The Cliffs Over Maple Bay Investments Ltd. (Re)

The Cliffs Over Maple Bay Investments Ltd. (Re)

The appeal term in the commitment letter, incorporated into the CCAA DIP order, was a condition protecting all creditors and could not be unilaterally waived by Century; Century's August 7, 2008 $500,000 advance was unauthorized under the DIP order and therefore Century is not entitled to super‑priority over those funds (except agreed $98,000).

Citation
2009 BCSC 869
Parties
DIP Lender / Applicant: Century Services; Debtor / Petitioner: The Cliffs Over Maple Bay Investments Ltd.; Mortgagee / Respondent: Fisgard Capital Corporation; Mortgagee / Respondent: Liberty Holdings Excell Corp.
Court
Supreme Court of British Columbia
Jurisdiction
Canada
Judgment Date
30 June 2009
Procedural Posture
CCAA Application Regarding DIP Financing and Priority Dispute / Chambers Application — Reasons for Judgment
Outcome
Application resolved in favour of the mortgagees; Century's claimed priority denied for the unauthorized advance.
Legal Topics
DIP Financing, Priority of Charges, Condition Precedent and Waiver, Court Orders and Variation, Estoppel and Election
Source Language
English
Companies' Creditors Arrangement Act Secured Transactions Contract Law Insolvency Law Procedure DIP Financing Priority of Charges Condition Precedent and Waiver +2 more

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Parties

Century Services

DIP Lender / Applicant

The Cliffs Over Maple Bay Investments Ltd.

Debtor / Petitioner

Fisgard Capital Corporation

Mortgagee / Respondent

Liberty Holdings Excell Corp.

Mortgagee / Respondent

Procedural Posture

CCAA Application Regarding DIP Financing and Priority Dispute / Chambers Application — Reasons for Judgment

Legal Issues

  1. 1 Was Century's advance made in accordance with the terms of the court‑approved DIP order?
  2. 2 Does the successful appeal of the DIP order deprive Century of priority for advances made?

Ratio Decidendi

The appeal term in the commitment letter, incorporated into the CCAA DIP order, was a condition protecting all creditors and could not be unilaterally waived by Century; Century's August 7, 2008 $500,000 advance was unauthorized under the DIP order and therefore Century is not entitled to super‑priority over those funds (except agreed $98,000).

Court Disposition

Application resolved in favour of the mortgagees; Century's claimed priority denied for the unauthorized advance.

Orders

  • Declare that Century is not entitled to priority for the $500,000 advance made August 7, 2008
  • Declare that Fisgard Capital Corporation and Liberty Holdings Excell Corp. are entitled to priority over those funds as first and second mortgagees, except for $98,000 agreed to be allocated to the Altus appraisal report