Court File and Parties

Court File No.: CV-25-00736572-00CL and CV-25-00737791-00CL
Date: 2025-03-04
Court: Superior Court of Justice – Ontario (Commercial List)

Re: In the Matter of a Plan of Compromise or Arrangement of JBT Transport Inc., Waydom Management Inc., Melair Management Inc., Heritage Truck Lines Inc., Drumbo Transport Limited, Heritage Northern Logistics Inc., and Heritage Warehousing & Distribution Inc.

And Re:
The Toronto-Dominion Bank (Applicant)
And:
JBT Transport Inc., Waydom Management Inc., Melair Management Inc., Heritage Truck Lines Inc., Drumbo Transport Limited, Heritage Northern Logistics Inc., and Heritage Warehousing & Distribution Inc. (Respondents)

Before: Kimmel J.

Counsel:

• Brendan Bissell, Caitlin Fell, Jessica Wuthmann, for the JBT Group of Debtors
• Craig A. Mills, Matthew Cressatti, for the Creditor Toronto-Dominion Bank
• Graham Phoenix, Shahrzad Hamraz, for the Proposed Monitor, Dodick Landau Inc.
• Nabiel Dawood, for lien creditors with a separate ongoing action, Trade-Mark Industrial Inc., Trade-Crete Ltd., and Comtrade Ltd.
• Phil Turner, for R&S Trailer Leasing Limited

Heard: 2025-02-27

Endorsement (Competing CCAA and Receivership Applications)

[1] The court has been asked to decide between the debtors’ CCAA Application and the Receivership Application by the Toronto-Dominion Bank. For the reasons that follow, I have concluded that it is most just and convenient to appoint a receiver. This decision is context and fact specific.

[2] Accordingly, the Receivership Application is granted and the CCAA Application is dismissed.

The Competing Proceedings

The Debtors’ NOI Proceedings and CCAA Application

[3] JBT Transport Inc., Waydom Management Inc., Melair Management Inc., Heritage Truck Lines Inc. ("HTL"), Drumbo Transport Limited ("Drumbo"), Heritage Northern Logistics Inc. ("HNL"), and Heritage Warehousing & Distribution Inc. ("HWD") (each individually, a "Debtor” and collectively, the "JBT Group" or “Debtors”) brought an application for protection under the Companies' Creditors Arrangement Act, R.S.C., 1985, c. C-36 (the "CCAA") on February 6, 2025 (the "CCAA Application"). The first hearing before this court with respect to that application was on February 10, 2025.

[4] Prior to the CCAA Application, the Debtors had each filed a Notice of Intention to Make a Proposal ("NOI") under the Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3 (the "BIA"). Dodick Landau Inc. ("DLI") was appointed as proposal trustee under each NOI proceeding (collectively, the "NOI Proceedings"). The NOIs were filed after the JBT Group's senior secured lender, Toronto-Dominion Bank ("TD Bank"), served demands for the approximately $16.2 million debt owed by the JBT Group to TD Bank (the "Demands"). The automatic stay in the NOI Proceedings would have expired on February 24, 2025.

[5] The Debtors pivoted to a CCAA Application after commencing the NOI Proceedings because they claimed to be facing an urgent liquidity and operational crisis that had been exacerbated by prejudicial self-help remedies that were being taken by transport carriers who they relied upon to continue to carry on their business (the “Critical Suppliers”).

[6] As part of the CCAA Application, the Debtors sought an order staying such carriers from contacting customers of the JBT Group directly, and from otherwise interfering with the JBT Group's arrangements with their customers. They sought a Critical Suppliers Charge attached to the receivables associated with the shipments that they were each, respectively, the carriers of subsequent to the CCAA filing date and a corresponding direction under s. 11.4 of the CCAA for the continued supply of goods and services by the Critical Suppliers, with discretion to pay pre-filing obligations to these creditors to ensure their continued supply during the stay period. The ability of transport carriers to enforce their right to payment of the Carrier Trust Funds directly from the customer who receives and pays for the goods, instead of that payment going to the broker, was also preserved under the Initial Order.

[7] Beyond the need for stability and for the continuing supply of services by the transport carriers (Critical Suppliers) to keep a going concern restructuring option open for the Debtors, the court’s decision to grant the Interim Order also took into account the fact that during the initial Stay Period (defined below), there would be far less of a learning curve for the proposed Monitor and counsel for the Debtors and the Monitor than for TD Bank and its proposed Receiver who did not have the same background regarding the business and operations of the JBT Group. This would also serve to minimize costs during that initial Stay Period.

[8] An Initial Order dated February 10, 2025 was granted under the CCAA (the “Initial Order”) without prejudice to all issues raised or to be raised at this de novo comeback hearing. The Initial Order included a stay of proceedings (the “Stay”) until February 28, 2025 (the initial “Stay Period”). The CCAA Initial Order that was granted only contained the essential terms for the continued operation of the Debtors’ business to maintain the status quo pending the outcome of the come-back hearing.

[9] Since the initial Stay Period was expiring the day after the comeback hearing, by a preliminary endorsement dated February 28, 2025 the Stay Period was extended until March 6, 2025 pending the release of this endorsement.

The Debtors’ Arguments in Favour of Continuing the CCAA Proceeding

[10] The JBT Group has over 58 trucks, 162 dry vans and refrigerated units, and over 100,000 square feet of state-of-the-art, GDP Gold-certified food storage and warehouse spaces. They employ more than 80 full-time employees and have contracts with more than 20 independent owner-operators. They regularly service 187 customers, and deal with 125 carriers and suppliers.

[11] Through the CCAA Proceeding, the JBT Group seeks to continue their end-to-end supply chain services, transportation logistics and warehousing services (the "Business") as a going concern for the benefit of all stakeholders. They seek to do so through an amended and restated initial order (“ARIO”) that includes debtor in possession (“DIP”) financing, and customary DIP and Administration Charges as well as preserving the Carrier Trust Fund and Critical Suppliers’ Charge. The DIP Lender will rank behind the Critical Suppliers Charge and the Administration Charge. It would also be subordinate to TD Bank's first ranking security on the one remaining property owned by the Debtors, municipally known as 425 Melair Drive, Ayr, Ontario (the "Melair Property").

[12] The Debtors maintain that a debtor-in-possession restructuring that permits the JBT Group to continue their operations in the normal course will better preserve value for stakeholders. By contrast, the Debtors believe a receivership will put their Business at risk, as they have the familiarity with their own operations, suppliers, customers, employees and other stakeholders that are needed to maintain the business.

[13] At the core of the Debtors’ position is their desire to preserve a going concern option while they run a sale and investment solicitation process (“SISP”). Through that process, they propose to try to sell their Business as a going concern, but also propose to solicit a wide range of possible transactions including refinancing, sale transactions, or liquidations, with the backstop of a management backed stalking horse agreement (the “Stalking Horse Agreement”). They say they are looking for a means to avoid what they believe will be devastating social and economic effects of bankruptcy or creditor initiated termination of their ongoing business operations.

[14] The shared conclusion of the JBT Group, their financial advisor Grant Thornton (“GT”) and the Monitor, is that a liquidation will produce a worse result (based on either a forced liquidation value or an orderly liquidation value) than a going concern sale. The financial analysis of the JBT Group and the Monitor is that the Stalking Horse Agreement represents a superior financial result for creditors, including TD Bank, relative to a liquidation because they predict that a liquidation will result in both a lower anticipated sale price as well as higher costs to the estate including as a result of occupation rent, employee WEPPA claims, and liquidator sales commissions.

[15] The Monitor assisted the JBT Group in developing the SISP and was involved in vetting and improving the terms of the stalking horse bid that is reflected in the Stalking Horse Agreement. The Monitor will lead and oversee the SISP process because of management’s involvement in the Stalking Horse Agreement. The JBT Group seeks approval to commence the SISP and to accept a stalking horse bid from management as part of the SISP if no superior bid is received (the "SISP Approval Order").

[16] The Monitor provided an update at the hearing about some of the terms of the SISP. The stalking horse bidder will now be required to provide proof of binding commitments from lenders and evidence of available cash to make up the balance of the purchase price under the stalking horse bid by March 31, 2025 to maintain its status as a binding bid. The stalking horse bidder was also asked, and agreed, to provide an increased cash deposit (beyond the $250,000 already provided for) by March 15, 2025 (the start of the SISP process). The stalking horse bidder’s entire deposit will be forfeited and there will be no repayment of the DIP loan (being advanced by a party related to the stalking horse bidder) if the March 31, 2025 conditions are not satisfied. Conversely, if the conditions are met and a superior bid comes in and is accepted, the stalking horse bidder will be paid a $65,000 break fee in addition to being repaid the deposit amounts and the DIP loan will have to be repaid.

[17] The stalking horse bid involves a transaction that is predicated upon a reverse vesting order that will still require future court approval (although the reverse vesting order structure is not mandated under the SISP for other bidders). At the February 27, 2025 come-back hearing, the court confirmed that if the stalking horse bid (and SISP) are approved now, the court is not being asked, and will not be taken, to approve an RVO structure for any transaction that emerges from the SISP, including the Stalking Horse Agreement. The requesting parties would still have to satisfy the court that an RVO is appropriate if and when approval is sought for any RVO based transaction.

[18] The stalking horse bid does not include the Melair Property, but interested parties will have the option to make an offer to purchase that property as part of a purchase of the Business (including other assets) or on its own. The Melair Property is estimated to be worth approximately 50% of the JBT Group’s Indebtedness to the TD Bank, although efforts to date to sell that property have not been successful.

[19] The Monitor supports the request by the JBT Group for both the ARIO and the SISP Approval Order, for reasons detailed in the Monitor’s First Report dated February 26, 2025. The Monitor has reviewed the cash flows prepared by JBT Group management and is satisfied that with the proposed DIP financing of $250,000, the JBT Group will have sufficient liquidity to continue its business operations until May 31, 2025, which would be after the expiry of the extended Stay Period under the ARIO (proposed to expire on May 16, 2025). Under the SISP, binding bids are to be submitted by April 18, 2025 and the successful bidder is to be selected on April 25, 2025.

The Arguments in Favour of TD Bank’s Receivership Application

[20] TD Bank is the Debtors’ senior secured and largest creditor.

[21] The Debtors have been in default of their various loan agreements and credit facilities with TD Bank (the “Credit Facilities”) since in or about June of 2023. The Bank informally agreed to forbear from enforcing on its security for almost a year. This agreement to forbear was formalized in a forbearance agreement dated April 13, 2024, and renewed on June 26, 2024 and December 13, 2024 (collectively, the “Forbearance Agreement”). During this period the Debtors continued to be in default of the Credit Facilities and were often in default of their obligations under the Forbearance Agreement.

[22] During the forbearance period, and in consultation with TD Bank, the JBT Group engaged a financial advisor, effected the sale of a real property and other assets, and implemented an operational restructuring to decrease operating costs and enhance the JBT Group's market position. The JBT Group’s efforts resulted in a reduction of the indebtedness owed to TD Bank from approximately $25 million in January of 2024 to $16.2 million in December of 2024.

[23] Despite a lengthy period of forbearance by TD Bank, and the reduction of the indebtedness owed to TD Bank to $16.2 million by December of 2024, the JBT Group were unable to come up with a refinancing proposal or restructuring plan that was acceptable to TD Bank, and they missed critical milestones in January of 2025 that resulted in TD Bank’s Demands.

[24] The February 6, 2025 CCAA Application was met with a draft Notice of Application for the appointment of a receiver by TD Bank dated February 7, 2025 (the "Receivership Application"). The receivership application seeks to lift the NOI stay of proceedings and the appointment of BDO Canada Limited ("BDO") as receiver (the "Receiver"), without security, of all of the current and future assets, undertakings, and properties (the "Property") pursuant to s. 243(1) of the BIA and section 101 of the Courts of Justice Act, R.S.O. 1990, c. C-43, as amended (the "CJA").

[25] When the two applications came before the court on February 10, 2025, the court was concerned with preserving a status quo pending a proper hearing of both the CCAA Application and the Receivership Application. This was achieved through the granting of the limited CCAA Initial Order. The Receivership Application was adjourned to February 27, 2025 at the return of the comeback hearing in the CCAA Application to keep the options for both manner of proceedings open and available for the court’s consideration.

[26] TD Bank has the right under its security documents to appoint a receiver. The JBT Group also consented to the appointment of a receiver under the terms of the Forbearance Agreement.

[27] The Debtors continue to access their line of credit with TD Bank, forcing TD to effectively assume the role of a de facto interim lender and bear the burden of CCAA-related costs. At the heart of TD Bank's position are its concerns about the erosion of its security and its increasing debt. TD Bank is not prepared to continue financing, through its outstanding Loan Facilities, the going concern business of the JBT Group while its indebtedness increases and its security is primed by the proposed charges under the ARIO and continues to be eroded. The Debtors’ cash flow projections do not forecast any payments under TD Bank’s Credit Facilities during the extended Stay Period under the CCAA scenario.

[28] The CCAA Application proposes DIP Charges, Administration Charges for the professional fees of the Debtors and DLI (the Proposal Trustee and proposed Monitor) and possibly certain thus far unspecified non-trust priority payments for pre-filing debt to Critical Suppliers in excess of $500,000. It does not propose to pay anything to TD Bank until there are distributions to creditors or there is a refinancing, in circumstances where TD Bank already anticipates that it will suffer a shortfall on its outstanding indebtedness.

[29] TD Bank's position is that the Debtors have already spent more than a year trying to refinance or sell their Business, with limited success (the sale of one property). The proposed SISP does not introduce anything new to entice third party interest; all it does is provide management with the ability to buy the Business and rid themselves of the burden of the TD Bank indebtedness through a stalking horse agreement that introduces uncertainty into the sale process and may, if anything, serve as a disincentive to potentially interested third parties.

[30] Given the history of this matter, TD Bank no longer has confidence in management’s ability to successfully achieve a sale or refinancing of the Business to a third party and it wants to take control of the sale process now, particularly since its security has eroded to the point that there is likely to be a deficiency in TD Bank’s recoveries.

Analysis

The Threshold Requirements Are Not in Dispute

[31] Neither the JBT Group nor TD Bank contest the ability of the other to satisfy the basic threshold requirements for the orders they seek: for the appointment of the proposed Monitor under the CCAA or Receiver under the BIA, respectively. They both agree that it is appropriate for one of the orders to be made (perhaps with some tweaking of the specific terms). However, they disagree about which of the orders is the more appropriate order to be made at this time and in the specific circumstances of the JBT Group.

[32] In deciding whether the appointment of a receiver is just or convenient, the court "must have regard to all of the circumstances but in particular the nature of the property and the rights and interests of all parties in relation thereto" which includes the rights of the secured creditor under its security: see Bank of Nova Scotia v. Freure Village of Clair Creek, para 10. Various factors may be considered by the court in making this determination: see Kingsett Mortgage Corp. v. Mapleview Developments Ltd., 2024 ONSC 1983, paras 24-25. The applicable factors, many of which are also relevant to the court’s consideration of whether to grant an order under the CCAA, are present in this case.

[33] Conversely, to grant an initial order under the CCAA, there are basic statutory requirements that are satisfied in this case (and were found to have been at the time the Initial Order was made). To extend the CCAA Stay Period, the JBT Group must demonstrate under s. 11.02 (2) and (3) of the CCAA that, (1) circumstances exist to make the order appropriate, and (2) they have acted and are acting in good faith and with due diligence. The good faith and due diligence of the JBT Group are not being challenged at this time.

[34] Either one of the requested orders could be justified. The question to be decided is which one is more appropriate, just and convenient in the circumstances of this case.

CCAA vs. Receivership

[35] Where there are competing applications for a continued insolvency proceeding under the CCAA, or the appointment of a receiver under the BIA"the court must consider all of the relevant factors in the exercise of its discretion to determine the most appropriate path forward": see Antibe Therapeutics Inc. (Re), CV-24-00717410-00CL, Unreported Endorsement of Osborne J., 22 April 2024, at para. 59.

[36] The JBT Group focuses on the importance of the remedial purposes of the CCAA, as set out by the Supreme Court of Canada in Century Services Inc v. Canada (Attorney General), 2010 SCC 60, emphasizing the importance of encouraging rehabilitation and allowing the debtor companies to carry on business to avoid the devastating effects of a bankruptcy or liquidation where possible, see Century Services, at paras. 15, 17-18, 59, and 70.

[37] However, courts have also held that it is just and convenient to appoint a receiver where:

(i) The lender's security is at risk of deteriorating;
(ii) There is a loss of confidence in the debtors' management;
(iii) There is a need to stabilize and preserve the debtors' business; and
(iv) The positions and interests of other creditors militate in favour of appointing a receiver.

See BCIMC Construction Fund Corporation et al. v. The Clover on Yonge Inc., 2020 ONSC 1953, para 45.

[38] In this case, all of the above four factors are engaged, although the third and fourth could support both the Receivership and the CCAA Application.

[39] The jurisprudence suggests that a receivership is generally more appropriate where:

(i) The debtor is not operating an active business: see AFC Mortgage Administrative Inc v. Sunrise Acquisitions (Stayner) Inc et al, CV-23-00710361-00CL, Unreported decision of Black J. dated February 29, 2024, at paras. 63-66; Ashcroft Urban Developments Inc. (Re), 2024 ONSC 7192, para 70; Antibe, at paras. 70-71; and Callidus v. Callcap, 2012 ONSC 163, para 52;

(ii) The debtor has acted in a manner to ground an objective basis for a loss of confidence in management: see Antibe, at para. 85; Ashcroft at paras. 104-106; and Callidus, at para. 51;

(iii) There is no germ of a plan such that a stay is merely an attempt to postpone an inevitable liquidation: see Industrial Properties Regina Limited v. Copper Sands Land Corp., 2018 SKCA 36, paras 20-21; Ashcroft, at paras. 99-100; Antibe at para. 70; AFC Mortgage, at paras. 55-57; and

(iv) The secured creditors will face prejudice as a result of a significant erosion of their security/collateral from the debtor's ongoing operations: see Callidus, at para. 53.

See also, BCIMC, at para 45.

[40] In Ashcroft, this court had to choose between competing CCAA and Receivership Applications involving businesses with over 200 employees that owned and operated various residential properties, and chose to appoint a receiver and terminate the CCAA proceedings, noting (at para. 113) that:

… the receivership remedy gives effect to the bargain made between the secured lenders and the applicants, and transfers control of the process from debtors in whom confidence has been lost to creditors who should be entitled to make good on their security while there are still good prospects of them being made whole.

[41] The JBT Group seeks to distinguish Ashcroft on three primary grounds.

[42] First, the JBT Group suggests that there is a recognized preference for a receivership over CCAA in situations where the debtor’s primary asset is real estate (and is a holding company rather than active operating company). In contrast, relief under the CCAA may be more appropriate than a receivership where there is an operating going-concern business: see, for example: Pacific Shores Resort & Spa Ltd. (Re), 2011 BCSC 1775; and Plan of Compromise or Arrangement of 2039882 Ontario Ltd. o/a Shelter Cove, CV-24-00713069-00CL, Unreported Decision of Conway J. dated January 18, 2024.

[43] The business in Ashcroft was the management of already developed real estate holdings. In that sense, the JBT Group argues that its Business is different and more conducive to a debtor-led CCAA process. However, Ashcroft employed 200 people so it cannot be characterized as an entirely passive real estate holding business. Similarly, while the primary asset of the JBT Group is its transport and logistics Business, one of its highest valued assets is the Melair Property which is, at least according to the stalking horse bidder, not essential to the operation of the Business since it is not part of the management led stalking horse bid [1].

[44] Like in Ashcroft, this case is not clearly in either category. Further, it has been made clear that in a CCAA scenario, the focus will be on selling the Business, rather than a more traditional restructuring of an operating business. In other words, this would be a liquidating CCAA. While recognized in appropriate cases, the fact that this is a liquidating CCAA detracts somewhat from the underlying rationale of utilizing the CCAA over the BIA to preserve a going concern business. Further, there is nothing to prevent the stalking horse bidder from presenting its bid to the Receiver. TD Bank has not foreclosed the possibility of a going concern sale within the receivership.

[45] Second, the JBT Group contends that, where a debtor has been working cooperatively to resolve its issues, and management has been working in good faith and with due diligence, courts have not placed a lot of weight on blanket statements by creditors that they have lost confidence in management of the debtor. In these circumstances, the generic assertion of a loss of faith in management should be viewed in the broader context of the dispute over the appropriate manner of proceeding and not taken at face value without probing for further objective grounds for the loss of confidence: see Pacific Shores, at paras. 25-33.

[46] The type of loss of confidence in management that has supported creditor led, as opposed to debtor led, restructurings often involves some type of lack of co-operation, lack of candour or non-disclosure (see Ashcroft at paras. 104-106 and Antibe at para. 85). These reflect concerns that go beyond the obvious and always present circumstance of the debtor being in breach of its loan obligations and having been unable to repay the outstanding indebtedness through refinancing or other means prior to the commencement of the proceeding.

[47] However, here the loss of confidence of TD Bank in management of the JBT Group is not generic. It is specific and there is an objective basis for it: TD Bank has lost confidence in management’s ability to do that which they say they are trying to do under the CCAA process, namely to sell or refinance the Business on a going concern basis. This is what management has been trying to do since at least October 2023 if not longer, with the benefit of TD Bank’s forbearance.

[48] Yet, Debtors now propose to go to market the Business under a proposed SISP, burdened by a stalking horse agreement that would require other bidders to over bid by at least $125,000 plus $65,000 for the break fee to be economically superior to the stalking horse bid, and they would have to separately negotiate for the Melair Property if they wanted it for the operation of the Business. Furthermore, the continued existence of the stalking horse agreement will itself be uncertain until March 31, 2025 (the deadline for proof of binding commitments from lenders), so that may deter interested parties from even committing to doing any due diligence before then, which will significantly reduce their ability to make a qualified bid within the prescribed time line.

[49] The fact that management is behind the stalking horse bid that introduces uncertainty and complications into the SISP is a further ground for TD Bank’s loss of confidence in management’s ability to fulfill their professed CCAA objectives. This leads TD Bank to be skeptical about the SISP and to view the CCAA process as a means for management to buy back the Business and force TD Bank to accept reduced recoveries on its debt without having to put forward a plan of arrangement to a creditor vote.

[50] The Debtors have shared with TD Bank their analysis and view that the value of the cash component of the stalking horse bid will likely be greater than the proceeds received under a liquidation scenario. This did not persuade TD Bank to go along with the CCAA scenario and proposed SISP and with the backstop Stalking Horse Agreement.

[51] Overall, even though it is not suggested that the Debtors have acted in bad faith, the TD Bank’s expressed lack of confidence in management is understandable and justified in the circumstances and given the history of dealings between the parties in this case. It is not just a bald assertion.

[52] Third, the JBT Group emphasizes that a specific contractual right to appoint a receiver merely relaxes the burden on the applicant seeking what is otherwise considered to be extraordinary relief, since it involves enforcing a term of a bargain that the parties have already agreed to: see Elleway Acquisitions Ltd. v. Cruise Professionals Ltd., 2013 ONSC 6866, para 27. An agreement that a creditor may ask the court to appoint a receiver upon default, and even a specific agreement consenting to the appointment of a receiver if certain conditions or milestones are not met, does not dictate the outcome and does not necessarily mean that a receiver will be appointed: see, for example, Bank of Montreal v. Maple City Ford Sales (1986) Ltd., para 142; Callidus, at paras. 29 and 31; and Bank of Nova Scotia v. Smiling Simba Learning Academy Inc., 2025 ABKB 11, paras 31-32.

[53] However, where a creditor has a contractual right to appoint a receiver upon the debtor’s default, has already agreed to forbear and defer exercising its enforcement remedies and, in exchange, has received further confirmation of the Debtors’ consent to the appointment of a receiver if the forbearance did not lead to the promised refinancing of the debt: “Commercial certainty for all stakeholders dictates that parties should expect that courts will hold them to their bargains, absent further agreement or circumstances that would make it appropriate to nullify or remove the order”: see ATB Financial v. Mayfield Investments Ltd., 2024 ABKB 635, para 40.

[54] That expectation reasonably arises in this case. This is not a situation where TD Bank has come rushing to court to seek the appointment of a Receiver without affording the Debtors any opportunity to explore the possibility of other options; the Debtors had a long period of forbearance and were not able to achieve a refinancing or sale that was satisfactory to their senior secured lender. They were given a final further opportunity to come up with a plan that their senior secured creditor could support when the Initial Order was made. They have been unable to do so.

[55] Like in Ashcroft, it appears that the Debtors here have sought CCAA protection to buy time to continue their ineffective attempt to raise new funding, that will now be used to support the stalking horse bid. That will put TD Bank in the position of having to accept a repayment shortfall along the lines of what it rejected in January when presented with the Debtors last proposed refinancing option. That outcome is not appropriate, fair or reasonable in the circumstances of this case. In terms of other potential outcomes under the CCAA, if the results of the past one plus year of efforts by the Debtors are any indication, as they surely are, the chances of any other better going concern proposal or refinancing emerging in a debtor-led CCAA proceeding are low.

[56] TD Bank acted reasonably and worked with the Debtors and it has earned the right to exercise its enforcement remedy and appoint the Receiver. In the circumstances of this case, I find that it is more appropriate, just and convenient to grant the Receivership Application rather than the CCAA Application which is most likely to end with the court being asked to approve the Stalking Horse Agreement and a separate sale of the Melair Property.

[57] I will address briefly some of the other points raised.

[58] Although arguments were made by TD Bank about the potentially higher costs of a CCAA process, that has not influenced my decision in this case. While “CCAA proceedings are inherently expensive [because] [t]hey require regular court attendances, probably with greater frequency than a receivership does” (see BCIMC at para. 93), the possibility of an incrementally higher cost is not a driving factor in this case because there will be a steep learning curve (and associated cost) for the Receiver and its counsel who do not have the background with the Debtors and their business that they themselves and the Monitor already have.

[59] Aside from the Debtors' speculation that a receivership will be less effective than a debtor-led sale process, TD Bank argues that there is no specific evidence that a court-appointed receiver would negatively impact the interests of employees or third parties. However, I do not need specific evidence to appreciate that there is a greater possibility of a liquidation of assets that does not involve a going concern transaction and to infer that employees, contractors and third party suppliers may be negatively impacted by that.

[60] Counsel for the Debtors asked the court to take into consideration that the Supreme Court of Canada has recognized that heightened creditor entitlements can be subordinated to the interests of other stakeholders in appropriate, albeit exceptional cases. The examples referenced were: Sun Indalex Finance, LLC v. United Steelworkers, 2013 SCC 6; Canada v. Canada North Group Inc., 2021 SCC 30, cases that considered priming court ordered super priority charges based on statutory deemed trusts.

[61] This submission was not developed in any detail, but was rather mentioned in passing during oral argument. Having given it some thought, I am not convinced that this is one of those exceptional cases where subordinating the senior secured creditor’s interests under its loan and security documents to the interests of other stakeholders who may be affected if the Business cannot survive under the burden of that debt is warranted. The interests of other stakeholders, while a relevant factor to take into consideration, do not in the circumstances of this case trump the interests of the Debtors’ senior secured and largest creditor that has been supporting the JBT Group’s restructuring efforts for more than a year, is still owed over $16 million and is facing the prospect of a shortfall.

[62] Having considered all of the above, and the more fulsome written and oral arguments and submissions on behalf of the parties, I find it to be more appropriate, just and convenient to appoint a receiver now in the circumstances of this case. TD Bank’s security has been eroded in the interim, and it should not be forced to continue to finance this Business through a debtor led CCAA that does not propose any payment of interest or principal under the TD Bank Credit Facilities.

Other Relief Sought

[63] Since I have decided to grant the Receivership Application and not grant the CCAA Application, I do not need to consider the requirements for the approval of the DIP Financing and DIP Charge, or the increased Administration Charge under the proposed ARIO, or the requirements for approval of the SISP and the stalking horse agreement under the proposed SISP Approval Order.

[64] As part of the CCAA Application, the Debtors and the Monitor asked the court to seal a Confidential Exhibit that discloses confidential information about the valuation of their Business. The parties agree that if this analysis is made public it will negatively affect the ability to maximize value and maintain integrity in any sale efforts under either of the CCAA or receivership scenarios. The requested sealing order is of a limited scope. It is necessary to protect commercially sensitive information that could negatively impact the JBT Group and its stakeholders in the continuing efforts to sell their Property. Even though the proposed SISP under the CCAA is not proceeding, for so long as there remains a prospect of some sale process being carried out by the Receiver, it would be harmful to that process for the terms of the Confidential Exhibit to be available to participants in that later process.

[65] The proposed partial sealing order appropriately balances the open court principle and legitimate commercial requirements for confidentiality. I am satisfied that the limited nature and scope of the proposed sealing order is appropriate and satisfies the requirements in Sierra Club of Canada v. Canada (Minister of Finance), 2002 SCC 41, para 53, as modified by the reformulation of the test in Sherman Estate v. Donovan, 2021 SCC 25, para 38. Preservation of the confidentiality of information inherent in a sale process is recognized as meeting the requirements of the test for sealing court documents in Sherman Estate, at para. 85, when limited to only that material that contains the confidential and sensitive information and only for as long as may be necessary.

[66] Counsel advised at the conclusion of the hearing on February 27, 2025 that they would propose language to be incorporated into the Receivership Order, or a CCAA termination order or some other order to seal the Confidential Exhibit if the court so orders, which I do.

[67] Counsel is directed to ensure that the sealed Confidential Exhibit is provided to the court clerk at the filing office in an envelope with a copy of this endorsement and the signed order with the relevant provisions highlighted so that it can be physically sealed. Counsel is further directed to apply, at the appropriate time, for an unsealing order, if necessary.

[68] Trade-Mark Industrial Inc., Trade-Crete Ltd. and Comtrade Ltd. (the "Trade-Mark Group") brought a motion returnable on February 27, 2025 for relief carving out its construction lien action commenced in 2023 from any ongoing stay such that: (a) it has leave to continue its action bearing Court File No. CV-23-00001474-0000, commenced at Kitchener, Ontario (the "Lien Action"), against Waydom Management Inc., Melair Management Inc. and JBT Transport Inc.; and (b) any stay of proceedings in these insolvency proceedings will not apply to the continued pursuit of the Lien Action. This motion is not urgent. It was acknowledged that the Trade-Mark Group only needs the stay of proceedings to be lifted before October 2025 when the Trade-Mark Group is otherwise required to set the Lien Action down for trial if it is proceeding.

[69] This motion in respect of the Lien Action was adjourned. It may be brought back before the court with reasonable notice to the service list, if necessary. Nothing in this endorsement shall have any bearing on the merits of any relief eventually sought in respect of the continued pursuit of the Lien Action.

[70] There was some discussion at the hearing about the form of order(s) to be signed once my decision has been released. It may be that there are some additional terms that could be appropriately added to the proposed Receivership Order, for example, to address any immediate concerns about Critical Suppliers. Accordingly, I will wait for counsel to confer among themselves and then send me the form of receivership order and any other order(s) that are deemed necessary, arising out of this endorsement, together with blacklines against the last versions of the orders(s) that were before the court. This will need to be done before the current Stay Period expires on March 6, 2025. If there is no agreement, I will sign the originally proposed form of Receivership Order, which counsel for TD Bank should forward directly to me on or before March 6, 2025.

Kimmel J.
Date: March 4, 2025

[1] Given this, TD Bank asked the court, in the alternative to appointing the Receiver over all of the Debtors’ Property, to appoint the Receiver at least over the Melair Property since the stalking horse agreement does not include this property. I do not need to consider this alternative position in light of the decision to grant the Receivership Application and appoint the Receiver over all of the Debtors’ Property, including but not limited to the Melair Property.