In the context of CCAA proceedings for Priszm, the landlord (Scott's REIT) brought a motion claiming entitlement to the proceeds from the sale and assignment of various restaurant leases to third-party purchasers.
Scott's argued it had a proprietary interest in the lease consideration and that the secured creditor (Prudential) had subordinated its security interest to Scott's claim.
The court dismissed the motion, finding that the lease provisions created only an unsecured contractual obligation, not a proprietary interest.
Furthermore, the court held that the leasehold charge consents did not contain clear and unequivocal language demonstrating an intention by Prudential to subordinate its first-priority security interest to Scott's unsecured claim.
