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PROCEEDINGS - Jurisdiction - International insolvencies - Evidence

Thursday, December 03, 2020 @ 6:22 AM  


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Three appeals by Pelletier from five orders of a chambers judge issued during bankruptcy proceedings. In 2014, the appellant and his holding company sold their interests in Pacer, an oilfield construction company, for approximately $59 million. The following day, the appellant stripped the holding company of its assets and transferred $20 million of the sale proceeds to his wife. He subsequently transferred other amounts to Cayman-based trusts and holding companies he controlled and other family members. In 2015, the appellant and his family moved to the Cayman Islands. He moved additional monies to Singapore and Belize. In 2016, Pacer and others brought a claim against the appellant and his company in respect of the sale. In 2019, an arbitration panel found substantial breaches and misrepresentations by the appellant. The appellant and his company were jointly and severally liable for $55 million plus interest and costs, of which they paid $4,000. In 2019, Pacer obtained a bankruptcy order in the Cayman Islands and applied in Alberta to have the holding company declared bankrupt. Cayman orders, including a freezing order, were recognized in Alberta and the bankruptcy representatives in the Caymans were declared representatives in Canada. In 2020, an order absolute was issued in the Caymans. The orders under appeal were comprised of dismissal of the appellant’s application for stays or variations of the initial foreign recognition order, an order annulling the appellant’s personal voluntary assignment into bankruptcy, and an order directing production and examination of three witnesses.

HELD: Appeals dismissed. No error arose from the stay refusal decision, as the appellant’s evidence did not support a finding of irreparable harm. No appeal was taken from the initial recognition order, settling that the appellant’s centre of main interest at the time of his bankruptcy was the Caymans, which would determine whether he was subject to the Cayman lookback period. The balance of convenience clearly favoured Pacer, given the delay associated with its ongoing difficulties in searching for assets due and owing since March 2019. The chambers judge did not err in finding the appellant could not make a voluntary assignment in bankruptcy in Canada due to the previous finding of insolvency by order of the Cayman court. It was appropriate to use the annulment provision where an assignment was made for an improper purpose, to avoid obligations to creditors, and to avoid foreign recognition. It was reasonable and appropriate that the examinations of the three witnesses be allowed based on a 10-year lookback period in accordance with the normal procedural rules. If it was subsequently determined that the appropriate period was five years, the production and examinations extending back longer could be expunged.

Pacer Holdings Construction Corp. v. Pelletier, [2020] A.J. No. 1142, Alberta Court of Appeal, B.K. O'Ferrall, R. Khullar and K.P. Feehan JJ.A., October 28, 2020. Digest No. TLD-November302020007