Bankruptcy and Insolvency Law - SCJ

The City of Toronto sought the appointment of a receiver and manager over the property, assets, and undertaking of Harry Sherman Crowe Housing Co-operative Inc. due to operational, financial, and governance challenges.

The court addresses the Receiver’s motion for approval of its activities, fees, and a proposed process (RFEIQ) for identifying and qualifying future board members to transition the Co-op out of receivership.

The court approves the Receiver’s activities and fees, and partially approves the RFEIQ process, requiring further reporting and court oversight before any subjective vetting of board candidates.

This decision approves four orders sought by the Applicants under the Companies’ Creditors Arrangement Act (CCAA): (1) approval of an asset purchase agreement (APA) with Canadian Tire Corporation for the sale of Hudson’s Bay’s intellectual property; (2) a sealing order for the confidential appendix summarizing bids; (3) termination of the stay of proceedings and CCAA proceedings for certain entities, concurrent with the appointment of a receiver; and (4) a declaration under the Wage Earner Protection Program Act (WEPPA) to assist terminated employees.

The Court found the sale process fair and transparent, the consideration reasonable, and the relief unopposed and supported by the Monitor.

The court considered a motion by the Administrator to revive the consumer proposal of Marion Patricia Amos, which had been annulled after the debtor defaulted due to health and financial issues.

The court reviewed the statutory discretion under s. 66.31(9) of the Bankruptcy and Insolvency Act and the relevant factors for revival, including the debtor’s good faith, completion of payments, and lack of creditor opposition.

The motion was granted, reviving the proposal.

The decision addresses motions regarding the appointment of representative counsel for current and former employees and retirees of Hudson’s Bay Company ULC and related entities in ongoing Companies’ Creditors Arrangement Act (CCAA) proceedings.

The Court declined to appoint any of the nominated law firms as representative counsel at this stage, instead appointing the Honourable Herman Wilton-Siegel as an independent third party to evaluate proposals and make a recommendation.

The Court also approved amendments to the Sale and Investment Solicitation Process (SISP) to remove the company’s art and artifact collection from the SISP and to appoint Heffel Gallery Limited to conduct a separate auction for the collection, subject to further court approval of procedures.

The reasons review the legal framework for appointing representative counsel and the importance of balancing stakeholder interests in complex insolvency proceedings.

This decision addresses whether Cushman & Wakefield ULC (C&W), as real estate broker, is entitled to a commission in respect of Stelco’s purchase of the Stakeholders’ limited partnership units and other equity in the Legacy Lands LP, under the Companies’ Creditors Arrangement Act proceedings.

The court finds that C&W is not entitled to a commission, as the relevant brokerage agreements had expired or were never executed for the properties in question, and the transaction at issue was not contemplated by the commission provisions.

The court also dismisses C&W’s alternative claim for unjust enrichment.

The court considered an application by Aggregated Investments Inc. for the appointment of a receiver over the assets of the respondents, including real property, under the Courts of Justice Act and the Bankruptcy and Insolvency Act.

The application was dismissed.

The court found that a bona fide defence existed regarding the underlying debt, specifically whether Aggregated breached its duty of good faith by accepting a reduced recovery and shifting value to a related party.

The court held that the appointment of a receiver was not just or convenient in the circumstances, given the triable issue as to the propriety of the debt and the conduct of Aggregated.

This decision is an appeal by Alan Saskin from the order of Associate Justice Ilchenko, sitting as Registrar in Bankruptcy, refusing an absolute discharge and imposing conditions under the Bankruptcy and Insolvency Act.

The court reviews the procedural history, the evidence, and the legal standards for discharge, including the meaning of "moral blameworthiness" under s. 173(1)(a) and the duties of a bankrupt under s. 173(1)(o).

The appeal is dismissed, with the court finding no error in the Registrar's factual or legal conclusions.

This decision concerns an appeal by Zeifman Partners Inc., as Trustee in Bankruptcy of Oragin Foods Inc., from the disallowance by KPMG Inc., as Trustee in Bankruptcy of Organic Garage (Canada) Ltd., of a proof of claim for $6,760,280.89.

The claim was based on alleged intercompany loans and a note payable.

The court allowed the appeal in part, admitting the "Current Liability Component" ($2,917,423.11) as a proven unsecured claim, but dismissed the appeal regarding the "Long Term Liability Component" and "Note Payable Component," finding insufficient evidence that these were debts rather than equity contributions.

The decision provides a detailed analysis of the distinction between debt and equity in the context of related-party transactions in insolvency, and the applicable standards of review.

The court dismissed Farm Credit Canada's application for the appointment of a receiver over the assets of Kapital Produce Ltd. and related companies.

The court found that, although there were alleged events of default under the credit agreement, most were cured within the required period and did not constitute actionable defaults.

The court held that the appointment of a receiver was not just or convenient in the circumstances, given the significant value of the security held by FCC, the lack of evidence of irreparable harm or risk to the assets, and the Debtors' ongoing efforts to resolve the indebtedness.

This decision concerns the approval of a plan of arrangement under section 192 of the Canada Business Corporations Act for Sherritt International Corporation and 16743714 Canada Inc. The plan involves the exchange and restructuring of certain debt obligations, including Senior Secured Notes and Junior Notes, to stabilize the company’s financial position.

The court reviews the statutory and fairness requirements for approval, considers objections, and ultimately finds the arrangement fair and reasonable, granting the final order.

The Applicants, The Cannabist Company Holdings (Canada) Inc. and 16834434 Canada Inc., sought an interim order under section 192 of the Canada Business Corporations Act (CBCA) to approve a plan of arrangement and to direct the holding of a meeting of Senior Noteholders.

The Court granted the interim order, finding the Applicants acted in good faith and met the statutory requirements.

The Court also approved the classification of all Senior Noteholders as a single class for voting purposes, rejecting the respondent's argument for separate classes.

The order included a limited stay of proceedings and set out the process for the upcoming meeting and final order hearing.

This endorsement grants initial relief under the Companies’ Creditors Arrangement Act (CCAA) to Synaptive Medical Inc., a Toronto-based medical device company facing a liquidity crisis and insolvency.

The court finds Synaptive to be a “debtor company” under the CCAA, appoints Richter Inc. as Monitor, approves a stay of proceedings, authorizes DIP financing with Export Development Canada, and grants administration, DIP lender, and directors’ charges.

The decision reviews the statutory and case law criteria for CCAA relief, including the expanded concept of insolvency and the requirements for interim financing and related charges.

Gray Jay Estates Inc. sought a court order to vary the “Payment Amount” under an assignment of indebtedness and security agreement, which would have increased the amount payable by NE SPC II LP (Blacksail) by approximately $1 million.

The dispute centered on whether cash on hand should have been used to repay a DIP facility before closing, and whether a term should be implied into the agreement to require such repayment.

The court found no basis to imply such a term, holding that the contract’s language was clear and that the parties had not agreed to the adjustment sought.

The motion was dismissed, and costs were awarded to Blacksail.

The plaintiff, Toronto-Dominion Bank, sought summary judgment against Michael D’Cruz and Rosalind D’Cruz to set aside a $94,000 payment made by Michael to Rosalind in February 2022, shortly before Michael’s bankruptcy.

The court found that the payment constituted a preference under the Bankruptcy and Insolvency Act and was void under the Fraudulent Conveyances Act, as it gave Rosalind preferential treatment over other creditors.

The court granted judgment in favour of the plaintiff for $94,000 and provided directions for costs.

This decision addresses three motions in the receivership of the Bridging Funds: (1) the Receiver’s motion for an interim distribution to unitholders, (2) approval of a settlement with the BlackRock Parties, and (3) the unitholders’ motion for a constructive trust.

The court approved the interim distribution but required a sufficient reserve for the disputed Cerieco claim until its final determination.

The BlackRock settlement was approved.

The constructive trust motion was deferred pending resolution of the Cerieco claim.

The decision provides detailed guidance on the treatment of creditor and unitholder claims in a complex receivership under the Securities Act.

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.

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 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 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 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.