Algoma Steel Inc., Re

• Jurisdiction: Ontario
• Judge: Osborne, A.C.J.O., Doherty and MacPherson, JJ.A.
• Date: 18 May 2001
• Citation: (2001), 147 O.A.C. 291 (CA)
• Court: Court of Appeal (Ontario)

Algoma Steel Inc., Re (2001), 147 O.A.C. 291 (CA)

MLB headnote and full text

Temp. Cite: [2001] O.A.C. TBEd. JN.016

In The Matter Of the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36 and The Business Corporations Act, R.S.O. 1990, c. B.16

And In The Matter Of a Proposed Plan of Arrangement with respect to Algoma Steel Inc.

Algoma Steel Inc. (applicant/responding party)

(M27359)

Indexed As: Algoma Steel Inc., Re

Ontario Court of Appeal

Osborne, A.C.J.O., Doherty and MacPherson, JJ.A.

May 25, 2001.

Summary:

The Ontario Superior Court, in a decision reported at [2001] O.T.C. Uned. 476, made an initial order under s. 11(3) of the Companies' Creditors Arrangement Act authorizing Algoma to obtain additional financing from its existing bank lenders. Certain creditors of Algoma, who did not receive notice, applied for leave to appeal the order.

The Ontario Court of Appeal dismissed the application for leave to appeal.

Creditors and Debtors - Topic 8596

Debtors' relief legislation - Companies' creditors arrangement legislation - Notice to creditors - A motions judge made an initial order under s. 11(3) of the Companies' Creditors Arrangement Act authorizing Algoma to obtain additional financing from its existing bank lenders - The order was intended as an urgent and interim response to Algoma's serious cash flow crisis - Certain creditors of Algoma did not receive notice - A comeback clause in the motions judge's order permitted any interested party to apply to vary or rescind the order - The Ontario Court of Appeal dismissed the creditors' application for leave to appeal, holding that it was premature - Section 11(1) of the Act permitted initial orders on a without notice basis - The motions judge's order was only an initial order brought on an urgent basis to deal with seemingly desperate circumstances - An appeal court should be cautious about intervening in the process under the Act, especially at an early stage - Further, the creditors availed themselves of the comeback clause and a motion to vary the order was pending.

Creditors and Debtors - Topic 8599

Debtors' relief legislation - Companies' creditors arrangement legislation - Appeals - Leave to appeal - [See Creditors and Debtors - Topic 8596 ].

Cases Noticed:

Pacific National Lease Holding Corp. et al., Re (1992), 19 B.C.A.C. 134; 34 W.A.C. 134; 15 C.B.R. 265 (C.A.), refd to. [para. 8].

Counsel:

John B. Laskin and David Outerbridge, for the moving party, First Mortgage Noteholders;

Michael Barrack, Geoff Hall and Sarit Batner, for the responding party, Algoma Steel Inc.;

John T. Porter, Alan Merskey and Mario Forte, for the DIP Lenders;

Ken Rosenberg, Lily Harmer and Marcus Knapp, for the United Steelworkers of America;

James H. Grout, for the Monitor;

Andrew Hatnay, for the Superintendent of Financial Services;

Michael Weinczok, for the Directors of Algoma Steel Inc.

This application was on May 18, 2001, by Osborne, A.C.J.O., Doherty and MacPherson, JJ.A., of the Ontario Court of Appeal. The Court of Appeal released the following endorsement on May 25, 2001.