Alberta Court grants leave in novel investor-led CCAA case

Angus A2A GP Inc v Alvarez & Marsal Canada Inc, 2025 ABCA 147
Can equity investors commence CCAA proceedings?

Summary: The Alberta Court of Appeal has granted leave to appeal a novel CCAA order obtained by Canadian equity investors who used the proceeding to temporarily block the sale of the Angus Manor real estate project, after alleging they were not informed of or asked to approve the transaction. The case arises from investments in entities tied to three development projects, including Angus Manor in Ontario and two Texas projects, with the Canadian investors arguing that the CCAA stay was needed because of alleged insolvency and governance concerns. The Court emphasized that CCAA appellate leave is granted sparingly because supervising judges manage fast-moving proceedings, but found that this case raised a practice-significant question because it involved what all parties accepted was a unique use of the CCAA by equity investors. Leave was granted on whether the supervising judge erred in concluding that the Canadian investors came within the scope of the CCAA and that using the statute in these circumstances was proper.

A representative group of Canadian investors invested funds either directly or indirectly in several entities which managed three real estate development projects. One of the development projects, Angus Manor, is in Ontario (the Angus Manor Project), while the other two are in Texas. The Canadian investors did not participate directly in the management, control or sale of the properties. They had rights to financial information, meetings, and opportunities to participate in the direction of the partnerships or trusts that held other interests, including direct interest in the land through Undivided Fractional Interests (UFIs). Offshore investors purchased UFIs in the development lands directly and had the right to vote on the sale of those lands.

Canadian investors discovered from a Facebook post that the Angus Manor Group was proceeding with a sale of the Angus Manor Project. The investors alleged they were neither informed of the sale nor contacted by the general partners to approve the sale. They initiated the application under the Companies’ Creditors Arrangement Act to temporarily prohibit the sale of the Angus Manor Project alleging insolvency. The supervising justice granted the Initial Order, which prevented the sale of any of the properties for a ten-day period and appointed a Monitor with enhanced powers. The Initial Order also appointed counsel to represent the offshore investors.

The applicants sought leave to appeal the Initial Order and subsequent orders issued in the CCAA proceedings pursuant to section 13 of the CCAA and rule 14.5(1)(f) of the Alberta Rules of Court. They argued that the investors were utilizing the CCAA process for an improper purpose inconsistent with the Act. The respondents asserted that the lower court made no error in providing the several interim orders it made under the CCAA proceedings.

The test for leave to appeal pursuant to section 13 of the CCAA is settled:

1. Whether the issue on appeal is of significance to the practice;

2. Whether the issue on appeal is of significance to the action itself;

3. Whether the appeal is prima facie meritorious; or on the other hand, whether it is frivolous; and

4. Whether the appeal will unduly hinder the progress of the action.

CCAA proceedings are dynamic processes where events are unfolding in real time, the situation is constantly changing, and the supervising justice is “steeped in the intricacies of the CCAA proceedings”. Therefore, appellate intervention is justified only where the “supervising [justice] erred in principle or exercised their discretion unreasonably”. As a result, leave tends to only be granted “sparingly”.

 All the parties to these applications and the supervising justice noted that this case represented a unique if not singular use of the CCAA by equity investors in these circumstances. As a result, the Court was satisfied that this issue met the threshold for leave to appeal, and granted permission for the appeal of the following question to a panel of the appellate court: Did the supervising justice err in concluding that the Canadian investors came within the scope of the Companies’ Creditors Arrangement Act, and that use of the Act in these circumstances was proper?

Judge: The Honourable Justice Joshua B. Hawkes

Professionals involved:

• Kelsey Meyer, Luc Rollingson and Chyna Brown of Bennett Jones (student-at-law) for Fossil Creek A2A Developments, LLC et al.

• Daniel Jukes of Miles Davidson for Angus A2A GP Inc. et al.

• Jeffrey Oliver and Danielle Marechal of Cassels for Alvaraz & Marsal Canada Inc. as monitor

• Robyn Gurofsky and Kaitlyn Wong of Fasken for the Canadian Investors

• Howard Gorman, KC and Daniel Stethem of Norton Rose Fulbright for the Offshore Investors

• Kyle Kashuba of Torys for Pillar Capital Corp., the Interim Lender

• Jeffrey Oliver, Danielle Marechal, Danica Jorgenson and Natalie Thompson for Alvarez & Marsal as Monitor