1078385 Ontario Ltd. (Receivership) et al., Re, (2004) 206 O.A.C. 17 (CA)

• Jurisdiction: Ontario
• Court: Court of Appeal (Ontario)
• Judge: Simmons, J.A.
• Citation: (2004), 206 O.A.C. 17 (CA)
• Date: 14 December 2004

1078385 Ont., Re (2004), 206 O.A.C. 17 (CA)

MLB headnote and full text

Temp. Cite: [2005] O.A.C. TBEd. DE.001

In the Matter of the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended

And in the Matter of a Plan of Compromise or Arrangement of 1078385 Ontario Limited, Island Cove Development Ltd., 1128625 Ontario Limited, 1362317 Ontario Limited, 1164801 Ontario Limited, 1099164 Ontario Limited, O.B. Properties Canada Ltd., Jam Sound Specialists Canada Ltd., and O.B. Properties Limited Partnership (applicants)

(M32003)

Indexed As: 1078385 Ontario Ltd. (Receivership) et al., Re

Ontario Court of Appeal

Simmons, J.A.

December 22, 2004.

Summary:

Several companies involved in a development were placed into receivership by a court order. A secured creditor proposed a plan of arrangement under which the companies' assets were to be sold for approximately $11,500,000 to an affiliate of the secured creditor and the funds used to satisfy secured creditors' claims totalling $19,219,744.

The Ontario Supreme Court sanctioned the plan. The plan was implemented by a vesting order. An unsecured creditor, who was also a shareholder in one of the debtor companies, moved for leave to appeal the orders.

The Ontario Court of Appeal, per Simmons, J.A., dismissed the motion.

Creditors and Debtors - Topic 8590

Debtors' relief legislation - Companies' creditors arrangement legislation - Arrangement - Judicial approval - Several companies involved in a development were ordered into receivership - A secured creditor proposed a plan of arrangement under the Companies' Creditors Arrangement Act - Under the plan, the companies' assets were to be sold for approximately $11,500,000 to the secured creditor's affiliate and the funds used to satisfy secured creditors' claims totalling $19,219,744 - A motions judge sanctioned the plan - The plan was implemented by a vesting order - Oram, who was an unsecured creditor and a shareholder in one of the debtor companies, sought leave to appeal - Oram asserted, inter alia, that the motions judge erred in allowing the secured creditors to use the Act's procedure as a shortcut for liquidating secured assets and in not requiring that the secured creditors proceed with enforcing their security in the ordinary course - The Ontario Court of Appeal, per Simmons, J.A., denied leave - Leave was only granted sparingly when there were serious and arguable grounds that were of real and significant interest to the parties - Oram failed to establish arguable grounds for appealing the finding that the secured debt exceeded the equity in the companies' property - Accordingly, he had not established any reasonable possibility that he had an economic interest in the assets forming the subject matter of the proposed appeal - He also failed to establish sufficient merit in the assertion that the plan of arrangement contravened the Act's purposes.

Creditors and Debtors - Topic 8591

Debtors' relief legislation - Companies' creditors arrangement legislation - Arrangement - When available - [See Creditors and Debtors - Topic 8590 ].

Creditors and Debtors - Topic 8599

Debtors' relief legislation - Companies' creditors arrangement legislation - Appeals - Leave to appeal - [See Creditors and Debtors - Topic 8590 ].

Cases Noticed:

Air Canada, Re, [2003] O.A.C. Uned. 531; 45 C.B.R.(4th) 163 (C.A.), refd to. [para. 26].

Country Style Food Services Inc. et al., Re (2002), 158 O.A.C. 30 (C.A.), refd to. [para. 26].

Blue Range Resource Corp., Re (1999), 244 A.R. 103; 209 W.A.C. 103; 12 C.B.R.(4th) 186 (C.A.), refd to. [para. 26].

Canadian Red Cross Society, Re, [2003] O.A.C. Uned. 375 (C.A.), refd to. [para. 26].

Enterprise Capital Management Inc. v. Semi-Tech Corp. (1999), 10 C.B.R.(4th) 133 (Ont. Sup. Ct.), dist. [para. 28].

Anvil Range Mining Corp., Re, [2004] O.T.C. Uned. 361; 25 C.B.R.(4th) 1 (Sup. Ct.), affd. [2002] O.A.C. Uned. 186 (C.A.), refd to. [para. 30].

Regal Constellation Hotel Ltd. (Receivership), Re (2004), 188 O.A.C. 97 (C.A.), refd to. [para. 43].

Counsel:

William V. Sasso and Evlynn Lipton, for the moving party, Randy Oram;

Richard B. Jones and Tiffany Little, for Amico Contracting & Engineering (1992) Inc., Amicone Design Build Inc., Amicone Holdings Limited and Boblo Property Finance Inc.;

John D. Leslie and Angela D'Alessandro, for Monitor;

G.S. MacLeod & Associates Inc., as Receiver and Manager, and for New Century Bank, assignee Pramco, IL, LLC and Bank One (Michigan).

Simmons, J.A., of the Ontario Court of Appeal, heard this motion in Chambers on December 14, 2004, and delivered the following judgment on December 22, 2004.