Steven Leonard Graff

The applicant bank brought an application for a court-supervised receivership over the respondent debtors' trucking and logistics business following uncured defaults on approximately $11 million in credit facilities.

At the hearing, the respondents sought an adjournment, relying on an improperly filed affidavit from a lawyer at their own counsel's firm disclosing privileged settlement communications.

The court struck the affidavit, denied the adjournment, and granted the receivership order, finding that the bank had given all required notices, negotiated for nearly a year, and was entitled to enforce its security.

The Court of Appeal for Ontario denied leave to appeal from an order appointing a receiver over the property of 11977636 Canada Inc. at the request of the Bank of Montreal.

The debtor argued that the application judge made a factual error regarding the closing date of a property sale, which allegedly affected the decision to refuse an adjournment and appoint a receiver.

The Court found that the error was not determinative, as the appointment was justified by the debtor’s lack of accountability and transparency.

None of the three "Pine Tree" considerations for granting leave to appeal under s. 193(e) of the Bankruptcy and Insolvency Act were met.

The decision addresses two competing motions for the appointment of representative counsel for investors in a receivership proceeding involving Sussman Mortgage Funding Inc. The court reviews the procedural background, the need for representative counsel, and the competing proposals from Aird & Berlis LLP and Paliare Roland Rosenberg Rothstein LLP.

The court ultimately appoints Aird & Berlis LLP as representative counsel, finding their approach and fee structure preferable for efficiency, transparency, and certainty.

The applicant, Waygar Capital Inc., as agent for Ninepoint Canadian Senior Debt Master Fund LP, sought the appointment of a receiver over the property of the respondents, El Mocambo Entertainment Inc. and related companies, under section 243 of the Bankruptcy and Insolvency Act and section 101 of the Courts of Justice Act.

The court reviewed the legal test and relevant factors for appointing a receiver, including the rights of secured creditors and the conduct of the parties.

Although the respondents did not oppose the application, the court, with the parties' agreement, adjourned the receivership to allow the proposed receiver to act as monitor for a short interim period to explore the possibility of maintaining the business as a going concern.

The application may be brought back on an urgent basis if necessary.

In the context of ongoing CCAA proceedings, the applicants and various equipment financiers reached an impasse regarding the wind-down plan and a proposed going-concern sale of the logistics business.

The applicants sought a monetization order, an increase in the administration charge, and lien regularization, which were unopposed and granted by the court to maintain operations.

Due to significant disputes over the sale and liquidation of assets, the court adjourned the contested motions, including several lift-stay motions brought by creditors, and ordered the parties to attend mandatory mediation before a former Commercial List judge.

In a CCAA proceeding, the Applicants sought three orders: approval of a factoring portfolio purchase agreement, approval for distribution of proceeds from a property sale, and permission for a creditor to sell certain vehicles.

The court approved the distribution of Chehalis property proceeds to Roynat.

For the Regions vehicles, the court granted the order allowing Regions to take possession, setting a 30-day retrieval period and approving storage costs of $35/day.

The motion for approval of the JD Factors Purchase Agreement was adjourned to a later date, as Mitsubishi HC Capital Canada Inc. objected, claiming ownership of the receivables and requiring more time to prepare its position.

This motion concerned the interpretation of the Wage Earner Protection Program Act (WEPPA) regarding Service Canada's subrogation rights to recover payments made to employees from an insolvent employer's distribution.

Metroland Media Group Ltd. made a proposal to its creditors, entitling unsecured creditors to a 17% distribution.

Service Canada had approved payments to former non-unionized employees under WEPPA for unpaid severance pay.

The issue was whether Service Canada was entitled to recover these payments on a dollar-for-dollar basis from the employees' distribution or only a pro-rata share (17 cents on the dollar) as an unsecured creditor.

The court held that Service Canada is entitled to a dollar-for-dollar recovery, up to the amount of the WEPP payment, from the employee's distribution before the employee receives any balance.

This motion addressed a receiver's application for an approval and vesting order (AVO) for the sale of properties, which was opposed by the debtors asserting their equitable right of redemption.

The debtors sought to delay the sale to secure financing, but their efforts were deemed highly conditional and uncertain.

The court applied the Soundair test, finding that the receiver conducted a robust and fair marketing process that yielded the best price.

The court emphasized that the debtors' inability to present a complete and unconditional financing package at the time of the motion was fatal to their request, distinguishing this case from precedents where redemption was allowed due to the debtor's immediate ability to pay.

The receiver's motion for the AVO was granted, and the debtors' cross-motion was dismissed.

This is a costs endorsement following an application where the applicants sought a declaration that a s. 244 BIA Notice was void due to the respondent taking an enforcement step (sending Notices of Sale under the Mortgages Act) contemporaneously.

The court previously found that the respondent's action contravened s. 244 BIA, but declined to void the notice due to a lack of demonstrated prejudice to the applicants.

In this costs decision, both parties sought costs.

The applicants claimed partial success, while the respondent claimed full success.

The court, exercising its discretion under s. 131 of the Courts of Justice Act and Rule 57, determined that neither party should be awarded costs, considering the respondent's contravention of the BIA and the applicants' failure to provide evidence of prejudice.

The applicants sought a declaration that the respondent's Notice of Intention to Enforce Security under s. 244 of the Bankruptcy and Insolvency Act (BIA) was void because the respondent concurrently issued Notices of Sale under the Mortgages Act.

The applicants argued that the Notices of Sale constituted an enforcement step taken within the BIA's ten-day notice period, which is prohibited.

The court found that the issuance of the Notices of Sale was indeed an enforcement step taken in contravention of s. 244(2) of the BIA.

However, the court declined to declare the s. 244 BIA Notice void, as there is no statutory prescription for such an outcome and no evidence of actual prejudice to the borrowers was demonstrated.

The court emphasized that the best practice is to issue notices of sale only after the BIA's ten-day notice period expires.

The moving party sought an order appointing Representative Counsel and a Non-Union Employee Representative for non-unionized employees terminated by the debtor following its Notice of Intention to Make a Proposal under the BIA.

The motion was unopposed and supported by the debtor and the Proposal Trustee.

Applying the CanWest factors, the court found the non-union employees to be a vulnerable group requiring representation to advance their claims.

The court granted the order, finding it would benefit all stakeholders by streamlining the claims process and avoiding a multiplicity of legal retainers.

The SMA 2 Unitholders sought a declaration that substantive consolidation does not apply to Bridging SMA 2 LP and approval for a second interim distribution.

The Receiver and Unitholder Representative Counsel opposed, arguing the motion was premature as various distribution issues, including the full economic impact of consolidation, remained unresolved.

The court dismissed the motion, deferring to the Receiver's position that a determination on substantive consolidation and further distributions was premature given the incomplete factual record and outstanding distribution issues.

The applicant, Original Traders Energy Ltd. (OTE Group), brought a motion for a Mareva injunction against former executives, Glenn Page and Mandy Cox, and their corporate entity, 2658658 Ontario Inc., to freeze a yacht allegedly purchased with OTE funds through fraudulent means.

The court granted the injunction, finding a strong prima facie case of fraud, a serious risk of asset dissipation given the yacht's movement after notice, and that the balance of convenience favored the applicant.

The requirement for an undertaking as to damages was dispensed with due to the applicant's insolvency and the strength of their case.

The order included directing the respondents to facilitate the yacht's return to Florida.

Voyager Digital Ltd. applied under Part IV of the CCAA for an Initial Recognition Order of its Chapter 11 proceedings in the United States.

The central issue was whether the US proceeding should be recognized as a 'foreign main proceeding' or a 'foreign non-main proceeding', which depended on determining the company's Centre of Main Interests (COMI).

Despite being incorporated in British Columbia and listed on the TSX, the court found that the company's COMI was in the US, where its operations, management, and principal assets were located.

The court recognized the US proceeding as a foreign main proceeding and granted the requested stay.

The Receiver brought a motion for an order approving an interim cash distribution of $78 million to the two institutional unitholders in Bridging SMA 2 LP.

The court found it appropriate to make an interim distribution but reduced the amount to $46 million to account for the potential impact of substantively consolidating the various Bridging Funds, an issue that had yet to be determined.

The Receiver brought an unopposed motion for a Claims and Unitholdings Identification Order and for approval of its activities as described in its 12th Report.

The court found the proposed order practical and reasonable to assist the Receiver with the distribution process.

The motion was granted and the Receiver's activities were approved.

The applicant, 908593 Ontario Limited (Eagle Travel Plaza) by its receiver, brought a motion seeking coverage under a credit risk insurance policy issued by Atradius.

The core dispute was the interpretation of Article 23300 of the policy, specifically whether a $100,000 maximum liability limit for "Discretionary Credit Limit" (DCL) Buyers applied per DCL Buyer or as an aggregate limit for all DCL Buyers per insurance year.

The court found the policy language clear and unambiguous, concluding that the $100,000 limit was an aggregate for all DCL Buyers per insurance year, not per individual DCL Buyer.

The applicant's motion was dismissed.

The applicant brought a consent motion within its CCAA proceedings for approval of Sale Procedures and an extension of the Stay Period.

The court found the applicant acted in good faith and with due diligence, and granted the motion, extending the Stay Period to December 22, 2021, and setting a bid deadline of December 31, 2021.

The applicant, McEwan Enterprises Inc., sought approval of a related-party transaction under the Companies' Creditors Arrangement Act to sell substantially all of its assets to a newly formed company owned by its current shareholders.

The motion was opposed by a landlord who had not reached a consensual arrangement with the applicant.

The court dismissed the motion, finding that the mandatory requirements of section 36(4) of the CCAA were not met, as no good faith efforts were made to sell the assets to non-related persons and the consideration was not shown to be superior to a receivership and bankruptcy alternative.

The applicant, McEwan Enterprises Inc., sought an Amended and Restated Initial Order at a comeback hearing in its CCAA proceedings to extend the stay period and increase the administration and directors' charges.

A creditor opposed the motion, arguing the applicant should not be allowed to continue without a court-approved marketing and sale process and raising concerns about a proposed transaction.

The court granted the requested relief to allow the applicant to continue operations, finding the creditor's concerns raised arguable issues that were more properly addressed at an upcoming motion to approve the proposed transaction.