Routine CCAA wind-up becomes costly legal battle

Coast Automotive Group Inc (Re), 2026 ABKB 490 
Is it appropriate to redact accounts when seeking costs in an insolvency?

Summary: The Alberta Court of King’s Bench has ordered Coast Automotive Group and related parties to pay 50% of the Monitor’s and Bank of Montreal’s full-indemnity costs after finding they turned a routine CCAA termination application into unnecessary adversarial litigation designed to advance a separate wrongful-inducement claim against BMO. The creditor-driven proceeding had achieved its purpose after BDO as Monitor sold the debtors’ British Columbia and Alberta dealerships and related assets, but the debtors and non-CCAA parties opposed termination and sought control of the proceeding and replacement of BDO without identifying a proposed monitor, funding source or cash flow plan. The Court found their actions delayed the wind-down, required four additional stay extensions and further burdened BMO, which was already facing a $16 million shortfall. In assessing quantum, the Court rejected arguments that the professional fees were inherently excessive given the complexity of the dispute, but held that extensive redactions made it impossible to determine whether all charges related to the applications at issue. Any unresolved dispute over the accounts may therefore be referred to an assessment officer, and the Monitor and BMO may also recover their reasonable disbursements, subject to assessment.

The Monitor, BDO Canada Limited (BDO), applied for termination of the Companies’ Creditors Arrangement Act proceeding and approval of the Monitor’s conduct, activities, decisions and reports to date. The proceeding was creditor-driven, initiated by the senior secured creditor, Bank of Montreal (BMO), for the express purpose of realizing on its security. The Monitor requested termination after all the assets of the four debtor companies (“Coast Auto Group”) had been liquidated and the objective of the proceeding fulfilled.

The assets consisted primarily of a Stellantis dealership in North Vancouver, BC and a Stellantis dealership and associated lands in Drayton Valley, Alberta, all of which had been disposed of through a court-supervised Sales and Investment Solicitation Process (SISP) in October 2025. A normally routine termination application was complicated by Coast Auto Group and related individuals and a related entity (non-CCAA parties) commencing their own action against BMO for wrongful inducement of insolvency (the “Founders’ Claim”). Coast Auto Group and the non-CCAA parties opposed the Monitor’s application and brought a cross-application for the continuation of the CCAA proceedings, the transfer of control of the proceedings to themselves, and replacement of BDO as Monitor with a Monitor-To-Be-Named.

Ultimately, the Court granted the Monitor’s application and dismissed the cross-application, and invited the parties to make submissions as to costs. The starting point in CCAA insolvency matters is that, as a matter of practice (not law), each party will usually bear its own costs. The Court does, however, consider cost awards where appropriate. While there are no provisions in the CCAA itself dealing with costs, the Court has the discretion to award costs under the Rules of Court and its inherent jurisdiction. The circumstances justifying a costs award may arise in various ways, “including unusual applications, unreasonable positions, unnecessary steps, or misconduct which impacts the timing or costs associated with winding up the estate.”

There is no general principle that costs should not be awarded in CCAA proceedings. While not the norm, there are restructuring proceedings in which a classic adversarial dispute can arise between two competing creditor groups, and in such circumstances there is a recognized discretion in the court to award costs as between the parties with the economic interests in the outcome. Here, both the Monitor and BMO argued that the normal rule in civil litigation that costs follow the event applied to both the disposition of the main application and the cross-application and that Coast Auto Group and the non-CCAA parties, as the unsuccessful parties in both applications, were liable to pay costs. Coast Auto Group and the non-CCAA parties argued, among other things, that the accounts rendered by counsel for both the Monitor and BMO were inordinately high and the accounts were partially redacted and lacked informative detail.

The entire purpose of opposing what is normally a non-controversial application on the Monitor’s part and advancing the cross-application was to enable Coast Auto Group/the non-CCAA parties to mine for information and advance their own lawsuit against BMO under the protective aegis of the CCAA. Providing leverage to guarantors in their ongoing debt battle with the lender is not a recognized objective under the CCAA. The proponents wanted control of the CCAA proceedings but did not propose an identified person as Monitor and had a concept but neither a proposal for funding nor a cash flow statement. The Monitor was required to apply for four additional stay periods in order to accommodate Coast Auto Group/the non-CCAA parties and their opposition to the main application and pursuance of the cross-application. BMO was already experiencing a $16M shortfall. Since BMO was funding this CCAA proceeding, it was doubly penalized by the challenges posed by Coast Auto Group/the non-CCAA parties.

The steps taken by Coast Auto Group/the non-CCAA parties adversely impacted the costs and timing of the winding down of the estate, and converted these proceedings from a forum for the exchange of views by stakeholders into a full-blown adversarial proceeding by Coast Auto Group/the non-CCAA parties against both BMO and the Monitor. Stakeholders are entitled to question the information, opinions, reasoning and decisions of the Monitor and to make suggestions and propose changes to proposals made to the Court. Here, however, once Coast Auto Group/the non-CCAA parties evinced an intention to sue BMO (and the Monitor, although that was later dropped), the notion of a collective forum for the exchange of ideas evaporated and was turned into hammer-and-tong legal warfare within the CCAA proceeding. It was not necessary. The Founders’ lawsuit carried on outside of the CCAA proceeding in the regular realm of civil litigation.

While the Court found the position of Coast Auto Group/the non-CCAA parties unmeritorious, it did not conclude that they had acted in bad faith. Therefore, full indemnity was not available on that basis. Having determined entitlement to costs and that the appropriate scale is a 50% proportion of full indemnity, the Court turned to the quantum or the exact amount that should be awarded. This exercise is different than that of approval of professional fees in the court-supervised insolvency context. In the pure insolvency context, the Court applies the “fair and reasonable” test as a measuring stick for court approval. Reviewing litigation costs for a costs award as between parties is a different process, but there is one feature that carries over in this case: the public nature of court-supervised insolvency proceedings. In court-supervised insolvencies, the public is entitled to a high level of professional services and such services come at a cost.

In a case of this complexity and importance, it was appropriate for experienced counsel with specialized expertise to carry the brief, on all sides. Thus, the legal accounts were not too high. The Court agreed with Coast Auto Group/the non-CCAA parties that where much detail has been blacked out, it is impossible to determine whether the costs are properly charged. In particular, it was difficult to tell if the services charged for related to the two applications, or something else. The party paying the accounts has the right to challenge quantum and seek an assessment. Accordingly, if Coast Auto Group/the non-CCAA parties were unable to agree with either the Monitor or BMO as to the final amount payable to each as a result of this costs ruling, any party was entitled to seek an assessment from the Assessment Officer under Rule 10.41.

The Court concluded that the Monitor and BMO were entitled to recover their actual reasonable disbursements, subject to assessment by the Assessment Officer.

Judge: The Honourable Justice Douglas R. Mah

Professionals involved:

• Kelly Bourassa and Aryo Shalviri of Blakes for BDO as Monitor

• James Reid and Bryan Hosking of Miller Thomson for BMO

• Scott Chimuk of Blue Rock Law for the Coast Auto Group & non-CCAA parties