Bolivar Gold Corp. v. Scion Capital, LLC et al., (2006) 223 B.C.A.C. 50 (YukCA)

• Judge: Finch, C.J.Y.T., Huddart and Low, JJ.A.
• Court: Court of Appeal (Yukon Territory)
• Case Date: February 27, 2006
• Jurisdiction: Yukon
• Citations: (2006), 223 B.C.A.C. 50 (YukCA);2006 YKCA 1

Bolivar Gold Corp. v. Scion Capital (2006), 223 B.C.A.C. 50 (YukCA);

    369 W.A.C. 50

MLB headnote and full text

Temp. Cite: [2006] B.C.A.C. TBEd. MR.050

In The Matter Of an Application for approval of an arrangement under Section 195 of the Business Corporations Act of the Yukon Territory, R.S.Y. 2002, c. 20 and Amendments thereto

Bolivar Gold Corp. (respondent/petitioner) v. Scion Capital, LLC, Scion Qualified Value Fund, A Series of Scion Qualified Funds, LLC, Scion Value Fund, A Series of Scion Funds, LLC, The Clinton Group, and Arnhold and S. Bleichroeder Advisers, LLC (appellants/respondents)

And In The Matter Of Bolivar Gold Corp. a Corporation incorporated pursuant to the Laws of the Yukon Territory and In The Matter Of Sections 124, 243 and 249 of the Business Corporations Act of the Yukon Territory, R.S.Y. 2002, c. 20 and Amendments thereto

Scion Capital, LLC, Scion Qualified Value Fund, A Series of Scion Qualified Funds, LLC, Scion Value Fund, A Series of Scion Funds, LLC, The Clinton Group, and Arnhold and S. Bleichroeder Advisers, LLC (appellants/petitioners) v. Serafino Iacono, Miguel De La Campa, Jose Francisco Arata, Robert Doyle, Peter Volk, and Perry Dellece, Bolivar Gold Corp. (respondents/respondents)

(YU0555; 2006 YKCA 1)

Indexed As: Bolivar Gold Corp. v. Scion Capital, LLC et al.

Yukon Court of Appeal

Finch, C.J.Y.T., Huddart and Low, JJ.A.

February 28, 2006.

Summary:

Bolivar Gold Corp. (Bolivar) sought the final approval of a plan of arrangement with Gold Fields Limited (Gold Fields) pursuant to s. 195 of the Business Corporations Act (Yukon). The plan called for Gold Fields to acquire 100% of the shares and other securities of Bolivar. Dissenting security holders objected. They also petitioned for the oppression remedy provided for under s. 243 of the Act. The relief sought included removal of Bolivar's officers and directors, and setting aside of the plan of arrangement.

The Yukon Supreme Court approved the plan of arrangement as being procedurally and substantially fair. The dissident security holders appealed, arguing that the directors failed to disclose material information and that the arrangement resulted in an offer that was too low.

The Yukon Supreme Court, in a separate judgment, dismissed the oppression remedy petition. The court ruled that a plan of arrangement that was procedurally and substantially fair could not be oppressive. The court also ruled that Bolivar's management directors were not in a position of conflict. The dissident security holders appealed.

The Yukon Court of Appeal dismissed both appeals.

Company Law - Topic 9781

Actions against corporations and directors - Action for oppressive conduct - When available - Bolivar Gold Corp.'s (Bolivar) managing directors were contractually entitled to "generous severance payments" on completion of any arrangement that resulted in change of control of Bolivar - When such an arrangement was completed, dissenting security holders petitioned for the oppression remedy under the Yukon Business Corporations Act, arguing that the managing directors were in a position of conflict of interest - The Yukon Court of Appeal affirmed the dismissal of the petition, ruling as follows: "It is clear that the directors have a financial interest dependent on completion of the arrangement. Those interests arise from their contracts of employment, entered into long before the negotiations that led to the arrangement. The security holders, including those who dissent, were aware of those interests. But those interests are not in conflict with the interests of the security holders. Their interests are aligned or coincide with those of the security holders. A significant part of the benefits the directors will obtain on completion depend directly on the consideration received by the security holders under the arrangement. The remainder of the benefits are routine severance benefits" - See paragraphs 13, 15 to 19.

Counsel:

E. Babin, L. Sarabia and K.C. Bourchier, for the appellant;

C.E. Hinkson, Q.C., and R. Ryan Bell, for the respondent, Bolivar Gold Corp.;

K.L. Kay, for Goldfields Ltd.;

M.A. Gelowitz, for respondents, S. Iacono, M. De La Campa, J.F. Arata, R. Doyle, P. Volk, P. Dellece.

This appeal was heard at Vancouver, British Columbia, on February 27, 2006, by Finch, C.J.Y.T., Huddart and Low, JJ.A., of the Yukon Court of Appeal. The decision of the Court of Appeal was delivered orally at Vancouver, British Columbia, by Finch, C.J.Y.T., on February 28, 2006.