Ontario Civil

Bankruptcy and Insolvency

Debtors obtained protection under Companies’ Creditors Arrangement Act (Can.)

Creditor was telecommunications company from whom debtors purchased telecommunication services for resale. While experiencing financial difficulty, debtors entered into asset purchase agreement (APA), conditional on court approval, with purchaser that was successful bidder under privately structured and supervised sales and investor solicitation process. APA contemplated purchaser might have to pay arrears owing under contracts to be assigned, and any arrears ultimately paid were allocated between purchasers and debtors. Debtors obtained protection under Companies’ Creditors Arrangement Act (Can.). Creditor consented to assignment without understanding that it would not be paid arrears or that it should have demanded payment of arrears. Creditor brought motion for order that court-appointed monitor pay creditor arrears owing from proceeds of sale of debtors’ assets. Motion dismissed. Discretion afforded court under s. 11 of Act did not encompass order for payment of creditor’s arrears. Consent request letters were neither unfair nor lacking transparency, and no advantage was taken of creditor’s mistaken understanding. Creditor had been made aware that APA would be posted on monitor’s website, and it was subsequently posted there. Because creditor had consented to assignment of its contracts and had not asked to be placed on e-service list, creditor had not been entitled to service of assignment motion. With respect to prejudice arising from creditor’s requested relief, this was situation where proverbial egg could not be unscrambled.

Primus Telecommunications Canada Inc., Re (Aug. 18, 2016, Ont. S.C.J. [Commercial List], Penny J., CV-16-11257-00CL) 270 A.C.W.S. (3d) 244.

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