A summary of recent Canadian insolvency-focused court decisions.

Royal Bank of Canada v. Mundo Media Ltd., 2022 ONSC 2147

Is a receiver bound by an arbitration clause in an agreement it wishes to sue on? Mundo Media (“Mundo”), a company which carried on business in Canada and the US, was placed in receivership in April 2019. The appointment order authorized the Receiver to exercise…

Crowe Mackay & Company Ltd. v. 0731431 B.C. Ltd., 2022 BCCA 158

Can a law firm appeal an order requiring the repayment of professional fees in a bankruptcy? In three related bankruptcy proceedings and two related civil actions, the Trustee and its counsel (the “Law Firm”) filed notices of appeal from orders of the trial judge requiring…

Medcap Real Estate Holdings Inc. (Re), 2022 ONCA 318

In what circumstances should the court exercise its discretion to dismiss a bankruptcy application? The respondents brought an application for a bankruptcy order against the appellant, Medcap, pursuant to s. 43(1) of the Bankruptcy and Insolvency Act. The application judge granted the application and made a…

On Deck Capital Canada, ULC v. Northern Protocol Inc., 2022 ONSC 2335

Should a defendant who has evaded formal service be able to set aside default judgment? Northern Protocol and its principal, Aaron Weston, were the parties to several loan agreements with On Deck Capital. Northern Protocol was the borrower, and Weston provided a personal guarantee of…

Re Favrens, Re Skanes and Re Okonkwo

Can a non-lawyer represent a creditor before the courts in an insolvency matter? In December 2021, the Court heard three motions by MCI for orders pursuant to rule 15.01(2) of the Rules of Civil Procedure that MCI, a corporation, be granted permission to be represented by a…

Grant Thornton Limited et al. v. 1902408 Ontario Ltd., 2022 ONSC 2011

Can municipal property taxes be vested out? In January 2019, the Receiver was appointed in relation to a property located in the Township of Augusta, which was then owned by 190 Ontario. The property consists of 27 acres, including event space, apartment townhouses, a boutique, storage…

Manitok Energy Inc (Re), 2022 ABCA 117

Do builders' liens take priority over abandonment and reclamation obligations? Manitok Energy Inc. was an oil and gas company that became insolvent. The respondent, Prentice Creek Contracting, provided equipment and services to Manitok related to the reclamation and cleanup of certain oil and gas well…

Ernst & Young Inc. v. Aquino, 2022 ONCA 202

What is the test for attributing a principal's fraudulent intent to the company? John Aquino was the directing mind of Bondfield Construction Company Limited and its affiliate, Forma-Con Construction. Bondfield was a construction company that operated in the Greater Toronto Area and elsewhere. Its affiliate…

Carde (Re), 2022 ABQB 154

Which bankruptcy tasks are claimable disbursements, and which ones are non-claimable overhead charges? A trustee’s fees are afforded priority over other claims by s. 136 of the Bankruptcy and Insolvency Act. However, priority of payment does not mean that a trustee is free to treat the recovery…