8640025 Canada Inc. (Re)

8640025 Canada Inc. (Re)

Teliphone Corp. lacks standing to invoke s.11.7(3) because it did not comply with the Claims Bar Date and therefore cannot apply to replace the monitor; alternatively, even if standing were assumed, the court would refuse substitution because there is no persuasive evidence of monitor impropriety, no evidence that LW Murphy Ltd. has the requisite expertise or independent funding, and substitution would cause unacceptable delay and prejudice to creditors.

Citation
2019 BCSC 1739
Parties
Applicant / Former Parent of Petitioner: Teliphone Corp.; Petitioner: 8640025 Canada Inc.; Court‑appointed Monitor / Receiver: Ernst & Young Inc.; Proposed Substitute Monitor: LW Murphy Ltd.; Creditors / Critical Suppliers / Respondents: Bell Canada; Northwestel Inc.; Bell Mobility Inc.; Bell Aliant Regional Communications Inc. (The BCE Group); Interested Party / Respondent: Navigata Communications Ltd.; Senior Secured Creditor / Respondent: Cascade Divide Enterprises Inc.; Creditor / Respondent: Telus Communications Company; DIP Lender / Respondent: Bond Capital Fund V Limited Partnership; Interested Party / Respondent: Canada Revenue Agency
Court
Supreme Court of British Columbia
Jurisdiction
Canada
Judgment Date
10 October 2019
Procedural Posture
Companies' Creditors Arrangement Act Proceedings With Related Canada Business Corporations Act Matters / Application to Replace Court‑appointed Monitor and for Declaration of Secured Creditor; Hearing on Standing and Suitability of Proposed Monitor
Outcome
Application to replace Ernst & Young Inc. with LW Murphy Ltd. dismissed for lack of standing; application for declaration that Teliphone Corp. is a secured creditor adjourned
Legal Topics
Replacement of Monitor, Claims Bar Date and Proofs of Claim, Standing to Bring CCAA Applications, Duty and Impartiality of Monitor, Sale and Vesting of Assets, Conflict of Interest
Source Language
English
Insolvency Corporate Law Receivership Commercial Litigation Administrative Law Replacement of Monitor Claims Bar Date and Proofs of Claim Standing to Bring CCAA Applications +3 more

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Parties

Teliphone Corp.

Applicant / Former Parent of Petitioner

8640025 Canada Inc.

Petitioner

Ernst & Young Inc.

Court‑appointed Monitor / Receiver

LW Murphy Ltd.

Proposed Substitute Monitor

Bell Canada; Northwestel Inc.; Bell Mobility Inc.; Bell Aliant Regional Communications Inc. (The BCE Group)

Creditors / Critical Suppliers / Respondents

Navigata Communications Ltd.

Interested Party / Respondent

Cascade Divide Enterprises Inc.

Senior Secured Creditor / Respondent

Telus Communications Company

Creditor / Respondent

Bond Capital Fund V Limited Partnership

DIP Lender / Respondent

Canada Revenue Agency

Interested Party / Respondent

Procedural Posture

Companies' Creditors Arrangement Act Proceedings With Related Canada Business Corporations Act Matters / Application to Replace Court‑appointed Monitor and for Declaration of Secured Creditor; Hearing on Standing and Suitability of Proposed Monitor

Legal Issues

  1. 1 Whether Teliphone Corp. has standing as a creditor under s.11.7(3) CCAA to apply to replace the monitor
  2. 2 Whether the court should replace Ernst & Young Inc. as monitor for alleged adversarial conduct
  3. 3 Whether Teliphone Corp. should receive a declaration that it is a secured creditor

Ratio Decidendi

Teliphone Corp. lacks standing to invoke s.11.7(3) because it did not comply with the Claims Bar Date and therefore cannot apply to replace the monitor; alternatively, even if standing were assumed, the court would refuse substitution because there is no persuasive evidence of monitor impropriety, no evidence that LW Murphy Ltd. has the requisite expertise or independent funding, and substitution would cause unacceptable delay and prejudice to creditors.

Court Disposition

Application to replace Ernst & Young Inc. with LW Murphy Ltd. dismissed for lack of standing; application for declaration that Teliphone Corp. is a secured creditor adjourned

Orders

  • Application to substitute Ernst & Young Inc. as monitor dismissed.
  • Application for a declaration that Teliphone Corp. is a secured creditor adjourned.