Contract considered by Superior Court concerns IP relating to aircraft modifications
Among other orders issued in insolvency proceedings, the Ontario Superior Court approved an agreement for the transfer of data, designs, drawings, and other intellectual property held by an insolvent entity in connection with specific aircraft modifications.
Field Aviation Company et al, 2026 ONSC 3498, involved the Field entities: Field Aviation Canada Inc. (Field Canada) and Field Aviation East Ltd. Field Canada’s business involved aerospace engineering and modification.
Due to liquidity issues, these entities defaulted on various provisions of their credit agreement with lender Wells Fargo Capital Finance Corporation Canada (Wells Capital), among others.
On Apr. 6, Wells Capital delivered a notice of default to Field Canada under the credit agreement. Field Canada and Wells Capital commenced negotiations contemplating a path forward.
On June 5, the Field entities each filed a notice of intention to make a proposal under the Bankruptcy and Insolvency Act, 1985 (BIA).
On the same date, Field Canada and Wells Fargo Bank entered into an accommodation agreement with FR Aviation Limited, trading as Draken Europe. Under this agreement, Draken would fund Field Canada’s operating costs and disbursements for a program to finish modifying Draken’s aircraft.
Still on June 5, Field Canada and Wells Fargo Bank executed a related data transfer agreement, required under the accommodation agreement. Under the data transfer agreement, Draken would pay Field Canada US$800,000 for the transfer of intellectual property currently held by Field Canada and related exclusively to the Draken program.
In the present proceedings, the Field entities sought a debtor-in-possession (DIP) approval and extension order and a sale and investment solicitation (SISP) process order.
The Ontario Superior Court of Justice granted the following relief in relation to the requested orders.
First, the court approved the accommodation agreement, which was necessary to maximize the value of the debtor’s assets. The court noted that AlixPartners Restructuring, Inc., the proposal trustee, supported the agreement, which would not prejudice any creditor.
Second, the court approved the data transfer agreement, which would help Field Canada and its stakeholders recover.
Despite the lack of a formal marketing process with regard to the subject data, the court ruled that an arms-length sale of the intellectual property specifically relating to modifications of Draken’s C-604 aircraft would be appropriate.
The court noted that the specific intellectual property was only valuable to Draken and that holding an open-market sale would consume additional resources and would unlikely yield any value.
Third, the court approved the DIP term sheet and DIP lender’s charge, as well as the closely related sixth amendment and forbearance agreement, upon considering the factors in s. 50.6(5) of the BIA.
Fourth, the court approved the appointment of Riveron Management Services, LLC, as Field Canada’s chief restructuring officer (CRO) upon weighing the factors in Re Earth Boring Co Ltd, 2025 ONSC 2422.
Fifth, the court approved the key employee retention plan, developed in consultation with the proposal trustee.
Sixth, the court approved an administration charge of $300,000 to secure the fees of the proposal trustee, the CRO, and counsel of the proposal trustee and the Field entities. The court found the charge reasonable and appropriate in the circumstances.
Seventh, the court deemed a director’s charge of $725,000 appropriate. The court considered the continued involvement of the remaining directors and officers critical to a successful SISP or BIA proposal.
Eighth, the court approved the SISP order, as well as the June 5 stalking horse asset purchase agreement and the transaction charge. The court pointed out that the parties could seek approval of the transactions contemplated by the stalking horse agreement if it became the successful bid.
Ninth, the court extended the stay because the proposal trustee believed that the Field entities were acting in good faith and with due diligence.
Lastly, the court granted a limited sealing order over specific confidential documents. The court held that the case met the test in Sherman Estate v. Donovan, 2021 SCC 25.
