In Case You Missed It: Decisions on Our Radar

Rebuilding Success Magazine Features - Fall/Winter 2024 > In Case You Missed It: Decisions on Our Radar

In Case You Missed It: Decisions on Our Radar

September 20, 2024

The financial restructuring group at Davies Ward Phillips & Vineberg LLP is tracking the following cases. We have briefly described issues and updates for each case relevant to the CAIRP membership. Unless otherwise noted, the information in the chart is current to July 31, 2024—more recent developments in each case are not reflected.

By Natasha MacParland, Partner and Rui Gao, Associate, Davies Ward Phillips & Vineberg LLP¹

The blue shading of cells denotes new cases we have been tracking since the last issue of Rebuilding Success; the blue font denotes updates to cases described in a previous issue.

Case	Issue	Update
Re Poonian (British Columbia) 2021 BCSC 555 2022 BCCA 274 2024 SCC 28	Does a “fresh start” granted in bankruptcy extinguish fraud related debts and liabilities?	No. If there is a direct link between the fraudulent activity and the value of the debts or liabilities ordered, they will be exempt from discharge under section 178(1)(e) of the BIA. The British Columbia Securities Commission imposed both a disgorgement order and administrative penalties against the bankrupts on account of their fraudulent conduct in dealing with securities. The British Columbia Supreme Court (“BCSC”) granted an order that these amounts owed by the Poonians would not be released by an order of discharge under the BIA. The BCSC relied on the provisions for ‘exemptions to the discharge of debts’, prescribed under sections 178(1)(a) and (e) of the BIA. The British Columbia Court of Appeal (“BCCA”) dismissed an appeal against the BCSC’s decision. In particular, the BCCA found that section 178(1)(a) did not apply, because it only exempted fines and penalties “imposed by a court”. However, the BCCA upheld the BCSC’s conclusion that both the disgorgement order and the administrative penalties were exempt from discharge under section 178(1)(e) because they are debts and liabilities “resulting from obtaining property or services by false pretences or fraudulent misrepresentation”. The BCCA’s decision was appealed to the Supreme Court of Canada. Numerous parties intervened in the appeal, including the Canadian Association of Insolvency and Restructuring Professionals and the Superintendent of Bankruptcy. On July 31, 2024, in a 5-2 decision, the Supreme Court of Canada allowed the appeal in part, and addressed the applicability of both section 178(1)(a) and section 178(1)(e). With respect to section 178(1)(a), the Supreme Court of Canada found that neither the disgorgement order nor the administrative penalties were exempt from discharge and upheld the BCCA’s conclusion that the words “imposed by a court” in this provision do not capture orders made by administrative tribunals or regulatory agencies that are subsequently registered as judgments of a court. The Supreme Court of Canada also agreed that this exemption is not restricted to fines and penalties associated with criminal or quasi‑criminal proceedings. With respect to section 178(1)(e), the Supreme Court of Canada ruled that provision exempted the disgorgement order from discharge, but not the administrative penalties. This is because: (1) there was a direct link between the fraudulent conduct and the amount of the disgorgement order; and (2) by contrast, the administrative penalties imposed by the Commission were not a direct result of the fraudulent activities, but rather an administrative decision unrelated to the value of property or services obtained as a result of the fraudulent conduct. More generally, the Supreme Court of Canada clarified that for a debt or liability to survive bankruptcy under section 178(1)(e), three elements must be established: (1) false pretences or fraudulent misrepresentation; (2) a passing of property or provision of services; and (3) a link between the debt or liability and the fraud.
Piekut v. Canada (Minister of National Revenue) (British Columbia) 2023 BCCA 181 SCC Case No. 40782	Does the seven-year period in in section 178(1)(g)(ii) of the Bankruptcy and Insolvency Act (“within seven years after the date on which the bankrupt ceased to be a full- or part-time student”) run from the latest date that the bankrupt ceased to be a full- or part-time student, irrespective of whether the studies at that latest date were financed by one or more student loans secured through a government program?	Yes. On April 19, 2023, the BCCA upheld the decision of the chambers judge regarding the interpretation of section 178(1)(g)(ii) of the BIA. The Chambers Judge had relied on the 2015 decision of the BCSC in Mallory (Re) on this same issue. The BCCA acknowledged that there were conflicting decisions in other jurisdictions (for instance, St. Dennis (Re), 2017 ONSC 2417). In those decisions, other courts had found that the seven-year period in section 178(1)(g)(ii) of the BIA runs from the latest date that the bankruptcy ceased being a full- or part-time student in studies financed through a federal or provincial student loans program. However, the BCCA concluded that the Mallory, rather than those other decisions, was correctly decided. On December 14, 2023, the Supreme Court of Canada granted leave to appeal in this matter. On April 27, 2024, the Supreme Court of Canada granted leave to intervene to numerous parties, including the Canadian Association of Insolvency and Restructuring Professionals. The appeal has been tentatively scheduled for the week of November 4, 2024.
AG and Agence du revenu du Québec v. Richter Advisory Group Inc. (“ChronoMétriq”) (Quebec) QCCS Order (October 27, 2021) 2023 QCCA 1295 SCC Case No. 41043	Can the Court grant charges in favour of interim lenders and others that rank in priority to the Crown’s deemed trust claims?	Yes. On October 27, 2021, the Quebec Superior Court (Commercial Division) approved an interim lender's charge, an administration charge and a directors’ and officers’ charge ranking in priority to any trusts (statutory or otherwise). The Attorney General of Canada and the Québec Revenue Agency appealed to the Quebec Court of Appeal, arguing the Court did not have authority to rank the charges above Crown deemed trusts. CIBC, the Canadian Bankers’ Association and the Insolvency Institute of Canada intervened in the consolidated appeal. On October 18, 2023, the Quebec Court of Appeal dismissed the appeal. The Court of Appeal affirmed that the lower court had jurisdiction to grant super-priority charges ranking in priority to the Crown deemed trusts, based principally on a reading of the Supreme Court of Canada’s 2021 decision in Canada v. Canada North Group Inc. and an application of that decision to the BIA. On December 18, 2023, the Attorney General of Canada sought leave to appeal to the Supreme Court of Canada. Leave to appeal was dismissed on June 6, 2024.
Rural Municipality of Eye Hill v. Saskatchewan (Minister of Energy and Resources) (Saskatchewan) 2023 SKKB 52 2023 SKCA 120	Will dues owed to a rural municipality rank in priority to claims unaddressed environmental obligations owed to the Crown?	No. On March 7, 2023, the Saskatchewan Court of King's Bench rejected an attempt by a rural municipality (“RM”) to gain priority in distribution of residual proceeds from the sale of assets in an oil and gas receivership. The Receiver sold certain oil and gas assets of the debtor and sought to distribute the residual proceeds to the Ministry of Energy Resources to offset $20 million in unaddressed environmental obligations. The RM took the position that it should be paid in priority for municipal taxes owed by the debtor, the RM also asserted a priority over funds in the receivership estate based on an alleged lien and orders issued in the CCAA proceeding. The Court rejected RM’s claims while holding that rural municipalities cannot "lie in the weeds", waiting to assert their claims. RM appealed to the Saskatchewan Court of Appeal, which dismissed the appeal on November 1, 2023. The Court of Appeal disagreed with the lower court on some aspects. Most notably, the Court of Appeal found that RM should not be criticized for not advancing its claim earlier than it did, based on the record in this case. However, in the result, the Court of Appeal concluded that there was no error in law in the lower court’s principal findings. The time period for seeking leave to appeal to the Supreme Court of Canada has lapsed. Leave was not sought.
Mantle Materials Group Ltd v. Travelers Capital Corp. (Alberta) 2023 ABCA 302 SCC Case No. 41063	Do the statutory rights of appeal under section 193 of the BIA extend to decisions of a procedural nature?	No. Within two months of one another, the Alberta Court of Appeal and the Ontario Court of Appeal both clarified that the statutory rights of appeal provided for in section 193 of the BIA do not extend to appeals from decisions that are procedural in nature. Although section 193(c) provides a statutory right of appeal if the value of the property at issue is more than $10,000, this does not mean that there is an automatic right of appeal applies to any order or decision in a proceeding where the value of the property exceeds $10,000. If the order in question does not result in a gain or loss to either party, the decision is likely procedural in nature and leave to appeal must be sought. On December 20, 2023, an application for leave to appeal the Alberta Court of Appeal’s decision in Mantle Materials to the Supreme Court of Canada was filed. On May 30, 2024, the Supreme Court of Canada dismissed the application for leave to appeal.
Cardillo v. Medcap Real Estate Holdings Inc. (Ontario) 2023 ONCA 852 2024 ONCA 278	Do the statutory rights of appeal under section 193 of the BIA extend to decisions of a procedural nature?	No. Within two months of the Alberta Court of Appeal’s decision in Mantle Materials on this same issue, the Ontario Court of Appeal also confirmed that the statutory rights of appeal provided for in section 193 of the BIA do not extend to appeals from decisions that are procedural in nature. The Ontario Superior Court of Justice (Commercial List) had ordered that various disputes ancillary to the bankruptcy proceedings to be heard by the Commercial List in Toronto, together with the bankruptcy proceedings. Cardillo, the principal of Medcap (the debtor subject to bankruptcy proceedings), and certain parties affiliated with him sought to appeal from that order. The Cardillo parties asserted that they had an automatic right of appeal, which was challenged by the Trustee, who brought a motion to dismiss the appeal. The motion was heard by a single judge of the Ontario Court of Appeal, who agreed with the Trustee that no automatic right of appeal existed. The chambers judge also found that a single judge has authority to determine whether a party has an automatic right of appeal, and where leave to appeal is required, a single judge is specifically given authority by section 193(e) of the BIA to decide whether to grant leave to appeal. The Cardillo parties challenged the chambers judge’s decision, on the basis that a single judge cannot make an order that an appeal is not of right and then also go on to deny leave to appeal. A three-judge panel of the Court of Appeal rejected the Cardillo parties’ arguments and upheld the chambers judge’s decision. The time period for seeking leave to appeal to the Supreme Court of Canada has lapsed. Leave was not sought.
Peakhill Capital Inc. v. 1000093910 Ontario Inc. (Ontario) 2024 ONCA 59	Is there an automatic right to appeal a procedural order approving a sales process and a stalking horse agreement in a receivership?	Yes, pursuant to s. 193(1)(c), if the procedural order has the effect of putting in play, and jeopardizing, the value of property by an amount exceeding $10,000. Prior to the receivership order, the debtor entered into an unconditional agreement of purchase and sale (APS) with a third party to sell its principal asset for $31,000,000. After the receivership order was issued, the receiver entered into a stalking horse agreement as part of a proposed auction sale with the same third party for a minimum sale price of $24,255,000, and providing for a break fee of $250,000 to the third party if a superior bid is secured. The Ontario Superior Court of Justice (Commercial List) approved the sales process and stalking horse agreement and refused to hear a cross-motion by the debtor to approve the original APS. The Commercial List found that the cross-motion was short served and could not be considered without notice, and that it had little chance of success in any event. The debtor sought to appeal the decision. The receiver objected to the appeal on the basis that there was no automatic right to appeal because the order was procedural in nature. The Ontario Court of Appeal concluded that the debtor had an automatic right to appeal. Although the order was procedural in nature, it had the effect of putting into play, and jeopardizing, the value of property by an amount exceeding $10,000. This conclusion was based on: (i) a comparison of the terms of the original APS and the stalking horse agreement; and (ii) a finding that the order deprived the debtor of any ability to complete or enforce the original APS. The appeal as of right by the debtor was subsequently dismissed in 2024 ONCA 261. The time period for seeking leave to appeal to the Supreme Court of Canada has lapsed. Leave was not sought.
Qualex-Landmark Towers Inc. v. 12-10 Capital Corp (Alberta) 2023 ABKB 109 2023 ABCA 177 [granting leave to intervene to Canadian Bankers’ Association] 2024 ABCA 115 [appeal from the ABKB decision]	Does an environmental remediation obligation take priority over creditors, including secured creditors such as mortgagees, outside of formal bankruptcy proceedings?	No. In this case, Capital Corp’s land had contaminants that spread onto Qualex-Landmark Towers Inc. (QLT)’s land. Capital Corp was allegedly insolvent but had not yet entered formal insolvency proceedings. QLT was concerned that Capital Corp would not be able to satisfy its environmental remediation obligations. At first instance, the Alberta Court of King’s Bench relied on the Supreme Court’s decision in Redwater (styled as Orphan Well Association v. Grant Thornton Ltd., 2019 SCC 5), and held that there was a reasonable likelihood that environmental remediation obligations can take a super priority charge over property even outside formal bankruptcy proceedings and without involvement of a regulator. The Court held that entities have a duty to the public to comply with their environmental remediation obligations and that they should not be able to avoid this duty because they have not yet entered into formal bankruptcy proceedings. Capital Corp. and three of its mortgagees filed fast-track appeals from this decision to the Alberta Court of Appeal. The Canadian Bankers’ Association obtained leave to intervene in the appeals. The Alberta Court of Appeal allowed the appeal and set aside the previous order. Among other things, the Alberta Court of Appeal found that the lower court had erred in displacing valid statutory priorities and in implementing “a change in the law that is not the courts’ to make”. Further, the Court of Appeal held that the Redwater analysis could not be expanded in the manner proposed by QLT. The time period for seeking leave to appeal to the Supreme Court of Canada has lapsed. Leave was not sought.
Atlantic Sea Cucumber Ltd. v. Weihai Taiwei Haiyang Aquatic Food Co. (Nova Scotia) 2023 NSSC 232 2024 NSCA 35 SCC Case No. 41310	Does a legal or operational conflict exist between the notice and service requirements under the CCAA and Nova Scotia’s Civil Procedure Rules?	No. In this case, Atlantic Sea filed an application to the Supreme Court of Nova Scotia for a conversion of a BIA proposal to an arrangement under the CCAA. The application documents were not filed and served within the time limit under Nova Scotia’s Civil Procedure Rules. Atlantic Sea sought an abridgment of time. The Court found the creditor was prejudiced and declined to abridge the time. Given the insufficient notice, the conversion application was dismissed. Atlantic Sea appealed, alleging a paramountcy conflict between the time limits under the CCAA and the Civil Procedure Rules. The Nova Scotia Court of Appeal dismissed the appeal on the basis that Atlantic Sea was required, but failed, to seek leave to appeal. The Court of Appeal nevertheless commented on the merits of the matter, noting that there is no legal or operational conflict between the CCAA and Nova Scotia’s Civil Procedure Rules. Both the CCAA and the Civil Procedure Rules gave the judge discretion to waive or abridge the time limits, and the same criteria would govern the exercise of that discretion. The lower court did not err in denying the abridgement of time. On May 27, 2024, Atlantic Sea filed an application for leave to appeal to the Supreme Court of Canada.
Peakhill Capital Inc. v. Southview Gardens Limited Partnership (British Columbia) 2023 BCSC 1476 2023 BCCA 368 (application to lift stay of proceedings triggered by appeal) 2024 BCCA 246 (appeal on the merits)	Can the Court grant a reverse vesting order (“RVO”) in a receivership proceeding where the main benefit of the RVO structure is the avoidance of a tax liability?	Yes, if the criteria for granting an RVO are met. The debtor company had been placed in receivership and was pursuing an RVO in connection with a sale of its undertaking. The purpose of the RVO structure, as opposed to a standard approval and vesting order, was to avoid a tax liability of $3.5 million. The Province of British Columbia opposed the structuring of the transaction as an RVO. The BCSC relied on Payslate Inc. (Re), 2023 BCSC 608, in finding that RVOs are available tools in insolvency contexts other than CCAA proceedings. Upon finding jurisdiction, the Court found that the Harte Gold factors (set out in Harte Gold Corp. (Re), 2022 ONSC 653) were met and that the RVO structure was justified. The Court found that there was nothing unlawful about avoiding the tax liability through an RVO, given that the tax liability was one that could be readily avoided in a non-insolvency context. The Province appealed to the BCCA, triggering an automatic stay of proceedings under s. 193 of the BIA. The purchaser applied for an order lifting the stay of proceedings to allow for the sale transaction to complete on time. The Court granted the order, lifting the stay with certain conditions to protect the Province in the event the appeal is successful. On July 2, 2024, the BCCA dismissed the Province’s appeal. It remains to be seen whether the Province will seek leave to appeal to the Supreme Court of Canada.
Royal Bank of Canada v. Canwest Aerospace Inc. (British Columbia) 2024 BCSC 585	Is the court authorized to grant an RVO in a receivership proceeding?	Yes. Canada opposed the proposed RVO on the basis that that the court has no power to order an RVO in a receivership proceeding, similar to the Province’s position in Peakhill. The BCSC followed the decision in Peakhill Capital Inc. v. Southview Gardens Limited Partnership, 2023 BCSC 1476 (summarized above and decided a few months prior), holding that the Court has jurisdiction to grant an RVO in a receivership. At the time, the appeal in Peakhill had not yet been decided. While Peakhill was under appeal, until any appellate authority calls Peakhill into question, the Court stated it was bound to follow it and reject Canada’s argument. Upon finding jurisdiction, the Court found that the Harte Gold factors were met and that the RVO structure was justified.
Invico Diversified Income Limited Partnership v. NewGrange Energy Inc. (Alberta) 2024 ABKB 214 2024 ABCA 244	Are gross overriding royalties interests in land that cannot be “vested out”, i.e., removed from title to the assets being purchased in an RVO?	In this case, no. Gross overriding royalties can constitute an interest in land, or can be contractual rights to receive royalty payments without constituting an interest in land. The Alberta Court of King’s Bench found that the gross overriding royalties in this case were not interests in land, and that they could be therefore vested out in an RVO. The Court declined to consider whether in the event that the gross overriding royalties were interests in land, they could still be vested out in an RVO. In determining the royalty interests did not “run with the land,” the Court employed the test from Bank of Montreal v Dynex Petroleum Ltd, 2002 SCC 7 to ascertain the intentions of the parties. Despite language in the royalty agreement purporting to create an interest in the land, the language in the royalty assignment clause and the surrounding factual circumstances indicated otherwise. NewGrange Energy Inc. (the holder of the gross overriding royalties) sought leave to appeal the decision of the Alberta Court’s King’s Bench. On July 5, 2024, the Alberta Court of Appeal granted leave to appeal.
In the Matter of The Body Shop Canada Limited 2024 ONSC 3871	When factors are determinative in a decision to appoint representative counsel in a contested motion?	In this contested motion, the Ontario Superior Court of Justice (Commercial List) denied the motion to appoint representative counsel for the terminated employees of The Body Shop Canada Limited. The Court considered the factors discussed in CanWest Publishing Inc. (Re), 2010 ONSC 1328 (while noting that they are neither exhaustive nor mandatory) in denying the motion for representative counsel in this case. Consideration was given to the fact that the universe of potential class members was relatively small, and that the potential claims of the terminated employees were relatively straightforward. Further, there was no evidence of significant diverging interests between or among different employee groups. Critically, the Court considered the appropriateness of including a mandatory opt-out mechanism in the proposed order. At the time of the motion, only 38 of the 220 terminated employees had retained representative counsel. Such a mechanism (and the appointment of representative counsel) would, in effect, subject the terminated employees to a mandatory discount to the gross amount they would otherwise recover from the company. Moreover, the Court found that the proposed scope of representative counsel’s immunity from liability is too broad in this case. It would seek to immunize representative counsel (if appointed) from any liability related to “its duties in carrying out the provisions of [the order sought]”. Even though such immunity was routinely granted in representation orders, the Court pointed out that representative counsel are differently positioned than Court officers or amicus curiae. While representative counsel owe duties to their client group, Court officers and amicus curiae owe duties to the Court.
John Doe (G.E.B. #26) v. Roman Catholic Episcopal Corporation of St. John’s (Newfoundland and Labrador) 2024 NLCA 26	Do the BIA or the CCAA fix the date for valuing tort claims against an insolvent defendant as of the initial filing date?	No. In this case, the debtor was subject to significant potential liabilities relating to over 150 tort claimants presenting claims with an aggregate value of greater than $50,000,000. Some of the tort claimants had deceased following the debtor’s initial filing date, and as a result their claims passed on to their estates pursuant to the Survival of Actions Act , RSNL 1990, c.S-32 (the “SAA”). However, section 4 of the SAA restricts of the nature of recoverable damages to “only damages that have resulted in actual monetary loss to the estate”. To avoid this restriction, the estates argued that the CCAA and BIA should be interpreted as fixing the date for valuing creditors’ claims as of the initial filing date, and that if the tort claimants were alive on the initial filing date but later died, the restrictions in the SAA should not apply to their estates’ claims. This argument was rejected by the Supreme Court of Newfoundland and Labrador. The estates appealed to the Court of Appeal of Newfoundland and Labrador, which appeal was dismissed on July 22, 2024. The Court of Appeal noted that neither the BIA nor CCAA sets out specific rules for the evaluation of tort claims, and there is no reason inherent in the objectives of insolvency legislation to depart from basic tort and statutory law when valuing tort damages in an insolvency, and that the trial judge appropriately exercised their discretion under the statutes.
Ernst & Young Inc. v. Aquino (Ontario) 2021 ONSC 527 2022 ONCA 202 SCC Case No. 40166	Was the false invoicing scheme carried out by the company’s directing mind a “transfer[s] at undervalue […] intended to defraud, defeat or delay a creditor”?	Yes. The Ontario Superior Court of Justice (Commercial List) held that the payments made in the fraudulent scheme were transfers at undervalue. The Ontario Court of Appeal held that permitting fraudsters to benefit at the expense of creditors would be perverse. In the context of transfers at undervalue under the Bankruptcy and Insolvency Act, the fraudulent intentions of the company’s directing mind should be imputed to the company to achieve the social purpose of providing proper redress to creditors. On December 5, 2023, the Supreme Court of Canada heard the appeal from the Ontario Court of Appeal’s decision, together with the appeal in Golden Oaks Enterprises Inc. v. Scott (see Row below). The Insolvency Institute of Canada (“IIC”) and the Attorney General of Ontario intervened in this appeal. This matter is currently under reserve.
Golden Oaks Enterprises Inc. v. Scott (Ontario) 2019 ONSC 5108 2022 ONCA 509 SCC Case No. 40399	In circumstances of fraud by a principal, when are creditors’ claims considered to be discoverable for the purposes of limitation periods?	The Ontario Court of Appeal declined to apply the principle of corporate attribution, which would have imputed Golden Oaks with the knowledge of fraud of its principal. As a result, the limitation period in respect of the unjust enrichment claim began to run when the trustee in bankruptcy was appointed. There were strong public policy grounds to resist imputing the principal’s knowledge on the bankrupt. Corporate attribution would have also undermined a fundamental tenet of insolvency law: the equitable distribution of a debtor’s assets between its creditors. Attribution would lead to the perverse outcome of allowing the appellants to retain certain fraudulent payments as well as depriving the Trustee of a civil remedy that would enlarge recoveries for the bankrupt’s other legitimate creditors. On December 5, 2023, the Supreme Court of Canada heard the appeal in this case, together with Ernst & Young Inc. v. Aquino (see Row above). The IIC and the Attorney General of Ontario intervened in this appeal. This matter is currently under reserve.
White Oak Commercial Finance, LLC v. Nygård Holdings (USA) Limited et al. (Manitoba) 2023 MBCA 73	Does the Court have jurisdiction to make a substantive consolidation order in respect of a corporation that is solvent?	Yes. Although the Manitoba Court of Appeal found in this case that the relevant corporations were insolvent, it nevertheless clarified that a Court may order a substantive consolidation between solvent and insolvent corporations in appropriate circumstances. In this regard, the Court of Appeal endorsed case law from the United States, and also found that it is consistent with policy in favour of an equitable and orderly distribution of assets to creditors. The Court of Appeal further agreed with the lower court’s finding that prejudice to a related entity was outweighed by prejudice to a third party entity. In the alternative, even if the consolidation were not ordered, the Court of Appeal would have upheld the lower court’s decision to approve the allocation by the receiver of priority payment obligations and costs as against the proceeds of realization of the assets of the relevant corporations. The allocation was found to be fair and reasonable. Receivership expenses do not need to be allocated amongst debtors strictly on the basis of how assets were chronologically realized and costs paid. The time period for seeking leave to appeal to the Supreme Court of Canada has lapsed. Leave was not sought.
Ontario Securities Commission v. Traders Global Group Inc. (Ontario) 2023 ONSC 7165	Can a receiver be appointed in Ontario despite a U.S. Court finding receivership not to be necessary?	Yes. In this case, the Ontario Securities Commission (“OSC”) investigated the Respondents for fraud after receiving a request from the U.S. Commodities and Futures Trading Commission (the “CFTC”). In the U.S. proceeding, based on the applicable legal regime, the District Court for the District of New Jersey declined to appoint a receiver to supervise an asset freeze, finding that it was not necessary to do so. Despite that result in the U.S., upon request by the OSC, the Ontario Superior Court of Justice (Commercial List) appointed a receiver on December 21, 2023 pursuant to s. 129 of the Ontario Securities Act . Under that provision, a receiver may be appointed if the Court is satisfied that it is: (i) in the best interests of the creditors of the person or company to do so; or (ii) appropriate for the due administration of Ontario securities law. The Court found that both of these requirements were met in this case, and that the U.S. decision was not determinative of the analysis the Court has to conduct based on evidence before it and the law in Ontario.

Case

Issue

Update

Re Poonian

(British Columbia)

2021 BCSC 555

2022 BCCA 274

2024 SCC 28

Does a “fresh start” granted in bankruptcy extinguish fraud related debts and liabilities?

No. If there is a direct link between the fraudulent activity and the value of the debts or liabilities ordered, they will be exempt from discharge under section 178(1)(e) of the BIA.

The British Columbia Securities Commission imposed both a disgorgement order and administrative penalties against the bankrupts on account of their fraudulent conduct in dealing with securities.

The British Columbia Supreme Court (“BCSC”) granted an order that these amounts owed by the Poonians would not be released by an order of discharge under the BIA. The BCSC relied on the provisions for ‘exemptions to the discharge of debts’, prescribed under sections 178(1)(a) and (e) of the BIA.

The British Columbia Court of Appeal (“BCCA”) dismissed an appeal against the BCSC’s decision. In particular, the BCCA found that section 178(1)(a) did not apply, because it only exempted fines and penalties “imposed by a court”. However, the BCCA upheld the BCSC’s conclusion that both the disgorgement order and the administrative penalties were exempt from discharge under section 178(1)(e) because they are debts and liabilities “resulting from obtaining property or services by false pretences or fraudulent misrepresentation”.

The BCCA’s decision was appealed to the Supreme Court of Canada. Numerous parties intervened in the appeal, including the Canadian Association of Insolvency and Restructuring Professionals and the Superintendent of Bankruptcy. On July 31, 2024, in a 5-2 decision, the Supreme Court of Canada allowed the appeal in part, and addressed the applicability of both section 178(1)(a) and section 178(1)(e).

With respect to section 178(1)(a), the Supreme Court of Canada found that neither the disgorgement order nor the administrative penalties were exempt from discharge and upheld the BCCA’s conclusion that the words “imposed by a court” in this provision do not capture orders made by administrative tribunals or regulatory agencies that are subsequently registered as judgments of a court. The Supreme Court of Canada also agreed that this exemption is not restricted to fines and penalties associated with criminal or quasi‑criminal proceedings.

With respect to section 178(1)(e), the Supreme Court of Canada ruled that provision exempted the disgorgement order from discharge, but not the administrative penalties. This is because: (1) there was a direct link between the fraudulent conduct and the amount of the disgorgement order; and (2) by contrast, the administrative penalties imposed by the Commission were not a direct result of the fraudulent activities, but rather an administrative decision unrelated to the value of property or services obtained as a result of the fraudulent conduct. More generally, the Supreme Court of Canada clarified that for a debt or liability to survive bankruptcy under section 178(1)(e), three elements must be established: (1) false pretences or fraudulent misrepresentation; (2) a passing of property or provision of services; and (3) a link between the debt or liability and the fraud.

Piekut v. Canada (Minister of National Revenue)

(British Columbia)

2023 BCCA 181

SCC Case No. 40782

Does the seven-year period in in section 178(1)(g)(ii) of the Bankruptcy and Insolvency Act (“within seven years after the date on which the bankrupt ceased to be a full- or part-time student”) run from the latest date that the bankrupt ceased to be a full- or part-time student, irrespective of whether the studies at that latest date were financed by one or more student loans secured through a government program?

Yes.

On April 19, 2023, the BCCA upheld the decision of the chambers judge regarding the interpretation of section 178(1)(g)(ii) of the BIA. The Chambers Judge had relied on the 2015 decision of the BCSC in Mallory (Re) on this same issue.

The BCCA acknowledged that there were conflicting decisions in other jurisdictions (for instance, St. Dennis (Re), 2017 ONSC 2417). In those decisions, other courts had found that the seven-year period in section 178(1)(g)(ii) of the BIA runs from the latest date that the bankruptcy ceased being a full- or part-time student in studies financed through a federal or provincial student loans program.

However, the BCCA concluded that the Mallory, rather than those other decisions, was correctly decided.

On December 14, 2023, the Supreme Court of Canada granted leave to appeal in this matter. On April 27, 2024, the Supreme Court of Canada granted leave to intervene to numerous parties, including the Canadian Association of Insolvency and Restructuring Professionals. The appeal has been tentatively scheduled for the week of November 4, 2024.

AG and Agence du revenu du Québec v. Richter Advisory Group Inc. (“ChronoMétriq”)

(Quebec)

QCCS Order (October 27, 2021)

2023 QCCA 1295

SCC Case No. 41043

Can the Court grant charges in favour of interim lenders and others that rank in priority to the Crown’s deemed trust claims?

Yes.

On October 27, 2021, the Quebec Superior Court (Commercial Division) approved an interim lender's charge, an administration charge and a directors’ and officers’ charge ranking in priority to any trusts (statutory or otherwise).

The Attorney General of Canada and the Québec Revenue Agency appealed to the Quebec Court of Appeal, arguing the Court did not have authority to rank the charges above Crown deemed trusts.

CIBC, the Canadian Bankers’ Association and the Insolvency Institute of Canada intervened in the consolidated appeal.

On October 18, 2023, the Quebec Court of Appeal dismissed the appeal. The Court of Appeal affirmed that the lower court had jurisdiction to grant super-priority charges ranking in priority to the Crown deemed trusts, based principally on a reading of the Supreme Court of Canada’s 2021 decision in Canada v. Canada North Group Inc. and an application of that decision to the BIA.

On December 18, 2023, the Attorney General of Canada sought leave to appeal to the Supreme Court of Canada. Leave to appeal was dismissed on June 6, 2024.

Rural Municipality of Eye Hill v. Saskatchewan (Minister of Energy and Resources)

(Saskatchewan)

2023 SKKB 52

2023 SKCA 120

Will dues owed to a rural municipality rank in priority to claims unaddressed environmental obligations owed to the Crown?

No.

On March 7, 2023, the Saskatchewan Court of King's Bench rejected an attempt by a rural municipality (“RM”) to gain priority in distribution of residual proceeds from the sale of assets in an oil and gas receivership.

The Receiver sold certain oil and gas assets of the debtor and sought to distribute the residual proceeds to the Ministry of Energy Resources to offset $20 million in unaddressed environmental obligations. The RM took the position that it should be paid in priority for municipal taxes owed by the debtor, the RM also asserted a priority over funds in the receivership estate based on an alleged lien and orders issued in the CCAA proceeding. The Court rejected RM’s claims while holding that rural municipalities cannot "lie in the weeds", waiting to assert their claims.

RM appealed to the Saskatchewan Court of Appeal, which dismissed the appeal on November 1, 2023. The Court of Appeal disagreed with the lower court on some aspects. Most notably, the Court of Appeal found that RM should not be criticized for not advancing its claim earlier than it did, based on the record in this case. However, in the result, the Court of Appeal concluded that there was no error in law in the lower court’s principal findings.

The time period for seeking leave to appeal to the Supreme Court of Canada has lapsed. Leave was not sought.

Mantle Materials Group Ltd v. Travelers Capital Corp.

(Alberta)

2023 ABCA 302

SCC Case No. 41063

Do the statutory rights of appeal under section 193 of the BIA extend to decisions of a procedural nature?

No.

Within two months of one another, the Alberta Court of Appeal and the Ontario Court of Appeal both clarified that the statutory rights of appeal provided for in section 193 of the BIA do not extend to appeals from decisions that are procedural in nature.

Although section 193(c) provides a statutory right of appeal if the value of the property at issue is more than $10,000, this does not mean that there is an automatic right of appeal applies to any order or decision in a proceeding where the value of the property exceeds $10,000. If the order in question does not result in a gain or loss to either party, the decision is likely procedural in nature and leave to appeal must be sought.

On December 20, 2023, an application for leave to appeal the Alberta Court of Appeal’s decision in Mantle Materials to the Supreme Court of Canada was filed. On May 30, 2024, the Supreme Court of Canada dismissed the application for leave to appeal.

Cardillo v. Medcap Real Estate Holdings Inc.

(Ontario)

2023 ONCA 852

2024 ONCA 278

Do the statutory rights of appeal under section 193 of the BIA extend to decisions of a procedural nature?

No.

Within two months of the Alberta Court of Appeal’s decision in Mantle Materials on this same issue, the Ontario Court of Appeal also confirmed that the statutory rights of appeal provided for in section 193 of the BIA do not extend to appeals from decisions that are procedural in nature.

The Ontario Superior Court of Justice (Commercial List) had ordered that various disputes ancillary to the bankruptcy proceedings to be heard by the Commercial List in Toronto, together with the bankruptcy proceedings.

Cardillo, the principal of Medcap (the debtor subject to bankruptcy proceedings), and certain parties affiliated with him sought to appeal from that order. The Cardillo parties asserted that they had an automatic right of appeal, which was challenged by the Trustee, who brought a motion to dismiss the appeal.

The motion was heard by a single judge of the Ontario Court of Appeal, who agreed with the Trustee that no automatic right of appeal existed. The chambers judge also found that a single judge has authority to determine whether a party has an automatic right of appeal, and where leave to appeal is required, a single judge is specifically given authority by section 193(e) of the BIA to decide whether to grant leave to appeal.

The Cardillo parties challenged the chambers judge’s decision, on the basis that a single judge cannot make an order that an appeal is not of right and then also go on to deny leave to appeal. A three-judge panel of the Court of Appeal rejected the Cardillo parties’ arguments and upheld the chambers judge’s decision.

The time period for seeking leave to appeal to the Supreme Court of Canada has lapsed. Leave was not sought.

Peakhill Capital Inc. v. 1000093910 Ontario Inc.

(Ontario)

2024 ONCA 59

Is there an automatic right to appeal a procedural order approving a sales process and a stalking horse agreement in a receivership?

Yes, pursuant to s. 193(1)(c), if the procedural order has the effect of putting in play, and jeopardizing, the value of property by an amount exceeding $10,000.

Prior to the receivership order, the debtor entered into an unconditional agreement of purchase and sale (APS) with a third party to sell its principal asset for $31,000,000. After the receivership order was issued, the receiver entered into a stalking horse agreement as part of a proposed auction sale with the same third party for a minimum sale price of $24,255,000, and providing for a break fee of $250,000 to the third party if a superior bid is secured.

The Ontario Superior Court of Justice (Commercial List) approved the sales process and stalking horse agreement and refused to hear a cross-motion by the debtor to approve the original APS. The Commercial List found that the cross-motion was short served and could not be considered without notice, and that it had little chance of success in any event. The debtor sought to appeal the decision. The receiver objected to the appeal on the basis that there was no automatic right to appeal because the order was procedural in nature.

The Ontario Court of Appeal concluded that the debtor had an automatic right to appeal. Although the order was procedural in nature, it had the effect of putting into play, and jeopardizing, the value of property by an amount exceeding $10,000. This conclusion was based on: (i) a comparison of the terms of the original APS and the stalking horse agreement; and (ii) a finding that the order deprived the debtor of any ability to complete or enforce the original APS.

The appeal as of right by the debtor was subsequently dismissed in 2024 ONCA 261.

The time period for seeking leave to appeal to the Supreme Court of Canada has lapsed. Leave was not sought.

Qualex-Landmark Towers Inc. v. 12-10 Capital Corp

(Alberta)

2023 ABKB 109

2023 ABCA 177 [granting leave to intervene to Canadian Bankers’ Association]

2024 ABCA 115 [appeal from the ABKB decision]

Does an environmental remediation obligation take priority over creditors, including secured creditors such as mortgagees, outside of formal bankruptcy proceedings?

No.

In this case, Capital Corp’s land had contaminants that spread onto Qualex-Landmark Towers Inc. (QLT)’s land. Capital Corp was allegedly insolvent but had not yet entered formal insolvency proceedings. QLT was concerned that Capital Corp would not be able to satisfy its environmental remediation obligations.

At first instance, the Alberta Court of King’s Bench relied on the Supreme Court’s decision in Redwater (styled as Orphan Well Association v. Grant Thornton Ltd., 2019 SCC 5), and held that there was a reasonable likelihood that environmental remediation obligations can take a super priority charge over property even outside formal bankruptcy proceedings and without involvement of a regulator. The Court held that entities have a duty to the public to comply with their environmental remediation obligations and that they should not be able to avoid this duty because they have not yet entered into formal bankruptcy proceedings.

Capital Corp. and three of its mortgagees filed fast-track appeals from this decision to the Alberta Court of Appeal. The Canadian Bankers’ Association obtained leave to intervene in the appeals.

The Alberta Court of Appeal allowed the appeal and set aside the previous order. Among other things, the Alberta Court of Appeal found that the lower court had erred in displacing valid statutory priorities and in implementing “a change in the law that is not the courts’ to make”. Further, the Court of Appeal held that the Redwater analysis could not be expanded in the manner proposed by QLT.

The time period for seeking leave to appeal to the Supreme Court of Canada has lapsed. Leave was not sought.

Atlantic Sea Cucumber Ltd. v. Weihai Taiwei Haiyang Aquatic Food Co.

(Nova Scotia)

2023 NSSC 232

2024 NSCA 35

SCC Case No. 41310

Does a legal or operational conflict exist between the notice and service requirements under the CCAA and Nova Scotia’s Civil Procedure Rules?

No.

In this case, Atlantic Sea filed an application to the Supreme Court of Nova Scotia for a conversion of a BIA proposal to an arrangement under the CCAA. The application documents were not filed and served within the time limit under Nova Scotia’s Civil Procedure Rules. Atlantic Sea sought an abridgment of time. The Court found the creditor was prejudiced and declined to abridge the time. Given the insufficient notice, the conversion application was dismissed. Atlantic Sea appealed, alleging a paramountcy conflict between the time limits under the CCAA and the Civil Procedure Rules.

The Nova Scotia Court of Appeal dismissed the appeal on the basis that Atlantic Sea was required, but failed, to seek leave to appeal. The Court of Appeal nevertheless commented on the merits of the matter, noting that there is no legal or operational conflict between the CCAA and Nova Scotia’s Civil Procedure Rules. Both the CCAA and the Civil Procedure Rules gave the judge discretion to waive or abridge the time limits, and the same criteria would govern the exercise of that discretion. The lower court did not err in denying the abridgement of time.

On May 27, 2024, Atlantic Sea filed an application for leave to appeal to the Supreme Court of Canada.

Peakhill Capital Inc. v. Southview Gardens Limited Partnership

(British Columbia)

2023 BCSC 1476

2023 BCCA 368 (application to lift stay of proceedings triggered by appeal)

2024 BCCA 246 (appeal on the merits)

Can the Court grant a reverse vesting order (“RVO”) in a receivership proceeding where the main benefit of the RVO structure is the avoidance of a tax liability?

Yes, if the criteria for granting an RVO are met.

The debtor company had been placed in receivership and was pursuing an RVO in connection with a sale of its undertaking. The purpose of the RVO structure, as opposed to a standard approval and vesting order, was to avoid a tax liability of $3.5 million. The Province of British Columbia opposed the structuring of the transaction as an RVO.

The BCSC relied on Payslate Inc. (Re), 2023 BCSC 608, in finding that RVOs are available tools in insolvency contexts other than CCAA proceedings. Upon finding jurisdiction, the Court found that the Harte Gold factors (set out in Harte Gold Corp. (Re), 2022 ONSC 653) were met and that the RVO structure was justified. The Court found that there was nothing unlawful about avoiding the tax liability through an RVO, given that the tax liability was one that could be readily avoided in a non-insolvency context.

The Province appealed to the BCCA, triggering an automatic stay of proceedings under s. 193 of the BIA. The purchaser applied for an order lifting the stay of proceedings to allow for the sale transaction to complete on time. The Court granted the order, lifting the stay with certain conditions to protect the Province in the event the appeal is successful.

On July 2, 2024, the BCCA dismissed the Province’s appeal. It remains to be seen whether the Province will seek leave to appeal to the Supreme Court of Canada.

Royal Bank of Canada v. Canwest Aerospace Inc.

(British Columbia)

2024 BCSC 585

Is the court authorized to grant an RVO in a receivership proceeding?

Yes.

Canada opposed the proposed RVO on the basis that that the court has no power to order an RVO in a receivership proceeding, similar to the Province’s position in Peakhill.

The BCSC followed the decision in Peakhill Capital Inc. v. Southview Gardens Limited Partnership, 2023 BCSC 1476 (summarized above and decided a few months prior), holding that the Court has jurisdiction to grant an RVO in a receivership. At the time, the appeal in Peakhill had not yet been decided. While Peakhill was under appeal, until any appellate authority calls Peakhill into question, the Court stated it was bound to follow it and reject Canada’s argument.

Upon finding jurisdiction, the Court found that the Harte Gold factors were met and that the RVO structure was justified.

Invico Diversified Income Limited Partnership v. NewGrange Energy Inc.

(Alberta)

2024 ABKB 214

2024 ABCA 244

Are gross overriding royalties interests in land that cannot be “vested out”, i.e., removed from title to the assets being purchased in an RVO?

In this case, no.

Gross overriding royalties can constitute an interest in land, or can be contractual rights to receive royalty payments without constituting an interest in land.

The Alberta Court of King’s Bench found that the gross overriding royalties in this case were not interests in land, and that they could be therefore vested out in an RVO.

The Court declined to consider whether in the event that the gross overriding royalties were interests in land, they could still be vested out in an RVO.

In determining the royalty interests did not “run with the land,” the Court employed the test from Bank of Montreal v Dynex Petroleum Ltd, 2002 SCC 7 to ascertain the intentions of the parties. Despite language in the royalty agreement purporting to create an interest in the land, the language in the royalty assignment clause and the surrounding factual circumstances indicated otherwise.

NewGrange Energy Inc. (the holder of the gross overriding royalties) sought leave to appeal the decision of the Alberta Court’s King’s Bench. On July 5, 2024, the Alberta Court of Appeal granted leave to appeal.

In the Matter of The Body Shop Canada Limited

2024 ONSC 3871

When factors are determinative in a decision to appoint representative counsel in a contested motion?

In this contested motion, the Ontario Superior Court of Justice (Commercial List) denied the motion to appoint representative counsel for the terminated employees of The Body Shop Canada Limited.

The Court considered the factors discussed in CanWest Publishing Inc. (Re), 2010 ONSC 1328 (while noting that they are neither exhaustive nor mandatory) in denying the motion for representative counsel in this case. Consideration was given to the fact that the universe of potential class members was relatively small, and that the potential claims of the terminated employees were relatively straightforward. Further, there was no evidence of significant diverging interests between or among different employee groups.

Critically, the Court considered the appropriateness of including a mandatory opt-out mechanism in the proposed order. At the time of the motion, only 38 of the 220 terminated employees had retained representative counsel. Such a mechanism (and the appointment of representative counsel) would, in effect, subject the terminated employees to a mandatory discount to the gross amount they would otherwise recover from the company.

Moreover, the Court found that the proposed scope of representative counsel’s immunity from liability is too broad in this case. It would seek to immunize representative counsel (if appointed) from any liability related to “its duties in carrying out the provisions of [the order sought]”. Even though such immunity was routinely granted in representation orders, the Court pointed out that representative counsel are differently positioned than Court officers or amicus curiae. While representative counsel owe duties to their client group, Court officers and amicus curiae owe duties to the Court.

John Doe (G.E.B. #26) v. Roman Catholic Episcopal Corporation of St. John’s

(Newfoundland and Labrador)

2024 NLCA 26

Do the BIA or the CCAA fix the date for valuing tort claims against an insolvent defendant as of the initial filing date?

No.

In this case, the debtor was subject to significant potential liabilities relating to over 150 tort claimants presenting claims with an aggregate value of greater than $50,000,000. Some of the tort claimants had deceased following the debtor’s initial filing date, and as a result their claims passed on to their estates pursuant to the Survival of Actions Act , RSNL 1990, c.S-32 (the “SAA”). However, section 4 of the SAA restricts of the nature of recoverable damages to “only damages that have resulted in actual monetary loss to the estate”.

To avoid this restriction, the estates argued that the CCAA and BIA should be interpreted as fixing the date for valuing creditors’ claims as of the initial filing date, and that if the tort claimants were alive on the initial filing date but later died, the restrictions in the SAA should not apply to their estates’ claims.

This argument was rejected by the Supreme Court of Newfoundland and Labrador.

The estates appealed to the Court of Appeal of Newfoundland and Labrador, which appeal was dismissed on July 22, 2024. The Court of Appeal noted that neither the BIA nor CCAA sets out specific rules for the evaluation of tort claims, and there is no reason inherent in the objectives of insolvency legislation to depart from basic tort and statutory law when valuing tort damages in an insolvency, and that the trial judge appropriately exercised their discretion under the statutes.

Ernst & Young Inc. v. Aquino

(Ontario)

2021 ONSC 527

2022 ONCA 202

SCC Case No. 40166

Was the false invoicing scheme carried out by the company’s directing mind a “transfer[s] at undervalue […] intended to defraud, defeat or delay a creditor”?

Yes.

The Ontario Superior Court of Justice (Commercial List) held that the payments made in the fraudulent scheme were transfers at undervalue.

The Ontario Court of Appeal held that permitting fraudsters to benefit at the expense of creditors would be perverse. In the context of transfers at undervalue under the Bankruptcy and Insolvency Act, the fraudulent intentions of the company’s directing mind should be imputed to the company to achieve the social purpose of providing proper redress to creditors.

On December 5, 2023, the Supreme Court of Canada heard the appeal from the Ontario Court of Appeal’s decision, together with the appeal in Golden Oaks Enterprises Inc. v. Scott (see Row below). The Insolvency Institute of Canada (“IIC”) and the Attorney General of Ontario intervened in this appeal. This matter is currently under reserve.

Golden Oaks Enterprises Inc. v. Scott

(Ontario)

2019 ONSC 5108

2022 ONCA 509

SCC Case No. 40399

In circumstances of fraud by a principal, when are creditors’ claims considered to be discoverable for the purposes of limitation periods?

The Ontario Court of Appeal declined to apply the principle of corporate attribution, which would have imputed Golden Oaks with the knowledge of fraud of its principal. As a result, the limitation period in respect of the unjust enrichment claim began to run when the trustee in bankruptcy was appointed.

There were strong public policy grounds to resist imputing the principal’s knowledge on the bankrupt. Corporate attribution would have also undermined a fundamental tenet of insolvency law: the equitable distribution of a debtor’s assets between its creditors. Attribution would lead to the perverse outcome of allowing the appellants to retain certain fraudulent payments as well as depriving the Trustee of a civil remedy that would enlarge recoveries for the bankrupt’s other legitimate creditors.

On December 5, 2023, the Supreme Court of Canada heard the appeal in this case, together with Ernst & Young Inc. v. Aquino (see Row above). The IIC and the Attorney General of Ontario intervened in this appeal. This matter is currently under reserve.

White Oak Commercial Finance, LLC v. Nygård Holdings (USA) Limited et al.

(Manitoba)

2023 MBCA 73

Does the Court have jurisdiction to make a substantive consolidation order in respect of a corporation that is solvent?

Yes.

Although the Manitoba Court of Appeal found in this case that the relevant corporations were insolvent, it nevertheless clarified that a Court may order a substantive consolidation between solvent and insolvent corporations in appropriate circumstances. In this regard, the Court of Appeal endorsed case law from the United States, and also found that it is consistent with policy in favour of an equitable and orderly distribution of assets to creditors. The Court of Appeal further agreed with the lower court’s finding that prejudice to a related entity was outweighed by prejudice to a third party entity.

In the alternative, even if the consolidation were not ordered, the Court of Appeal would have upheld the lower court’s decision to approve the allocation by the receiver of priority payment obligations and costs as against the proceeds of realization of the assets of the relevant corporations. The allocation was found to be fair and reasonable. Receivership expenses do not need to be allocated amongst debtors strictly on the basis of how assets were chronologically realized and costs paid.

The time period for seeking leave to appeal to the Supreme Court of Canada has lapsed. Leave was not sought.

Ontario Securities Commission v. Traders Global Group Inc.

(Ontario)

2023 ONSC 7165

Can a receiver be appointed in Ontario despite a U.S. Court finding receivership not to be necessary?

Yes.

In this case, the Ontario Securities Commission (“OSC”) investigated the Respondents for fraud after receiving a request from the U.S. Commodities and Futures Trading Commission (the “CFTC”).

In the U.S. proceeding, based on the applicable legal regime, the District Court for the District of New Jersey declined to appoint a receiver to supervise an asset freeze, finding that it was not necessary to do so.

Despite that result in the U.S., upon request by the OSC, the Ontario Superior Court of Justice (Commercial List) appointed a receiver on December 21, 2023 pursuant to s. 129 of the Ontario Securities Act . Under that provision, a receiver may be appointed if the Court is satisfied that it is: (i) in the best interests of the creditors of the person or company to do so; or (ii) appropriate for the due administration of Ontario securities law. The Court found that both of these requirements were met in this case, and that the U.S. decision was not determinative of the analysis the Court has to conduct based on evidence before it and the law in Ontario.

¹ The authors are grateful for the assistance of Matthew Garay (summer student at Davies Ward Phillips & Vineberg LLP) during the preparation of the chart.