SUPERIOR COURT OF JUSTICE – ONTARIO

(COMMERCIAL LIST)

COURT FILE NO.: CV-11-9487-00CL;
CV-11-9505-00CL

DATE: 20120111

IN THE MATTER OF Section 243 of the Bankruptcy and Insolvency Act ,

R.S.C. 1985, c. B-3 , as amended and Section 101 of the Courts of Justice Act ,

R.S.O. 1990 c. C-43 , as amended

CV-11-9487—00CL

RE: EPM GLOBAL SERVICES INC., Applicant

AND:

SIGNIFI SOLUTIONS INC., Respondent

CV-11-9505-00CL

AND RE: SIGNIFI SOLUTIONS INC., Plaintiff

AND:

EPM GLOBAL SERVICES INC., Defendant

BEFORE: CUMMING J .

COUNSEL: Andrea McEwan and Rebecca L. Lewis, for the Applicant/Defendant, EPM Global Services Inc.

Antonin I. Pribetic, for the Respondent/Plaintiff, Signifi Solutions Inc .

HEARD: January 11, 2012

ENDORSEMENT

The Evidence

1The Applicant, EPM Global Services Inc. (“EPM”) and the Respondent, Signifi Solutions Inc. (“Signifi”) entered into a Manufacturing Service Agreement (“MSA”) on January 7, 2011 whereby EPM was to manufacture certain products for Signifi.

2As security for its obligations to EPM, Signifi granted a general security agreement (“GSA”) to EPM, dated May 19, 2011.

3On November 9, 2011, EPM demanded payments from Signifi for amounts outstanding and issued a Notice of Intention to Enforce Security pursuant to s. 244 of the BIA .

4On December 1, 2011, EPM commenced a Receivership Application under ss. 47 and 243(1) of the Bankruptcy and Insolvency Act (“ BIA ”) and s. 101 of the Courts of Justice Act (“ CJA ”) .

5On December 7, 2011, Signifi commenced action CV-11-9505-00CL against EPM by way of a statement of claim, seeking a declaration that the GSA is null and void. Signifi asserts in its statement of claim that EPM was in breach of the MSA or the Amendment Agreement in respect thereof. Signifi makes many allegations in its 21-page statement of claim which have as the common theme that EPM was in breach of the contract, i.e . the MSA.

6As well, Signifi asserts it was not an “insolvent person” when the purported s. 244 Notice was given by EPM.

The Application of EPM and Motion to Stay of Signifi

7Pending the return of the Application for the appointment of a receiver and manager, EPM seeks the appointment of an interlocutory or interim receiver.

8Signifi brings a motion to stay the application for a receiver or alternatively, consolidate the proceedings referred to above so that they are heard at the same time.

9The application for a receiver or interim receiver is a free-standing originating process. The evidence establishes on a preponderance of evidence basis that Signifi is insolvent, is unable to meet its current obligations as they become due without incurring further liabilities, does not generate sufficient cash flow from its current operations to meet its current liabilities and continues to operate at a deficit.

10The GSA provides that Signifi is in default thereof if it “becomes insolvent”. Thereupon, the security interest under the GSA becomes enforceable.

11Hence, EPM is a secured creditor with a significant financial interest at stake in Signifi.

Disposition

12In my view, and I so find, it is necessary for the protection of the interest of the secured creditor, EPM, in respect of the estate of the insolvent debtor, Signifi, that the requested interim receiver be appointed under ss. 47(1) and 244 of the BIA and s. 101 of the CJA. The Application of EPM is granted to the extent of appointing an interim receiver with limited powers.

13The terms of the requisite Order, in accordance with these reasons, have been reviewed with counsel.

14The motion of Signifi for a stay of the Application, or in the alternative, an order for consolidation, is dismissed.

15The parties have made submissions as to costs. Costs are fixed in favour of EPM at $15,000.00, inclusive of all disbursements and HST, payable forthwith.

16A schedule has been agreed upon for the return of the Application for the appointment of a Receiver.