Chester Basin Seafood Group Inc (re)

Chester Basin Seafood Group Inc (re)

On the evidence the Registrar found that abridgement of notice was appropriate, a $50,000 administration charge under s.64.2 was fair and reasonable, the s.50.4(9) extension (45 days) was justified because the company acted in good faith and was likely to present a viable proposal without material prejudice to creditors, and the s.50.6 factors were satisfied so the proposed $1.1M DIP financing to 4519497 Nova Scotia Limited, on the lender's term sheet, was approved with super-priority; the Registrar declined to modify the lender's commercial terms because the court cannot compel a lender to accept altered terms but could only approve or refuse the proposed charge.

Citation
2023 NSSC 388
Parties
Debtor (insolvent Person): Chester Basin Seafood Group Inc.; Proposal Trustee: Grant Thornton Limited; Proposed Debtor in Possession Lender: 4519497 Nova Scotia Limited; Secured Creditor: The Toronto-Dominion Bank; Secured Creditor: Pluto Investments Inc.
Court
Supreme Court of Nova Scotia
Jurisdiction
Canada
Judgment Date
1 December 2023
Procedural Posture
Notice of Intention to Make a Proposal Under the Bankruptcy and Insolvency Act / Application for Abridgement of Time and Service, Approval of Administration Charge, Extension Under S.50.4(9) and Approval of DIP Financing (heard Nov 24, 2023)
Outcome
Application granted in part and orders made as drafted by consent: abridgement of notice, approval of administration charge (reduced to $50,000), 45-day extension under s.50.4(9), and approval of $1.1M DIP priority financing to 4519497 Nova Scotia Limited on the lender's terms; no costs ordered.
Legal Topics
Notice of Intention, Debtor in Possession Financing, Administration Charge, Extension of Time to File Proposal, Priority of Security, Service on Creditors Including CRA
Source Language
English
Bankruptcy and Insolvency Commercial Law Corporate Restructuring Notice of Intention Debtor in Possession Financing Administration Charge Extension of Time to File Proposal Priority of Security +1 more

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Parties

Chester Basin Seafood Group Inc.

Debtor (insolvent Person)

Grant Thornton Limited

Proposal Trustee

4519497 Nova Scotia Limited

Proposed Debtor in Possession Lender

The Toronto-Dominion Bank

Secured Creditor

Pluto Investments Inc.

Secured Creditor

Procedural Posture

Notice of Intention to Make a Proposal Under the Bankruptcy and Insolvency Act / Application for Abridgement of Time and Service, Approval of Administration Charge, Extension Under S.50.4(9) and Approval of DIP Financing (heard Nov 24, 2023)

Legal Issues

  1. 1 Whether notice and service periods could be abridged
  2. 2 Whether an administration charge under s.64.2 should be approved and in what amount
  3. 3 Whether a 45-day extension under s.50.4(9) should be granted

Ratio Decidendi

On the evidence the Registrar found that abridgement of notice was appropriate, a $50,000 administration charge under s.64.2 was fair and reasonable, the s.50.4(9) extension (45 days) was justified because the company acted in good faith and was likely to present a viable proposal without material prejudice to creditors, and the s.50.6 factors were satisfied so the proposed $1.1M DIP financing to 4519497 Nova Scotia Limited, on the lender's term sheet, was approved with super-priority; the Registrar declined to modify the lender's commercial terms because the court cannot compel a lender to accept altered terms but could only approve or refuse the proposed charge.

Court Disposition

Application granted in part and orders made as drafted by consent: abridgement of notice, approval of administration charge (reduced to $50,000), 45-day extension under s.50.4(9), and approval of $1.1M DIP priority financing to 4519497 Nova Scotia Limited on the lender's terms; no costs ordered.

Orders

  • Abridgement of notice and service periods pursuant to Rule 6 of the BIA General Rules
  • Approval of an administration charge in the amount of CAD 50000 pursuant to s.64.2 of the BIA