The Ontario Court of Appeal has approved a creative use of the Companies’ Creditors Arrangement Act (CCAA) designed to unfreeze the $32-billion Canadian market for asset-backed commercial paper (ABCP).

As has been widely publicized, the Canadian ABCP market froze in August 2007 as a result of concerns in world credit markets arising from the US subprime mortgage crisis. After the market froze, a Pan-Canadian Investors Committee was formed to attempt to restructure it.

In the recent decision of Re WorkGroup Designs Inc.,1 the Ontario Court of Appeal considered the provisions of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (the "BIA") which relate to valuing and determining the claims of secured creditors in proposal proceedings under the BIA.

Background

In Re Norame Inc. (2008), 90 O.R. (3d) 303(Ont. C.A.), the Ontario Court of Appeal was again called upon to consider various issues of importance to insolvency practitioners. In a decision released on April 28, 2008, Mr. Justice LaForme delivered the judgment for the Court of Appeal and in so doing dismissed the appeal of Paddon + Yorke Inc., in its capacity as trustee in bankruptcy of Norame Inc. (the "Trustee").

The decision of the Ontario Court of Appeal earlier this year in Slater Steel* exposed 10 directors, officers and employees to possible personal liability of $20 million with no meaningful recourse against the insolvent Slater Steel or its assets. This is a reminder that failure to recognize and fulfill fiduciary obligations for a pension plan can expose you to substantial personal liability.

The Ontario Court of Appeal has confirmed the asset backed commercial paper CCAA Plan of Arrangement (2008 CaswellOnt 4811 (C.A.)). The reasoning of the Ontario Superior Court approving the Plan of Arrangement was reviewed in previous editions of this Newsletter.

On July 31, 2024, the Supreme Court of Canada released its decision in Poonian v. British Columbia (Securities Commission), on whether financial sanctions imposed by securities regulators are dischargeable through bankruptcy. The decision resolves a conflict between Alberta and B.C. jurisprudence and will have a significant impact on the treatment of all administrative orders in bankruptcy proceedings.

The facts

Court approval of a sale process in receivership or Bankruptcy and Insolvency Act (“BIA”) proposal proceedings is generally a procedural order and objectors do not have an appeal as of right; they must seek leave and meet a high test in order obtain it. However, in Peakhill Capital Inc. v.

In Bank of Montreal v. Iskenderov, 2023 ONCA 528, the Ontario Court of Appeal held that actions to set aside a conveyance under section 2 of the Fraudulent Conveyances Act are subject to the basic two-year limitation period under the Limitations Act, 2002 – not the ten-year period prescribed by section 4 of the Real Property Limitations Act.

Understanding limitation periods are of crucial importance in the construction industry, particularly when a contractor is faced with unpaid invoices for services or materials rendered. The Ontario Court of Appeal stepped back into the spotlight in this regard with its decision in Thermal Exchange Service Inc. v Metropolitan Toronto Condominium Corporation No. 1289, 2022 ONCA 186, in holding that a defendant's assurances may prolong the "discoverability" of a claim for non-payment.

Background

Following are this week’s summaries of the Court of Appeal for Ontario for the week of September 4, 2023.

In AssessNet Inc. v. Ferro Estate, the Court set aside an order dismissing the action, finding that the summary judgment motion judge had erred in determining the issue of discoverability of a claim against a trustee in bankruptcy.

Torgersrud v Lightstone is a family law decision where the Court dismissed an appeal from an order setting aside a marriage contract entered into in Quebec in 1988.