A summary of recent Canadian insolvency-focused court decisions.

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…

Johansen v Wallgren, 2021 ABCA 234

Does a judgment on a guarantee survive bankruptcy where the underlying claim is for fraud? The appellant, Johansen, filed a statement of claim against the respondent, Wallgren, alleging breach of contract, fraudulent misrepresentation and fraudulent preference. Johansen then severed his claim and sought partial summary…

DGDP-BC Holdings Ltd v Third Eye Capital Corporation, 2021 ABCA 226

Can a receivership order override the validity and priority of the charges contained in an earlier order granted pursuant to the CCAA in the same insolvency proceedings? Accel Canada Holdings Limited (“Holdings”) and Accel Energy Canada Limited (“Energy” and, together with Holdings, “Accel”) each filed…

Sellathamby (Re), 2020 BCSC 1567

Can a notice of disallowance be declared a nullity following the expiry of the appeal period? The applicant creditor sought an order for, among other things, a declaration that the Notice of Disallowance of his Proof of Claim issued in December 2017 was a nullity…

Flasha Holdings Ltd (Re), 2021 ABQB 435

What factors will a court consider on competing applications to terminate or extend the period to make a proposal? A recent Alberta decision considers the factors a court will consider on competing applications brought by the debtor to extend the period to make a proposal…

Meridian v. Okje Cho & Family Enterprise Ltd., 2021 ONSC 3755

Can a debtor avoid a receivership if it has a reasonable plan for moving forward? The applicant, Meridian, sought an order pursuant to s. 243(1) of the Bankruptcy and Insolvency Act and s. 10 of the Ontario Courts of Justice Act, appointing a receiver and manager over all…

John Trevor Eyton (Re), 2021 ONSC 3646

Can a statute-barred claim still be a provable claim in bankruptcy if it was included on the debtor's statement of affairs? The bankrupt gave the appellant a promissory note in the amount of $250,000 dated April 10, 2001 due on October 10, 2001. On September…

Laurentian University v. Sudbury University, 2021 ONSC 3392

Does the duty of good faith extend to contract disclaimers? Laurentian University (“Laurentian”) experienced a financial crisis and sought protection under the Companies’ Creditors Arrangement Act. Since February 1, 2021, Laurentian has undergone an overhaul of its entire financial and operational structure in order to create…