In Bankruptcy of Cougar Metal Industries

In Bankruptcy of Cougar Metal Industries

The application was dismissed because the court was not satisfied on a balance of probabilities that Cougar Metal acted in bad faith or without due diligence as required by s.50.4(11); mere suspicion does not meet the required standard, therefore the proposal period remains in effect.

Citation
2004 BCSC 1258
Parties
Applicant/creditor: Terra Nova Steel Incorporated; Respondent/debtor: Cougar Metal Industries Inc.; Creditor: Wilkinson Steel (Premetalco Inc. division)
Court
Supreme Court of British Columbia
Jurisdiction
Canada
Judgment Date
14 September 2004
Procedural Posture
Bankruptcy/notice of Intention to File a Proposal / Application Under S.50.4(11) to Terminate Proposal Period Decided in Chambers
Outcome
Application dismissed; proposal period not terminated; Cougar Metal remains under the notice of intention to file a proposal
Legal Topics
Notice of Intention to File a Proposal, Termination of Proposal Period (s.50.4(11)), Good Faith and Due Diligence, Creditor Remedies for Recovery of Goods
Source Language
English
Bankruptcy Insolvency Commercial Law Notice of Intention to File a Proposal Termination of Proposal Period (s.50.4(11)) Good Faith and Due Diligence Creditor Remedies for Recovery of Goods

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Parties

Terra Nova Steel Incorporated

Applicant/creditor

Cougar Metal Industries Inc.

Respondent/debtor

Wilkinson Steel (Premetalco Inc. division)

Creditor

Procedural Posture

Bankruptcy/notice of Intention to File a Proposal / Application Under S.50.4(11) to Terminate Proposal Period Decided in Chambers

Legal Issues

  1. 1 Whether the court should terminate the 30-day proposal period under s.50.4(11) of the Bankruptcy Act on grounds that the insolvent acted in bad faith and without due diligence
  2. 2 Whether creditors are entitled to enter premises and retrieve goods prior to completion of the proposal period
  3. 3 Whether the evidence meets the balance of probabilities standard required to find bad faith

Ratio Decidendi

The application was dismissed because the court was not satisfied on a balance of probabilities that Cougar Metal acted in bad faith or without due diligence as required by s.50.4(11); mere suspicion does not meet the required standard, therefore the proposal period remains in effect.

Court Disposition

Application dismissed; proposal period not terminated; Cougar Metal remains under the notice of intention to file a proposal

Orders

  • Application under s.50.4(11) dismissed
  • Costs awarded at Scale 3, payable within seven days