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
[ 1 ] The 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.
[ 2 ] As security for its obligations to EPM, Signifi granted a general security agreement (“GSA”) to EPM, dated May 19, 2011.
[ 3 ] On 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 .
[ 4 ] On 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 ”) .
[ 5 ] On 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.
[ 6 ] As 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
[ 7 ] Pending the return of the Application for the appointment of a receiver and manager, EPM seeks the appointment of an interlocutory or interim receiver.
[ 8 ] Signifi 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.
[ 9 ] The 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.
[ 10 ] The GSA provides that Signifi is in default thereof if it “becomes insolvent”. Thereupon, the security interest under the GSA becomes enforceable.
[ 11 ] Hence, EPM is a secured creditor with a significant financial interest at stake in Signifi.
Disposition
[ 12 ] In 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.
[ 13 ] The terms of the requisite Order, in accordance with these reasons, have been reviewed with counsel.
[ 14 ] The motion of Signifi for a stay of the Application, or in the alternative, an order for consolidation, is dismissed.
[ 15 ] The 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.
[ 16 ] A schedule has been agreed upon for the return of the Application for the appointment of a Receiver.
CUMMING J.
Date: January 11, 2012

