Sam Babe

The Monitor of BioSteel Sports Nutrition Inc. (under CCAA protection) sought an order declaring ColdHaus Direct Inc. liable for $3.97 million and directing payment, along with an extension of the stay of proceedings and approval of fees.

ColdHaus brought a cross-motion to lift the stay to allow set-off of post-filing obligations against pre-filing amounts, specifically a $1.05 million buy-back claim.

The court allowed the Monitor's payment motion in part, permitting ColdHaus to set off pre-filing billbacks for warehousing ($89,273.14) and distribution rebates ($74,546.05).

However, the court dismissed ColdHaus's motion to set off the buy-back amount, finding the obligation did not arise pre-filing and that ColdHaus had artificially created indebtedness by failing to pay invoices.

The Monitor's request for a stay extension and fee approval was granted.

The DIP Agent sought the appointment of a non-possessory Receiver and approval of a Sale Solicitation Process (SSP) for iSpan Systems LP, which had filed a Notice of Intention to Make a Proposal and subsequently defaulted on its Amended Proposal payments.

The motion also sought to suspend the Claims Adjudication Process and Mediation.

The court found the appointment of a receiver appropriate to maximize value for stakeholders, as bankruptcy would destroy much of the business's value.

The proposed SSP was approved, with the court deferring to the Receiver's recommendations on timeline and deposit amount, despite objections from two unsecured creditors regarding these terms.

The Claims Adjudication Process was also suspended.

The appellant creditor appealed a decision upholding the Trustee's disallowance of its unsecured claim in the bankruptcy.

The claim was based on a promissory note and subsequent agreement, but no payments or acknowledgments had been made for over two years prior to the bankruptcy, rendering it statute-barred under the Limitations Act, 2002.

The court held that a statute-barred claim, being unenforceable at law, is not a claim to which the bankrupt is 'subject' under section 121(1) of the Bankruptcy and Insolvency Act, and is therefore not provable in bankruptcy.

The appeal was dismissed.

This case concerns an appeal by a creditor, Forty-One Peter Street Inc., from the Trustee's disallowance of its claim in the bankruptcy of John Trevor Eyton.

The claim was based on a debt incurred in 2001, with the last payment in 2016, making it statute-barred under the Limitations Act, 2002.

The court affirmed the Trustee's disallowance, holding that while a statute-barred debt may form the basis for a bankruptcy application, it cannot constitute a provable claim in bankruptcy, as such claims must be recoverable by legal process.

The Master followed appellate court precedents over conflicting Superior Court obiter dicta, emphasizing that allowing such claims would grant an unfair advantage to creditors on otherwise unenforceable debts.

A priority dispute arose between Royal Bank of Canada (RBC), a secured creditor of bankrupt contractor A-1 Asphalt Maintenance Ltd., Guarantee Company of North America (GCNA), a bond company and secured creditor, and certain employees represented by unions.

The central issue was whether funds paid to the receiver by owners, which constituted "trust funds" under section 8 of the Construction Lien Act (CLA), were excluded from the bankrupt's estate available to creditors pursuant to section 67(1)(a) of the Bankruptcy and Insolvency Act (BIA).

The motion judge found the funds were not excluded and were available for distribution.

The Court of Appeal allowed the appeal, holding that provincially created statutory trusts satisfying general principles of trust law are preserved from distribution to ordinary creditors under the BIA.

In a priority dispute following the bankruptcy of a paving company, a bond company argued that funds held by the receiver in a project account were statutory trust funds under the Construction Lien Act and therefore excluded from the bankrupt's estate under s. 67(1)(a) of the Bankruptcy and Insolvency Act.

The court dismissed the trust claim, finding that the funds lacked the certainty of subject matter required to constitute a true common law trust, as they were not identifiable or held separately prior to the receivership.

Consequently, the funds were to be distributed under the BIA scheme.

The Receiver of a bankrupt masonry contractor sought directions to distribute remaining funds to a secured creditor.

A subcontractor opposed the distribution, arguing the funds were subject to a deemed trust under the Construction Lien Act and excluded from the bankruptcy estate.

The court found that the funds did not meet the certainty of subject matter required for a trust under general trust principles, as all funds were commingled in a single account.

The court ordered the funds distributed to the secured creditor.

The applicant, Zochem Inc., applied under Part IV of the CCAA for recognition of First Day Orders made by the U.S. Bankruptcy Court in Chapter 11 proceedings.

The court found that the U.S. proceeding was a foreign main proceeding, as the debtors were managed as an integrated group from the United States, despite Zochem's operations being in Ontario.

The court also recognized the interim financing order and granted a super-priority charge for the DIP lender, noting that the interim advance was necessary to meet payroll and that the directors must act in the best interests of the Canadian corporation.

The applicants sought approval under the Companies’ Creditors Arrangement Act for a sale of substantially all of their assets following a court‑approved sales and investor solicitation process.

The court considered the statutory factors in s. 36 of the CCAA, including the fairness and reasonableness of the process, the role of the monitor, consultation with creditors, and the adequacy of the consideration.

A late competing bid was rejected to preserve the integrity of the court‑approved sales process.

The court also addressed priority issues involving a DIP lender, secured creditors, and potential claims to HST refunds under the Financial Administration Act.

The proposed transaction and distribution scheme were approved as fair and reasonable in the circumstances.

In CCAA restructuring proceedings, the applicants sought court approval to increase a debtor-in-possession (DIP) lending facility and to implement a Sale and Investor Solicitation Process (SISP).

The court considered the factors under s. 11.2(4) of the Companies’ Creditors Arrangement Act and approved an increase of the DIP facility to $6 million, noting the monitor’s support and the absence of opposition from secured creditors.

The proposed SISP included an expedited timeline, applicant-led solicitation of bids, and a stalking horse credit bid by the DIP lender.

The court held that the process was fair, transparent, and commercially reasonable given the applicants’ liquidity crisis and prior marketing efforts.

The SISP was approved as likely to maximize stakeholder value by facilitating either a going-concern sale or new investment.

In Companies’ Creditors Arrangement Act restructuring proceedings, the applicants sought an extension of the stay of proceedings and an increase to the debtor-in-possession lending facility.

The court considered the applicants’ liquidity position, workforce reductions, revised cash-flow forecasts, and the monitor’s report supporting the request.

The court found the applicants had acted in good faith and with due diligence and that extending the stay would permit implementation of an expedited sale and investor solicitation process aimed at preserving the business as a going concern.

The court approved an increase of the DIP facility to $5.35 million and amendments to the loan agreement, but declined to include $650,000 in accrued lender fees within the facility at that stage due to insufficient review.

The stay of proceedings was extended to allow the restructuring process to continue.

In CCAA restructuring proceedings, the applicants sought an extension of the stay of proceedings, an increase in debtor-in-possession financing, amendments to a key employee retention plan, and a sealing order.

The court considered the applicants’ efforts to secure additional interim financing and their progress toward a potential long-term supply contract that could enable further investment or restructuring.

Applying the statutory factors under the Companies’ Creditors Arrangement Act, the court approved an increase in the DIP lending facility and granted the requested stay extension.

The court also approved a minor salary reallocation to retain essential non-management employees and ordered that confidential employee-related schedules be sealed.

Two affiliated technology companies applied for initial protection under the Companies’ Creditors Arrangement Act after exhausting start-up capital and becoming unable to meet payroll and other obligations.

The applicants sought a stay of proceedings, approval of debtor-in-possession financing, and priority charges for administration expenses and directors’ and officers’ liabilities.

The court held that the companies qualified as debtor companies under the CCAA and that they were appropriately treated as affiliated entities for the purpose of the proceedings.

The court approved the requested stay, DIP facility and related charges, finding them reasonable and necessary to allow time for restructuring or a going-concern sale for the benefit of stakeholders.