Bankruptcy and Insolvency Law - SCJ

The moving creditors, Antoine Dwyane Small and Whayne Small, brought a motion under section 69.4 of the Bankruptcy and Insolvency Act to lift the automatic stay of proceedings.

They sought to continue their civil fraud action against the bankrupt, Richard Nicholson, in which they claimed damages of approximately $500,000 for fraud, misrepresentation, and breach of fiduciary duty.

The bankrupt opposed the motion, while the trustee did not oppose it.

The court granted the motion, lifting the stay to allow the fraud action to proceed, finding that the creditors would be materially prejudiced by a continued stay and that it was equitable to do so.

The court considered whether Baketree Inc. validly exercised its option to extend a commercial lease with Nico Properties Inc., or whether alleged defaults precluded the extension.

The court found that Baketree met all preconditions for extension, including payment of rent, compliance with lease terms, and maintenance of financial strength.

Even if there had been a default, the court would have granted relief from forfeiture.

However, Baketree lost its right to negotiate a purchase of the property under Schedule E due to prior defaults, and the court declined to grant relief from forfeiture for that right.

The decision concerns a motion by creditors Jennifer Look-Hong and Geoffrey MacKay in the bankruptcy of The Aggressive Good Inc. The motion sought, among other things, to challenge the eligibility of Christopher Falconi to act as an inspector and to have his votes at the first meeting of creditors revoked.

The court found that the Trustee made a palpable and overriding error in determining the date Mr. Falconi ceased to be a director, and that Mr. Falconi was not dealing at arm’s length with the debtor within the year prior to bankruptcy.

The court also found that Mr. Falconi was ineligible to act as an inspector due to his involvement in contested actions against the estate.

The motion was granted, and the order was signed as requested, with a new meeting of creditors to be held.

This endorsement addresses a motion by Sandvine Corporation and related entities under the Companies’ Creditors Arrangement Act for approval of a Stalking Horse Transaction Agreement, a vesting order, and related relief.

The court denied an adjournment request by Telecom Egypt, found that all statutory and procedural requirements were met, and approved the transaction, assignments, limited releases, sealing of confidential materials, enhanced monitor powers, and an extension of the stay of proceedings.

The Monitor, FTI Consulting Canada Inc., brought a motion for an approval and vesting order in respect of the Purchased Assets and the sale thereof to Vault or an affiliate pursuant to the Rifco Asset Purchase Agreement, and for a stay extension order.

The Court approved the Rifco APA and the AVO, finding the process reasonable, the requirements of the Companies' Creditors Arrangement Act satisfied, and the transaction in the best interests of stakeholders.

The stay extension was also granted.

The trustee in bankruptcy, Goldhar & Associates Ltd., brought a motion to annul Qui Thieu Mac’s discharge from bankruptcy, arguing that the discharge was granted due to inadvertence in failing to file a notice of opposition.

The court found that there was a bona fide error, that opposition would have been filed but for the error, and that a discharge hearing would likely have led to a different result given the facts proven under section 173(1) of the Bankruptcy and Insolvency Act.

The court exercised its discretion to set aside the absolute discharge and granted the trustee’s motion.

This endorsement grants, with one exception, the relief sought by the Receiver in the receivership of Antibe Therapeutics Inc., including approval of a sale transaction with Taro Pharmaceuticals Inc. via a reverse vesting order.

The court finds the transaction and process fair, maximizes value for stakeholders, and preserves key tax and intellectual property attributes.

The only relief not granted is the proposed interim distribution to unsecured creditors, as the court is not satisfied that sufficient information exists regarding unresolved claims and holdbacks.

The court provides guidance for a future motion once these issues are resolved.

The decision grants an initial order under the Companies’ Creditors Arrangement Act (CCAA) to Joriki Topco Inc. and Joriki Inc., converting their ongoing NOI proceeding under the Bankruptcy and Insolvency Act to a CCAA proceeding.

The court approves the appointment of Alvarez & Marsal as Monitor, a stay of proceedings, a key employee retention plan, DIP financing, and various charges over the applicants’ assets.

The order is supported by the secured lenders and the proposed monitor, and is unopposed.

The court finds the statutory and case law requirements for CCAA relief are met, including the need for continued restructuring efforts and the appropriateness of the proposed charges and stay extension.

The decision addresses three motions in a civil action: the plaintiffs’ motion to extend and validate service of their statement of claim, the defendants’ motion for a status hearing, and the defendants’ motion to dismiss the action for delay.

The court validates service on the individual defendants, finds that limitation period arguments raise triable issues, and concludes that both parties contributed to the delay.

The court grants the plaintiffs’ motion for a status hearing, dismisses the defendants’ motion to dismiss for delay, and sets a timetable for the action to proceed to trial.

The Receiver sought and obtained an Approval and Vesting Order (AVO) in connection with a settlement involving the sale of certain secured interests (the Maidstone Charges) and related indebtedness to the Canning Claimants.

The settlement resolved a $50 million claim in the receivership proceedings.

The court found the transaction fair, reasonable, and beneficial to stakeholders, and granted a limited sealing order over confidential economic terms of the transaction until closing, applying the test from Sherman Estate v. Donovan.

The Applicants sought an order extending the Stay Period under the Companies’ Creditors Arrangement Act, approving the Sixty-first Report of the Monitor, and approving the fees and disbursements of the Monitor, Monitor’s counsel, and Applicant’s counsel.

The court found the Applicants acted in good faith and with due diligence, that the extension was reasonable, and that the requested approvals were appropriate.

The motion was granted.

The applicant, Junhua Wang, sought the appointment of a receiver and manager over real property owned by the respondents, Hong Jing and Lihan Jing, under a matured and unpaid mortgage.

The respondents objected, arguing the mortgage was part of a broader financing arrangement involving third parties and ongoing litigation.

The court found the appointment of a receiver just and convenient, given the default, the risk to the applicant’s security, and the lack of evidence that the applicant was party to the broader arrangements.

The court also addressed evidentiary objections regarding the applicant’s affidavits and settled the process for finalizing the receivership order.

The Applicants sought and were granted several orders in a Companies' Creditors Arrangement Act (CCAA) proceeding, including approval of a Remaining Securitized Assets Order, a sale and vesting order for Dixie Truck Parts Inc. (Ontario and Delaware), an omnibus distribution order, and a sealing order.

The Court found that the sale process was reasonable, the related party transaction safeguards were sufficient, and the proposed orders were fair and reasonable.

The Court also addressed the importance of timely opposition to relief and the need for efficiency and comity in cross-border insolvency proceedings.

This endorsement concerns a motion by FAAN Mortgage Administrators Inc., as Court-appointed Trustee of Building & Development Mortgages Canada Inc. (BDMC), for approval of its 30th and 31st Reports, its fees and disbursements, a sealing order for certain confidential exhibits, and authorization to distribute the Fortress Holdback and Future Fortress Amounts to investors.

The motion was unopposed.

The court approved the Trustee’s activities and fees, granted the sealing order, and authorized the distribution to investors, finding these steps appropriate and necessary to protect investor interests and confidential information.

The court approved a Settlement and Mutual Release Agreement regarding the administration of syndicated mortgage loans and projects affiliated with Fortress Real Developments Inc. The Trustee, FAAN Mortgage Administrators Inc., sought approval to enter into the agreement, direct payment of the settlement, and authorize distribution to investors.

The court found the settlement appropriate, noting no better alternatives existed and that the agreement provided certainty and at least a nominal recovery for investors after significant delay.

The plaintiffs moved for default judgment after the defendant, Maria Surovova, was noted in default for failing to attend examinations for discovery.

The court found that Surovova had fraudulently misrepresented herself as a mortgage broker, induced the plaintiffs to transfer $85,221.00 to her under false pretenses, and retained the funds.

The court granted default judgment, awarded punitive damages, and ordered that the judgment survive bankruptcy under s. 178(1) of the Bankruptcy and Insolvency Act.

Full indemnity costs and prejudgment interest were also awarded.

A motion by a first-time bankrupt to determine preliminary legal issues regarding his discharge under the Bankruptcy and Insolvency Act.

The bankrupt argued that section 168.1 provides for automatic discharge after nine months, and that section 169(1) does not operate as an application for discharge for first-time bankrupts.

He contended that when his discharge was opposed, the procedure should follow a different pathway than the standard discharge application procedure in sections 169-176, with the onus on the trustee and creditors to prove their opposition rather than on him to prove entitlement to discharge.

The court rejected these arguments and held that the standard discharge procedure applies to opposed automatic discharges.

The decision concerns a dispute over the return of a deposit following the termination of an agreement of purchase and sale (APS) for a property, in the context of a receivership and subsequent refinancing.

The court orders the return of the deposit to 2557905 Ontario Inc., with interest only from the date the deposit was placed in an interest-bearing account, and denies the listing broker's request for costs from the deposit.

The Trustee, KSV Restructuring Inc., sought substantive consolidation of the estates of ProEx Logistics Inc., Guru Logistics Inc., and 1542300 Ontario Inc., as well as authorization to accept claims by Paul Randhawa and to approve the Trustee’s reports.

The court granted substantive consolidation and approved the Trustee’s reports, but declined to authorize the Trustee’s acceptance of Paul’s claims, holding that the Bankruptcy and Insolvency Act provides a comprehensive code for the allowance and disallowance of claims, and that equity owners such as Rana Randhawa have no standing to challenge the Trustee’s decision to accept a claim.

The decision also addresses the effect of outstanding costs awards on standing and the finality of proceedings.

The applicant, Rothmans, Benson & Hedges Inc., brought an unopposed motion for an insurance settlement and bar order under the Companies’ Creditors Arrangement Act.

The court found that the record supported the requested relief and granted the motion.