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ADMINISTRATION OF ESTATE - Receivers - Duties and powers - Sale of assets - Approval

Tuesday, July 13, 2021 @ 5:29 AM  

Lexis Advance® Quicklaw®
Appeal by DGDP-BC Holdings, one of two interim lenders, from an order that gave a later receiver’s borrowings charge priority over the earlier interim lenders’ charge and order that approved the sale of the assets of Accel Energy. An interim lenders’ charge was given over the assets of the Accel Entities while they were in Companies’ Creditors Arrangement Act (“CCAA”) proceedings. A later receiver’s borrowings charge was given when a receiver was appointed to facilitate the sale of the assets of the Accel Entities. It was originally contemplated the assets of Accel Energy and Accel Holdings would be sold en bloc, but it was subsequently decided to sell the assets of Accel Energy separately. The interim lenders’ charge was not completely satisfied during the transaction. The amounts advanced under the interim lenders’ charge had been allocated between Accel Energy and Accel Holdings. Only the portion allocated to Accel Energy was paid off.

HELD: Appeal dismissed. Section 11.2(3) of the CCAA did not give the appellant a veto over the priority of the receiver’s borrowings charge. The supervising judge clearly had authority to authorize a receiver to borrow and to grant the receiver security. Section 243(1)(c) of the Bankruptcy and Insolvency Act was wide enough to allow the supervising judge to set the order of priority. The supervising judge had the jurisdiction to make the order granting priority to the receiver’s borrowings charge. She was entitled to decide that, in the context of this insolvency, it was necessary to give priority to the receiver’s borrowings charge to protect the overall interests of all stakeholders. The supervising judge had the discretion and jurisdiction to approve the sale of the Accel Energy assets, free and clear of the interim lenders’ charge, even though that charge was not paid in full.

DGDP-BC Holdings Ltd. v. Third Eye Capital Corp., [2021] A.J. No. 828, Alberta Court of Appeal, J. Watson, F.F. Slatter and R. Khullar JJ.A., June 17, 2021. Digest No. TLD-July122021003