Encore Developments Ltd. (Re.)

Encore Developments Ltd. (Re.)

The ex parte initial CCAA order was set aside (nunc pro tunc) because there was no urgency, the petitioner failed to disclose material facts about equity, assets and encumbrances, the CCAA stay and proposed DIP would improperly shift the costs and risk onto secured lenders, and therefore ex parte relief and the order were unjustified.

Citation
2009 BCSC 13
Parties
Petitioner/debtor: Encore Developments Ltd.; Related Debtor: Patton Construction (2002) Ltd.; Related Debtor: 0796269 B.C. Ltd.; Applicant/creditor: Bancorp Financial Services Ltd.; Applicant/creditor: Canadian Western Bank; Creditor: Invested Financial; Proposed DIP Lender: P3 Holdings Inc.; Court Appointed Monitor: Monitor; Creditor: First Calvary Savings & Credit Union
Court
Supreme Court of British Columbia
Jurisdiction
Canada
Judgment Date
21 January 2009
Procedural Posture
Application Under the Companies' Creditors Arrangement Act (ccaa) / Application by Secured Creditors to Set Aside Ex Parte First Day CCAA Order; Hearing and Ruling on December 11, 2008
Outcome
Application allowed; the November 21, 2008 ex parte first day CCAA order set aside from the outset (nunc pro tunc)
Legal Topics
CCAA Initial Order, Ex Parte Relief, Disclosure Obligations, DIP Financing, Stay of Proceedings, Priming Security
Source Language
English
Insolvency Corporate Restructuring Secured Transactions Civil Procedure CCAA Initial Order Ex Parte Relief Disclosure Obligations DIP Financing +2 more

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Parties

Encore Developments Ltd.

Petitioner/debtor

Patton Construction (2002) Ltd.

Related Debtor

0796269 B.C. Ltd.

Related Debtor

Bancorp Financial Services Ltd.

Applicant/creditor

Canadian Western Bank

Applicant/creditor

Invested Financial

Creditor

P3 Holdings Inc.

Proposed DIP Lender

Monitor

Court Appointed Monitor

First Calvary Savings & Credit Union

Creditor

Procedural Posture

Application Under the Companies' Creditors Arrangement Act (ccaa) / Application by Secured Creditors to Set Aside Ex Parte First Day CCAA Order; Hearing and Ruling on December 11, 2008

Legal Issues

  1. 1 Whether the ex parte first day CCAA order of November 21, 2008 was justified
  2. 2 Whether the petitioner failed to make full and frank disclosure on the ex parte application
  3. 3 Whether there was urgency or imminent enforcement to justify ex parte relief

Ratio Decidendi

The ex parte initial CCAA order was set aside (nunc pro tunc) because there was no urgency, the petitioner failed to disclose material facts about equity, assets and encumbrances, the CCAA stay and proposed DIP would improperly shift the costs and risk onto secured lenders, and therefore ex parte relief and the order were unjustified.

Court Disposition

Application allowed; the November 21, 2008 ex parte first day CCAA order set aside from the outset (nunc pro tunc)

Orders

  • Set aside and vacated nunc pro tunc the November 21, 2008 first day CCAA order in respect of Encore Developments Ltd. and related debtors
  • No stay or DIP priming authorized pursuant to the vacated order