Ontario civil | Bankruptcy and Insolvency | Companies' creditors arrangement act | Initial application
Applicants were involved in $1 billion of active construction projects on more than 30 projects. Applicants were insolvent and were unable to operate without financial support from surety. Applicants applied for relief under Companies' Creditors Arrangement Act (CCAA). Application granted. There was important pubic interest in ensuring that construction projects were successfully completed in timely manner. Applicants were unable to pay liabilities as they come due and had insufficient funds to operate in ordinary course of business without third party financial support. Applicants urgently required stay of proceedings and sufficient liquidity to maintain ongoing operations so that they were able to continue construction on many significant infrastructure projects and to reorganize their affairs to regain financial and operational stability. Applicants met criteria established for protection under CCAA as they were affiliated Canadian creditor companies with total claims against them of over $5 million and they were insolvent. Stay should be granted to maintain status quo for period of time to allow applicants to reorganize their affairs, it would enable them to continue operating and provide employment to 330 employees and contractors, and stay was preferable to receivership. Debtor-in-possession (DIP) financing charge should be granted as applicants were unable to continue operations without third-party funding; surety indicated that it would not continue to provide funding of costs not covered by its bonded obligations without benefit of DIP lending charge; it was anticipated that DIP facility would provide applicants with funds necessary to maintain operations during restructuring process, and DIP facility had been tailored to minimize potential impact on secured creditors; DIP lending charge would not secure any pre-filing obligations; and proposed monitor supported DIP facility and charge. Priority administration charge should be approved as nature of applicants' business required expertise, knowledge and continuing participation of beneficiaries of proposed administrative charge in order to complete successful restructuring. Administrative charge was fair and reasonable and was necessary to ensure that key individuals continued to participate in proceedings. Director's charge was approved given potential liabilities and lack of liability insurance or contractual indemnification, and that would ensure that level of continuity was maintained within applicants' management so that restructuring plan could be achieved for benefit of all of stakeholders.
Bondfield Construction Company, Re (2019), 2019 CarswellOnt 5597, 2019 ONSC 2310, Hainey J. (Ont. S.C.J. [Commercial List]).
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