Pursuant to an order issued on June 9 2010 in Fifth Third Bank v MPI Packaging Inc, the Ontario Court of Appeal dismissed an appeal from a disgruntled bidder and confirmed the invalidity of referential bids in Ontario.
Grant Thornton Ltd was appointed as receiver over the assets, property and undertakings of MPI Packaging Inc, an Ontario producer of bottle containers. Before the appointment of the receiver, MPI commenced an action against Zuckerman-Honickman Incorporated (ZH) (the 'litigation') and a few days later ZH commenced an action against MPI and its president, Ronald O'Brien. Each action was for, among other things, breach of contract.
The receiver assessed the merits of the litigation and determined that, due to its many complexities, it would be a long and protracted process at great cost to the estate, with no guarantee of realisation for the benefit of creditors. The receiver engaged in discussions with Paul Morton, a principal of MPI, in an attempt to negotiate an assignment of the litigation. However, after two months of protracted negotiations, the parties were unable to complete the assignment. Before the receiver's motion for discharge, Morton submitted a revised bid and, before its acceptance, the receiver received an unsolicited offer from ZH to acquire MPI's interest in the litigation. As a result of the competing offers, the receiver advised both parties that, subject to court approval, they would be given an opportunity to submit their final irrevocable offer to acquire MPI's interest in the litigation. Pursuant to an order of Justice Pepall, the deadline for submission of offers was established as noon on November 27 2009.
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