A summary of recent Canadian insolvency-focused court decisions.

8640025 Canada Inc. (Re), 2021 BCSC 1826

Does a CCAA debtor have standing to oppose a sale of its assets to a competitor? The petitioners were two companies which were involved in the business of selling telephone services. The Monitor had previously effected, with court approval, sales of two tranches of the…

Stoddard (re), 2021 NSSC 81

Are EI overpayments discharged in a bankruptcy? The bankrupt filed her second bankruptcy on September 22, 2017 (her first, from 2006, ended in an automatic discharge nine months later).  Of her $58,499 in declared total debt (all unsecured), $32,000 was an Employment Insurance (EI) overpayment.…

Re 12463873 Canada Inc., 2021 ONSC 5895

Is a purchaser or a ResidualCo entitled to a tax refund of the debtor? PwC as Monitor of 124 Canada Inc. brought a motion for declaratory relief about entitlement to HST refunds with a value of approximately $456,429.42. The issue arose in connection with a company…

Arrangement relatif à Bloom Lake, 2021 QCCS 3402

Does a CCAA court in one province have jurisdiction to hear a motion under the CBCA when CBCA proceedings have been commenced in another province? On June 29, 2018, the Quebec CCAA Court issued an Order sanctioning the Joint Plan of Compromise and Arrangement that…

McKibbon v. BDO Canada Limited, 2021 BCCA 303

Can a bankrupt revoke a discharge to sue a trustee? In July 2013, the appellant McKibbon made an assignment into bankruptcy. BDO acted as the corporate trustee. During the administration, issues arose in calculating the appellant’s surplus income and tax payable to Canada Revenue Agency.…

Grant Thornton LLP v. New Brunswick, 2021 SCC 31

What is the test for the discoverability of an auditor's negligence claim? In the fall of 2008, the Atcon Group of Companies (“Atcon”) – a New Brunswick-based provider of construction, energy, industrial and waste management services – sought loans from the Bank of Nova Scotia,…

Canada v. Canada North Group Inc., 2021 SCC 30

Can CCAA priority charges prime the CRA’s deemed trust claim? The Debtors initiated restructuring proceedings under the BIA, but soon changed course and sought to restructure under the CCAA. In their initial CCAA application, they requested, among other things, the creation of three super-priority charges.…

JMX Contracting Inc. (Re), 2021 ONSC 5142

When will an insolvency court not approve a litigation funding agreement? In July 2018, JMX, a demolition company, entered into a contract with OPG for the demolition of the Lambton Thermal Generating Station. In February 2020, OPG formally notified JMX that it was in default of…

Flight v. Adamson, 2021 ONSC 4278

Does a bankrupt require leave to sue a trustee in a personal capacity? The plaintiff had undergone four bankruptcies over the course of 13 years. He claimed that, following his fourth bankruptcy, he discovered that his former bookkeeper misappropriated approximately $206,000 from his sole proprietorship between…