Agro Pacific Industries Ltd., Re

• Jurisdiction: British Columbia
• Court: Supreme Court of British Columbia (Canada)
• Judge: Thackray, J.
• Citation: 2000 BCSC 837,[2000] B.C.T.C. 331 (SC)
• Date: 19 May 2000

Agro Pacific Ind. Ltd., Re, [2000] B.C.T.C. 331 (SC)

MLB headnote and full text

Temp. Cite: [2000] B.C.T.C. TBEd. JN.030

In The Matter Of the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36

And In The Matter Of the Company Act, R.S.B.C. 1996, c. C-62

And In The Matter Of Agro Pacific Industries Ltd. (petitioner)

(L001146; 2000 BCSC 837)

Indexed As: Agro Pacific Industries Ltd., Re

British Columbia Supreme Court

Vancouver

Thackray, J.

May 30, 2000.

Summary:

Agro, a major animal feed and crop products supplier to the farming industry, experienced financial difficulties and obtained an interim stay order under the Companies' Creditors Arrangement Act. Numerous suppliers felt they had been duped by Agro and its secured creditors, who had let the suppliers build up Agro's inventory at a time when they knew Agro was teetering. The suppliers applied to set aside the order to obtain the return of goods supplied to Agro within 39 days of the order. Alternatively, they sought to vary the stay order, whereby the goods supplied would be traced and identified and the proceeds of sale of such goods placed in a trust fund.

The British Columbia Supreme Court dismissed the suppliers' application. The court was unable to find that Agro's receipt of the supplies while experiencing financial difficulties constituted lack of good faith. Also, there was no justification for a trust fund. A trust fund in favour of the suppliers would create a class of secured creditors after the fact. Creditors should be created by the parties on a contractual basis when entering into their business relationships.

Creditors and Debtors - Topic 8583

Debtors' relief legislation - Companies' creditors arrangement legislation - Setting aside or varying order - See paragraphs 1 to 58.

Cases Noticed:

Woodwards's Ltd., Re (1993), 77 B.C.L.R.(2d) 346 (S.C.), refd to. [para. 46].

Eaton (T.) Co., Re, [1999] O.T.C. 182 (Sup. Ct.), refd to. [para. 48].

Statutes Noticed:

Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, sect. 81.1 [para. 45].

Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, sect. 11 [para. 34].

Counsel:

D.I. Knowles, for Agro Pacific Industries Ltd. and KPMG Inc.;

G.E.H. Cadman, Q.C., and S.R. McGladery, for Archer Daniels Midland Co., Interag, Calhoun Agri Services Ltd., Market Laboratory Inc., United Agri Products, United Grain Growers Ltd. and Van Waters and Rogers Ltd.;

R.J. Kearns, for the Monitor, KPMG Inc.;

M.A. Fitch, Q.C., for the National Bank of Canada;

J.I. McLean, for the Bank of Montreal;

S.C. Fitzpatrick, for Barenbrug USA Export Inc., Cargill Ltd., International Raw Materials, J.R. Simplot Co., Hydro Agri North America Inc., IMC Kalium Canada Ltd.;

J. Lynch, for Agrium Inc. and Pioneer Hi Bred;

T.J Potter, for B.C. Transportation Financing Authority;

J.P. Mancuso, for Parrish and Heimbecker Ltd.

This application was heard on May 19, 2000, at Vancouver, British Columbia, before Thackray, J., of the British Columbia Supreme Court, who delivered the following judgment on May 30, 2000.

Please note: The following judgment has not been edited.