and certain other purchasers and a secured lender for one project.

The court granted the appointment of Dickinson Wright as representative counsel, but stipulated an opt-in process for purchasers rather than an opt-out.

The court denied the request for an administrative charge for legal fees, ruling that fees and disbursements could be paid by the estates from the distributions made to those purchasers who chose to be represented by Dickinson Wright.

The applicants, a group of real estate development companies, sought an Initial Order under the CCAA and the continuation of their NOI proceedings under the CCAA.

Concurrently, the foreign representative of the parent company sought recognition of Israeli insolvency proceedings as a foreign main proceeding under Part IV of the CCAA.

The court approved a Co-operation Protocol between the foreign representative and the proposed Monitor, recognized the Israeli proceeding as a foreign main proceeding, and granted the Initial Order.

The court also extended the stay of proceedings to related limited partnerships and approved various administrative and interim financing charges.

The applicant sought recognition in Ontario of U.S. Chapter 11 proceedings involving a large casino-entertainment corporate group, including an Ontario subsidiary managing the Windsor casino.

The court held the applicant was a proper foreign representative and that the U.S. proceeding qualified as a foreign main proceeding because the debtors’ centre of main interests was in the United States.

The court granted the initial recognition order and supplemental relief to preserve the status quo and protect Canadian assets while the U.S. venue dispute remained unresolved.

The supplemental order was modified to exclude a stay of actions against directors and officers.

The applicant insurer sought leave to appeal an order requiring it to pay the legal fees of Nortel's executives without reference to a $10 million retention amount or a directors and officers trust fund.

The motion judge had found that the indemnification was a pre-filing claim subject to the CCAA stay, and that allowing access to the trust would improperly elevate the insurer's priority.

The Court of Appeal denied leave, finding the motion judge's conclusions were within his expertise and entitled to deference, and the issues were specific to the case rather than of broader interest.

The Court also declined to consider fresh evidence filed by the applicant because no motion for leave to admit it was brought.

The EMEA Debtors sought leave to appeal an order approving an Allocation Protocol that provided for a joint trial by the Ontario Superior Court of Justice and the US Bankruptcy Court for the District of Delaware to allocate over US$7 billion in proceeds from the sale of Nortel assets.

The moving parties argued the joint trial violated the Ontario court's independence and that the parties had previously agreed to binding arbitration.

The Court of Appeal dismissed the motion for leave to appeal, finding the proposed appeal lacked prima facie merit as the joint trial did not infringe judicial independence and the relevant agreement did not mandate arbitration.

In Companies’ Creditors Arrangement Act proceedings involving the Nortel corporate group, the Canadian debtor entities moved for approval of an Allocation Protocol governing the distribution of sale proceeds among various affiliated estates and stakeholders.

The court approved the protocol substantially in the form originally proposed, subject to modifications requiring reliance on the June 7, 2011 protocol version and expansion of the list of “core parties” to include additional indenture trustees.

The court directed the Monitor to prepare a revised list of core parties and coordinate a litigation schedule for resolving allocation disputes.

A cross-motion by the Joint Administrators of a UK affiliate seeking to compel arbitration of allocation disputes under the Interim Funding and Settlement Agreement was dismissed.

The appeal period was deferred until the release of full reasons coordinated with reasons of the United States Bankruptcy Court for the District of Delaware.

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.