A summary of recent Canadian insolvency-focused court decisions.

Institutional Mortgage Capital Canada Inc v 0876242 BC Ltd, 2022 BCSC 1520

Can a stalking horse bid be made subject to a right to redeem the property? The Receiver of a six-storey commercial project in Vancouver (“Gateway”) ascertained that a significant amount of work was required to bring the project to completion, estimated to cost in excess…

Grewal (Re), 2022 ABQB 553

What is the test for the assignment of a claim under s. 38 of the BIA? In May 2016, Grewal made an assignment into bankruptcy. Over three years later, a group of his creditors—whose aggregate unsecured debt totaled almost $5 million—requested that the Trustee in…

Poonian v. British Columbia (Securities Commission), 2022 BCCA 274

Is a securities commission fine discharged in bankruptcy? The British Columbia Securities Commission found that the Poonians had breached s. 57(a) of the British Columbia Securities Act by manipulating the share price of OSE Corp., an Ontario company whose shares traded on the TSXV, and selling overpriced…

In The Matter of Voyager Digital Ltd., 2022 ONSC 4553

What is the COMI for a Canadian company with significant operations in the US? Voyager, a company with its registered office at a law firm in British Columbia, operates a cryptocurrency brokerage and custodial and lending services via its United States subsidiaries. In July 2022,…

M.O.S. MortgageOne Solutions Ltd. v. Heidary, 2022 ONCA 561

Does a consent judgment fall within section 178 of the BIA and survive a discharge? The appellant Heidary granted a mortgage to the respondent M.O.S. MortgageOne Solutions, which ranked third in priority, behind the first mortgage held by Manulife Financial and various Minister of National…

Sirius Concrete Inc. (Re), 2022 ONCA 524

Can a payment made to the debtor one day before bankruptcy be returned on the basis of a constructive trust? Ayerswood was the general contractor on an apartment building project in Guelph, Ontario. Sirius, a concrete forming company, was hired by Ayerswood in 2018 to…

Flight (Re), 2022 ONCA 526

Is leave required to sue a trustee in bankruptcy in a personal capacity? The Debtor made assignments in bankruptcy on four occasions: in 2004, 2006, 2011, and 2016. The appellant firm, Adamson Inc., was the trustee in respect of each of these bankruptcies. The individual appellant, Adamson,…

Golden Oaks Enterprises Inc. v. Scott, 2022 ONCA 509

When will the court refuse to apply the corporate attribution doctrine? Golden Oaks was a Ponzi scheme operating in Ottawa between 2009 and 2013. It was publicly advertised as a “rent-to-own” business, but was promoted to certain individuals as a way to turn a quick…

In the Matter of the Bankruptcy of Mai Anh Tran

Does a single creditor need to prove special circumstances to petition a debtor into bankruptcy? The Creditor held a judgment against the Debtor in the amount of $488,871.04 plus costs and post-judgment interest. Despite the Creditor’s demand for payment, the Debtor paid nothing. On August…

KingSett Mortgage Corporation v. 30 Roe Investments Corp., 2022 ONCA 479

Does a debtor have an appeal as of right from a receivership order? KingSett advanced a non-revolving demand loan to 30 Roe of $1.875 million, which was secured, in part, by a second mortgage on nine residential condominium units owned by 30 Roe in a 397-unit…