Late offers were not credible and should not be used as benchmark for “loss”

Bankruptcy and Insolvency – Practice and Procedure in Courts - Appeals

Interim receiver was appointed in relation to two-building apartment complex in September 2017. Properties were subject of five mortgages extended by three mortgagees. In May 2019, receiver was authorized to enter into listing agreement for properties. Agreement of purchase and sale (APS) was entered into in August 2019. APS required that approval and vesting order be granted within 21 days of purchaser's waiver and that transaction close within 10 days following issuance of that order. Debtors opposed issuance of approval and vesting order on basis that purchase price under APS did not represent fair market value. Late offers for properties were received by receiver but rejected as not credible. Motion judge granted approval and vesting order. Debtors filed notice of appeal seeking to set aside approval and vesting order. Receiver brought motion for declaration that appeal from approval and vesting order was governed by Bankruptcy and Insolvency Act (BIA) and for declaration that debtors required leave to appeal. Motion granted. Debtors agreed that appeal was governed by BIA. Based on late offers, debtors claimed loss exceeded amount of $10,000. Late offers were not credible and should not be used as benchmark for “loss” under s. 193(c) of BIA. Purchase price as reflected in APS was below appraised value but gap was due to purchaser's estimated capital expenditure upon closure. Granting of approval and vesting order did not result in loss of more than $10,000 because there was no credible evidence to support position that receiver could have obtained higher sales price for properties. Accordingly, appeal was not governed by s. 193(c) of BIA and debtors must seek leave to appeal under s. 193(e).

First National Financial GP Corporation v. Golden Dragon HO 10 Inc. (2019), 2019 CarswellOnt 18509, 2019 ONCA 873, Fairburn J.A. (Ont. C.A.).

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