No second chances for bankrupt company's appeal

Royal Bank of Canada v. 1512632 Ontario Inc. (Cheema & Sons Transport), 2026 ONCA 618
What appeal route governs appeals from orders made under both the BIA and provincial receivership legislation?

Summary: When a receiver is appointed under both the BIA and provincial receivership legislation, the BIA's appeal rules govern, and paramountcy blocks any resort to the provincial route. Applying this, the Court of Appeal refused the Debtors leave to appeal an Approval and Vesting Order and an Ancillary Relief Order tied to the sale of their properties, since none of the automatic appeal rights under s. 193(a)-(d) applied. The Debtors also failed the leave test under s. 193(e), as their appeal raised no issue of general importance and the sale process stood unchallenged on the record.

On application by the Royal Bank of Canada, the Receiver was appointed over the property of the appellant Debtors pursuant to s. 243(1) of the Bankruptcy and Insolvency Act and s. 101 of the Courts of Justice Act. The Receivership Order authorized the Receiver to market and sell the property of the Debtors and, on July 14, 2026, the Court granted an Approval and Vesting Order approving a sale transaction for the real properties of the Debtors following a lengthy marketing process, and an Ancillary Relief Order authorizing the Receiver to, among other things, make distributions from the proceeds of the sale transaction.

The Debtors sought an extension of time to file appeal materials in respect of the AVO and ARO, as well as a stay of the closing of the sale transaction. They alleged that the AVO and the ARO resulted from a process that was procedurally unfair since they had requested an adjournment from the motion judge on the basis that their counsel was unavailable on the date of the motion, which request had been denied. The Receiver sought a declaration that the appellants required leave to appeal the AVO and ARO and an order denying them leave to appeal.

The original hearing date for the Receiver’s motion for the AVO and ARO had previously been re-scheduled once to accommodate the stated unavailability of the Debtors’ counsel. A week after the hearing date was re-scheduled, the Debtors’ counsel again advised of their unavailability on the re-scheduled date. Given that the sale transaction had a target closing date of July 31, 2026, and the next earliest available hearing date in Brampton was in September 2026, the Receiver was not prepared to consent to a further adjournment of the motion. The Debtors did not bring a motion seeking an adjournment of the new hearing date, and they did not deliver any responding affidavit, factum or other materials opposing the relief sought by the Receiver.

At the hearing of the motion, new counsel appeared as agent for the Debtors and requested an adjournment on the basis that the Debtors’ original counsel was not available to attend the motion. The motion judge declined the adjournment request and directed that the motion would proceed as scheduled. The Debtors did not otherwise oppose the substantive relief sought by the Receiver, with the result that the motion was unopposed. It was supported by RBC and the proposed purchaser.

The Court of Appeal confirmed that the provisions of the BIA governed rights of appeal and appeal routes in this matter as the Receiver was appointed under both s. 243 of the BIA and s. 101 of the CJA. The doctrine of paramountcy prevented an appellant from resorting to the CJA appeal provisions where they are in operational conflict with those of the BIA in respect of timing and leave requirements. Accordingly, the Debtors had to demonstrate that they had an appeal route available to them under s. 193 of the BIA.

An appeal lies as of right only if the circumstances set out in one of subsections 193(a) – (d) apply; otherwise leave from a judge of the Court of Appeal is required pursuant to subsection 193(e). Due to the broad automatic stay on appeal contained in s. 195, the Court of Appeal has expressly taken a narrow approach to the interpretation of the appeal rights in s. 193 (a) – (d). 

In this case, none of subsections (a) – (d) applied. “Future Rights” required to engage s. 193(a) are rights that cannot be presently asserted, but will come into existence at a future date. They are not procedural rights or commercial advantages that may accrue from the order sought to be challenged on appeal. The Debtors did not identify any legal right that did not exist when the AVO and ARO were granted but would arise at some point in the future. The fact that closing of the sale transaction would occur after the date of the AVO did not convert existing interests of the Debtors into future rights. 

Section 193(b) also did not apply. The lower court’s decision and Orders were not likely to affect other cases of a similar nature. The Debtors’ complaint amounted to a challenge of the decision of the motion judge to deny their request for an adjournment at the hearing.

With respect to s. 193(c), a proper interpretation requires an approach which meets the needs of modern, “real-time” insolvency litigation. This subsection does not apply to orders that are procedural in nature, orders that do not bring into play the value of the debtor’s property, or orders that do not result in a loss. An order concerning the method by which a receiver or trustee disposed of assets does not engage s. 193(c), even if the assets at issue had a value that exceeds the statutory threshold. Further, in this case, the Debtors had not demonstrated that the granting of the AVO had resulted or would result in a loss of more than $10,000 because the Receiver could have obtained a higher price for the real properties. Rather, the Debtors wanted the sale transaction quashed in order to attempt to obtain refinancing and not have the real properties sold at all.

Having determined that leave to appeal was required, the Court went on to find that the test for leave was not met. The proposed appeal did not raise any issue of general importance to insolvency practice or to the administration of justice. It is a fact specific complaint about the scheduling history of the motion, the refusal of the motion judge to grant an adjournment, and the lack of a reference in his Endorsement to the request for an adjournment. Moreover, the notice of appeal did not disclose a prima facie meritorious appeal. The evidence before the motion judge, uncontested and unchallenged given the absence of any responding materials filed, demonstrated that the real properties were exposed to the market through a professional broker for a period of approximately five months, and that the purchaser submitted the highest offer.

The Endorsement of the motion judge, while clearly brief, was adequate and appropriate in circumstances where the Debtors did not challenge the motion, and their agent appeared only to request an adjournment. When that request was denied, that agent made no submissions on the motion. The Debtors had filed no responding materials. Accordingly, the motion proceeded on an unopposed basis. On a motion within a “real-time” receivership proceeding, like the one before the motion judge, nothing more than a brief Endorsement was required. It was not a requirement that the Endorsement refer to every single event, fact or submission. The Court of Appeal rejected the Debtors’ submission that the failure of the motion judge to specifically reference in his Endorsement the adjournment request frustrated meaningful appellate review.

The Court of Appeal declined to grant leave to appeal, and dismissed the Debtors’ motions in full. 

Judge: Osborne J.A. (Motion Judge)

Professionals involved:

• Matilda Lici of Aird & Berlis for Grant Thornton as receiver

• Louis Raffaghello of Concorde Law for Gateway Landscaping Group (2005) Inc. and 8412-8424 Goreway Drive Holdings Inc., the purchaser

• Pathik Baxi of SDS Law Firm for Satish Chopra, second mortgagee

• Kirpal Singh for the appellants/debtors