Ontario Civil

Bankruptcy and Insolvency

Companies’ Creditors Arrangement Act

Initial application

Claimant breached duty to be forthright in claims process by failing to disclose sale of property

Claimant leased property in Texas to N Inc., U.S. subsidiary of N Ltd.. N Ltd. guaranteed lease. N group of companies became involved in cross-border insolvency proceedings. Lease debt went unpaid. Claimant assigned its rights under lease and guarantee to bank, which held security over property. Claimant claimed against N Ltd. under lease and guarantee in Companies’ Creditors Arrangement Act (CCAA) proceedings. Bank foreclosed and sold property. Claimant did not advise monitor property had been sold. Claims officer granted claim for liquidated damages under s. 17.1(e) of lease, but reduced award by $1 on basis that claimant had duty to be forthright in claims process and breached that duty by failing to disclose sale of property. Monitor and claimant brought motions appealing claims officer’s decision. Monitor’s motion granted in part; claimant’s motion dismissed. Claims officer’s finding that there is duty to be forthright in claims process was correct, and ample evidence established claimant breached that duty. Claims officer erred in law by failing to address whether sale of property under s.17.1(c) of lease occurred. Section 17.1(e) provided for liquidated damages “but only if property shall not have been sold under s. 17.1(c)”. 

Nortel Networks Corporation (Re) (2018), 2018 CarswellOnt 1939, 2018 ONSC 278, G.B. Morawetz R.S.J. (Ont. S.C.J. [Commercial List]).

cover image


Subscribers get early and easy access to Law Times.

Law Times Poll

A Law Society of Ontario tribunal has ruled that a lawyer charged with offences related to child pornography should not be subject to an interlocutory suspension. Do you agree with this decision?