Bankruptcy and Insolvency Law - SCJ

The court-appointed Receiver brought a motion to extend an ex parte Mareva injunction against the spouse of the debtors' principal and to repatriate misappropriated HST funds.

The debtors had concealed a $986,594.96 HST refund and diverted it to an account controlled by the spouse.

An intervenor claimed the funds were repayment for a loan, but the court dismissed this as a fraudulent attempt to divert the funds.

The court found the Receiver made full and frank disclosure, was not required to commence an action against the spouse first, and did not need to provide an undertaking as to damages due to the Receivership Order.

The motion was granted, the injunction extended, and immediate repatriation of the funds ordered.

The applicant, a customer of a bankrupt securities firm, sought to establish a claim against the bankrupt estate's general fund for post-bankruptcy increases in the value of liquidated foreign futures contracts.

The court held that while Part XII of the Bankruptcy and Insolvency Act does not preclude a customer from making a claim against the general fund as an ordinary creditor, the applicant only had a provable claim for contracts that vested in the trustee on the date of bankruptcy, not for those liquidated prior to bankruptcy due to subagent insolvency.

The court also dismissed the applicant's request for an equitable priority over other general creditors.

The respondent husband brought a motion to strike the applicant wife's claim for equalization of net family properties, arguing her prior assignment in bankruptcy disentitled her from making the claim.

He also sought security for costs.

The wife produced evidence that her Trustee in Bankruptcy had returned the right to sue for equalization to her after her discharge.

The court found this distinguished her case from the authorities relied upon by the husband and concluded he had not shown she had no reasonable claim in law.

The motion to strike was dismissed, and the request for security for costs was denied without prejudice due to an insufficient record.

The defendants brought a motion for summary judgment or to strike the plaintiff's breach of trust claim under the Construction Lien Act.

The defendants argued the claim was moot because they had placed funds equal to the plaintiff's original claim in their lawyer's trust account.

The court dismissed the motion, finding that the breach of trust claim had substantive legal value independent of the breach of contract claim, particularly because a judgment for breach of trust would likely survive a potential bankruptcy under section 178(1)(d) of the Bankruptcy and Insolvency Act.

The moving party, acting under a s. 38 BIA order in the bankruptcy of a general contractor, moved for a final order that a release executed by the bankrupt's trustee did not bar a claim for damages against the respondent municipality.

The moving party also sought an order nunc pro tunc for leave to amend the bankrupt's statement of defence to add a crossclaim against the municipality.

The court dismissed the motion, finding that the action had already been dismissed following a settlement, and a crossclaim could not stand alone under the Construction Lien Act.

Furthermore, the comprehensive release executed by the trustee barred the crossclaim, and the court declined to exercise its discretion under s. 37 of the BIA to reverse the trustee's decision.

In the context of CCAA proceedings for Target Canada Co. and related entities, the applicant brought an unopposed motion to establish a streamlined process for identifying and resolving common issues among pharmacist claims.

The court granted the motion, noting the benefit of an expeditious and efficient procedure to resolve such disputes, and approved the modified fee arrangements subject to court approval.

The bankrupt appealed a decision by the Registrar in Bankruptcy refusing to schedule his discharge application for a hearing before a Commercial List judge.

The Registrar had adjourned the hearing sine die pending the outcome of a separate action by the Trustee against the bankrupt's family for alleged preferential and fraudulent conveyances.

The Superior Court dismissed the appeal, finding that the Registrar properly exercised her discretion by balancing the relevant factors, including prejudice, interests of the parties, and the summary nature of discharge hearings where fraud allegations should be established beforehand.

In the context of CCAA proceedings, the applicant sought to add its highly integrated subsidiary, GuestLogix Ireland Limited, as an applicant to facilitate a comprehensive sale and investor solicitation process.

The applicant also sought approval for an Administration Charge, a Directors' Charge, and an Interim Lender's Charge to secure interim financing of up to US $3,000,000.

The court granted the unopposed motion, finding the addition of the subsidiary appropriate and the requested charges and financing necessary and reasonable under the CCAA.

The moving party, a former CFO of a company undergoing CCAA restructuring, sought a declaration that a court-approved settlement and release barred the Chartered Professional Accountants of Ontario (CPAO) from commencing disciplinary proceedings against him.

The court dismissed the motion, finding that the CPAO's regulatory proceedings regarding professional misconduct did not constitute a 'claim' under the CCAA, nor were they claims against him in his capacity as a director or officer.

Furthermore, the disciplinary proceedings did not fall within the definition of released claims in the settlement order, and the CPAO was not bound by the order as it had not received notice.

The Attorney General of Canada, at the request of the Superintendent of Financial Institutions, applied for a winding-up order under the Winding-up and Restructuring Act in respect of the Canadian business of an authorized foreign bank.

The bank had admitted insolvency following the emergence of significant German tax claims and the imposition of a moratorium by German regulators.

The court found that the Superintendent had ample basis to take control of the bank's Canadian assets under the Bank Act.

Given the bank's admitted insolvency and the appointment of a German insolvency administrator, the court concluded it was just and equitable to grant the winding-up order and appoint a liquidator.

The bankrupt applied for discharge from bankruptcy.

On the first day of the hearing, the bankrupt raised preliminary issues regarding the standing of an opposing creditor, whether an alleged undue preference could be considered, and the admissibility of documents.

The court held that the opposing creditor had standing because its proof of claim had not been disallowed.

The court deferred the undue preference issue, noting a separate proceeding had been scheduled to determine it, and ordered that the discharge hearing be deferred until that issue was resolved.

The court declined to rule on document admissibility in advance.

The plaintiff bank brought a motion for summary judgment seeking rectification of two mortgages registered against the defendants' abutting properties to comply with the Planning Act, as well as possession of the properties.

The defendants had defaulted on the loan and entered bankruptcy.

The court found that the parties had a common continuing intention to mortgage both properties as security for the loan, and that the failure to cross-reference the mortgages was a mistake.

The court granted rectification, deemed the notices of sale sufficient, and granted judgment for possession.

The plaintiff's motion to dismiss the defendants' counterclaim was dismissed without prejudice as the counterclaim remained stayed under Rule 11 due to the bankruptcy.

The parties appeared at a case conference to settle a draft Order arising from previous Reasons for Decision.

The plaintiff advised the court of its intention to discontinue the proceeding and make a voluntary assignment into bankruptcy.

The draft Order, including costs, was settled and signed by the court.

The applicants, a group of mortgage investors, applied to appoint a receiver over the property of the respondent, a not-for-profit corporation operating a church and school, due to an outstanding loan balance of approximately $11.5 million.

The respondent had previously commenced an action against the applicants alleging conspiracy and seeking restitution.

The court dismissed the application, finding it was not just and convenient to appoint a receiver because the respondent raised triable issues, the property value greatly exceeded the debt, and a receivership would effectively end the ongoing litigation and negatively impact the church and school.

The court-appointed Manager moved for approval of its fees, its counsel's fees, and a proposed Fee Allocation Methodology to distribute the costs among various properties in a complex real estate receivership.

Several mortgagees and lien claimants opposed the fee approval and the allocation methodology, arguing that time was not docketed on a property-by-property basis and that the methodology was unfair.

The court approved the fees and the methodology, finding that strict property-by-property accounting would be cost-prohibitive and that the proposed allocation was fair and equitable.

The court also rejected arguments that the Manager's charge should be subordinated to prior liens or subject to the doctrine of marshalling.

Following the dismissal of the Estate's appeal of the Receiver's disallowance of its proof of claim, the successful parties sought costs.

The court awarded costs to the Receiver on a substantial indemnity scale and to the Applicants on a partial indemnity scale.

The court also held the trustee of the Estate personally liable for the costs award, jointly and severally with the Estate, as the trustee initiated the unsuccessful appeal and there was no evidence of estate assets to satisfy the award.

The appellants appealed a Registrar's order requiring a family farming corporation to disclose documents and its directors to submit to examinations under the Bankruptcy and Insolvency Act.

The trustee sought the information to value the bankrupt's shares in the corporation.

The appellants argued the trustee's access should be limited to shareholder rights under the OBCA.

The court dismissed the appeal, finding the trustee is entitled to information relevant to valuing the shares and that there is no conflict between the BIA and directors' duties under the OBCA.

The court granted the trustee's cross-appeal, holding the Registrar lacked authority to order written interrogatories in lieu of an oral examination under s. 163 of the BIA, and awarded costs to the trustee.

The parties sought clarification on the settlement of an order following a judgment declaring a bulk sale void for non-compliance with the Bulk Sales Act.

The applicant trustee argued that the respondent purchaser's liability to account for the 'value of the stock in bulk' under s. 16(2) of the Act included the HST paid on the transaction.

The court applied the modern principle of statutory interpretation and held that the plain and ordinary meaning of 'value of the stock in bulk' does not include value-added taxes like HST.

The respondent's maximum liability was therefore capped at the purchase price excluding HST, less amounts paid to secured creditors.

The moving parties, construction lien creditors of the Mady Group of Companies, brought a motion seeking to lift a CCAA stay of proceedings, amend their statements of claim, and obtain a Mareva injunction against several individuals and corporations.

The court dismissed the motion, finding that the moving parties failed to make full and fair disclosure, failed to establish a strong prima facie case of fraud or breach of trust, and provided no evidence of a risk of dissipation or removal of assets from the jurisdiction.

The defendant bankruptcy trustee brought a motion for summary judgment to dismiss the plaintiff's action for conversion and negligence on the basis that the two-year limitation period had expired.

The plaintiff claimed a half-interest in a boat that her bankrupt husband had purportedly gifted to their son, which the trustee subsequently seized and sold.

The court found that the trustee took possession of the boat on May 30, 2011, and the statement of claim was issued exactly two years later on May 30, 2013, making it within the limitation period.

The court also noted that the alleged conversion likely occurred when the boat was sold, not when possession was taken.

The motion for summary judgment was dismissed.