In the Matter of the Proposal of Maple Homes Canada Ltd.

In the Matter of the Proposal of Maple Homes Canada Ltd.

The court approved the Proposal because the trustee's report and the evidence established the Proposal is reasonable and benefits the general body of creditors and the court was not satisfied that the debtor continued to trade knowing it was insolvent; however the court held a Proposal cannot compromise all personal claims against directors beyond the statutory scope of s.50(13)-(14), and granted Mr. Gomez a s.69.4 declaration lifting the stay because his breach of trust/Quistclose-type claim is of a nature that would survive discharge, presents a triable issue, and continuation of the stay would cause material prejudice and be inequitable.

Citation
2000 BCSC 1443
Parties
Debtor / Applicant (proposal): Maple Homes Canada Ltd.; Opposing Creditor / Applicant for S.69.4 Declaration: Max Gomez; Trustee Under the Proposal: David Gray
Court
Supreme Court of British Columbia
Jurisdiction
Canada
Judgment Date
2 October 2000
Procedural Posture
Application for Court Approval of a Proposal Under the Bankruptcy and Insolvency Act and Ancillary S.69.4 Declaration / Hearing on Approval of Proposal and Application to Lift Stay (trial Court Decision)
Outcome
Proposal of Maple Homes Canada Ltd. approved; declaration under s.69.4 granted to Max Gomez lifting the stay as to his claim against Maple Homes; court held Proposal cannot validly compromise all personal claims against Bradley and Cathie Grindler beyond statutory limits
Legal Topics
Proposal Approval Under S.59 BIA, Stay of Proceedings and S.69.4 Declaration, Quistclose/traceable Trust, Continuing to Trade While Insolvent (s.173(1)(c)), Limits on Compromise of Directors' Claims Under S.50(13) (14)
Source Language
English
Bankruptcy and Insolvency Trusts and Fiduciary Obligations Commercial Law Directors' Liability Proposal Approval Under S.59 BIA Stay of Proceedings and S.69.4 Declaration Quistclose/traceable Trust Continuing to Trade While Insolvent (s.173(1)(c)) +1 more

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Parties

Maple Homes Canada Ltd.

Debtor / Applicant (proposal)

Max Gomez

Opposing Creditor / Applicant for S.69.4 Declaration

David Gray

Trustee Under the Proposal

Procedural Posture

Application for Court Approval of a Proposal Under the Bankruptcy and Insolvency Act and Ancillary S.69.4 Declaration / Hearing on Approval of Proposal and Application to Lift Stay (trial Court Decision)

Legal Issues

  1. 1 Whether the Proposal is reasonable and benefits the general body of creditors under s.59 BIA
  2. 2 Whether Maple Homes continued to trade after it knew it was insolvent (s.173(1)(c))
  3. 3 Whether the stay of proceedings should be lifted for Max Gomez under s.69.4 BIA

Ratio Decidendi

The court approved the Proposal because the trustee's report and the evidence established the Proposal is reasonable and benefits the general body of creditors and the court was not satisfied that the debtor continued to trade knowing it was insolvent; however the court held a Proposal cannot compromise all personal claims against directors beyond the statutory scope of s.50(13)-(14), and granted Mr. Gomez a s.69.4 declaration lifting the stay because his breach of trust/Quistclose-type claim is of a nature that would survive discharge, presents a triable issue, and continuation of the stay would cause material prejudice and be inequitable.

Court Disposition

Proposal of Maple Homes Canada Ltd. approved; declaration under s.69.4 granted to Max Gomez lifting the stay as to his claim against Maple Homes; court held Proposal cannot validly compromise all personal claims against Bradley and Cathie Grindler beyond statutory limits

Orders

  • Proposal of Maple Homes Canada Ltd. is approved by the court.
  • Declaration pursuant to s.69.4 BIA that sections 69 to 69.3 no longer operate in respect of Max Gomez (stay lifted) to permit his action for breach of trust to proceed.