Shayne Kukulowicz

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 endorsement grants a brief adjournment in the Companies’ Creditors Arrangement Act (CCAA) proceedings involving Hudson’s Bay Company ULC and related entities, following ongoing discussions between the applicants and stakeholders.

The court extends the stay of proceedings, increases the Directors’ Charge, amends the relative priorities of charges, and approves the engagement of Reflect Advisors, LLC as financial advisor.

The court finds the requested relief appropriate, unopposed, and supported by the Monitor, and orders the requested amendments to the Initial Order.

The applicants, a group of companies undergoing CCAA proceedings, sought to extend the existing stay of proceedings to DAK Capital Inc., a non-debtor third-party guarantor involved in an arbitration with Canopy Growth Corporation.

Canopy opposed, arguing that CCAA s. 11.04 prohibits such an extension for guarantors.

The court, relying on the broad inherent jurisdiction under CCAA s. 11 and recent Ontario precedents, found that s. 11.04 is a clarifying provision, not a prohibitive one, and granted the temporary stay against DAK Capital to prevent distraction from the ongoing restructuring efforts.

The Monitor of BioSteel Sports Nutrition Inc. (under CCAA protection) sought an order declaring ColdHaus Direct Inc. liable for $3.97 million and directing payment, along with an extension of the stay of proceedings and approval of fees.

ColdHaus brought a cross-motion to lift the stay to allow set-off of post-filing obligations against pre-filing amounts, specifically a $1.05 million buy-back claim.

The court allowed the Monitor's payment motion in part, permitting ColdHaus to set off pre-filing billbacks for warehousing ($89,273.14) and distribution rebates ($74,546.05).

However, the court dismissed ColdHaus's motion to set off the buy-back amount, finding the obligation did not arise pre-filing and that ColdHaus had artificially created indebtedness by failing to pay invoices.

The Monitor's request for a stay extension and fee approval was granted.

The appellants, Monica Murad, Aaron Murad, and 997322 Ontario Inc., sought to appeal a non-competition order issued by a motion judge during the receivership of Mill Street & Co. Inc. The motion judge had included the appellants in the order, despite their not being directly implicated in obstruction or fraudulent licensing, because the Murad companies operated as family businesses.

The Court of Appeal found no jurisdiction under s. 193(a) of the Bankruptcy and Insolvency Act as the right to compete is a present, not future, right.

Leave to appeal under s. 193(e) was denied because the issue of making a non-competition order against a non-party did not arise, as the appellants were considered "Murad Parties" and treated as parties throughout the receivership.

The appeal was quashed.

Crystallex International Corporation and Tenor Special Situation I, LP sought leave to appeal a motion judge's order that partially dismissed Crystallex's request to seal certain financial information in the Monitor's Thirty-Third Report.

The motion judge had applied the Sierra Club test and found the evidence for sealing speculative.

The Court of Appeal refused leave, finding the proposed appeal was not prima facie meritorious and the case was not of significance to the practice, upholding the motion judge's discretionary order.

Crystallex International Corporation brought a motion for a sealing order to keep confidential certain financial information and strategic details contained in the Monitor's 33rd Report, including cash balance, litigation expenses, sanctions impact, and confidential mediation disputes.

The Ad Hoc Committee of senior noteholders and the Trustee opposed the sealing of financial information, arguing for the importance of disclosure in CCAA proceedings.

The court applied the Sierra Club test, which requires demonstrating a real and substantial risk to an important commercial interest, no reasonable alternative to sealing, and the salutary effects outweighing the deleterious effects on the open-court principle.

The court found Crystallex's evidence, consisting of bald and speculative statements, insufficient to meet this high evidentiary burden, and therefore dismissed the motion for a sealing order.

Her Majesty the Queen in right of Ontario sought to lift a stay on its $330 billion health care cost recovery action against three tobacco companies (JTI-Macdonald Corp., Imperial Tobacco, Rothmans, Benson & Hedges Inc.) and eleven co-defendants, which was imposed under CCAA proceedings.

Ontario proposed to temporarily stay the effects of any judgment.

The court dismissed the motion, emphasizing the need to preserve the status quo in CCAA proceedings to facilitate a global resolution of significant claims.

Allowing Ontario's action to proceed would alter the level playing field, distract from restructuring efforts, and impose significant costs, prejudicing other stakeholders.

The applicants, Payless ShoeSource Canada Inc. and Payless ShoeSource Canada GP Inc., sought and were granted an Initial Order under the Companies’ Creditors Arrangement Act (CCAA).

This order included a stay of proceedings, which was extended to Payless ShoeSource Canada LP due to its integral role in the operations.

The court also approved the appointment of FTI Consulting Canada Inc. as Monitor and Ankura Consulting Group LLC as Chief Restructuring Organization (CRO), along with an Administration Charge and a Directors’ Charge.

A cross-border protocol, consistent with the Judicial Insolvency Network (JIN) Guidelines, was also approved to coordinate with concurrent U.S. Chapter 11 proceedings.

A comeback hearing was scheduled to address further matters.

In long‑running insolvency proceedings under the Companies' Creditors Arrangement Act, the court was asked to determine whether unsecured bondholders were entitled to claim post‑filing interest on crossover bonds after the debtor companies entered CCAA protection.

The court considered the common law “interest stops” rule, the pari passu principle governing distribution to unsecured creditors, and the relationship between the CCAA and the Bankruptcy and Insolvency Act.

The court held that the interest stops rule applies in CCAA proceedings and prevents unsecured creditors from claiming post‑filing interest absent a negotiated plan providing for such payments.

Allowing interest to accrue for some creditors during the stay period would undermine the status quo and distort equality among creditors.

The court further held it had jurisdiction to determine the issue even without a proposed plan of arrangement.

On a cross-border insolvency recognition motion under ss. 44-49 of the Companies’ Creditors Arrangement Act, the moving party sought recognition of U.S. Chapter 11 proceedings as foreign main proceedings and requested ancillary relief, including enforcement of first-day orders, appointment of an information officer, and an administration charge.

The court held that Chapter 11 proceedings qualified as foreign proceedings and accepted that the moving party was a foreign representative, subject to possible further U.S. court developments.

Applying a centre of main interests analysis that can rebut the registered-office presumption, the court found the Canadian debtors’ centre of main interests was in the United States.

Mandatory and discretionary relief under Part IV of the statute was granted, including the requested supplemental orders and a capped administration charge.

In Companies’ Creditors Arrangement Act proceedings, the debtor sought approval of a debtor-in-possession financing facility, an extension of the stay of proceedings, approval of a management incentive plan, and approval of the monitor’s actions.

Certain noteholders opposed the proposed financing and incentive plan and proposed an alternative short-term DIP facility intended to maintain the status quo pending negotiation of a restructuring plan.

The court held that the debtor’s board had exercised reasonable business judgment after a competitive process and that the proposed financing satisfied the statutory considerations under s. 11.2 of the CCAA.

The court rejected the argument that the DIP facility constituted a de facto plan of arrangement requiring creditor approval and found the alternative financing proposal tactical and inconsistent with market conditions.

The management incentive plan was also approved as reasonable and necessary to retain key personnel responsible for pursuing a significant international arbitration claim forming the debtor’s primary asset.