North American Tungsten Corporation Ltd. (Re)

North American Tungsten Corporation Ltd. (Re)

The court found NATC was in default under the loan agreement such that a debt to GTP existed and that mutuality for legal set-off was not destroyed by the CCAA initial order; however, the court has discretion under the CCAA to stay enforcement of set-off rights to preserve the status quo and facilitate restructuring. Exercising that discretion, the court continued a temporal stay of enforcement of GTP's set-off rights for the duration of the amended initial order (to October 31, 2015) while recognizing the underlying set-off rights and ordering payment for certain post-filing deliveries as previously directed.

Citation
2015 BCSC 1382
Parties
Petitioner: North American Tungsten Corporation Ltd.; Monitor: Alvarex & Marsal Canada Inc.; Secured Creditor: Callidus Capital Corporation; Government: Government of Northwest Territories; Interested Party/creditor: Wolfram Bergbau and Hütten AG; Respondent/creditor: Global Tungsten and Powders Corp.
Court
Supreme Court of British Columbia
Jurisdiction
Canada
Judgment Date
30 July 2015
Procedural Posture
Proceeding Under the Companies' Creditors Arrangement Act and Canada Business Corporations Act / Interlocutory/applications Regarding Set Off and Stay Under Amended Initial Order
Outcome
Court recognized GTP's legal right of set-off but exercised discretion to stay enforcement of those rights until October 31, 2015; court found GTP breached the amended initial order with respect to attempted set-off and confirmed earlier direction requiring payment for tungsten delivered after June 9, 2015; costs...
Legal Topics
Set Off, Stay of Proceedings, Temporal Stay, Mutuality, Initial Order Under CCAA, Creditor Enforcement
Source Language
English
Insolvency Corporate Law Contract Law Remedies Set Off Stay of Proceedings Temporal Stay Mutuality +2 more

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Parties

North American Tungsten Corporation Ltd.

Petitioner

Alvarex & Marsal Canada Inc.

Monitor

Callidus Capital Corporation

Secured Creditor

Government of Northwest Territories

Government

Wolfram Bergbau and Hütten AG

Interested Party/creditor

Global Tungsten and Powders Corp.

Respondent/creditor

Procedural Posture

Proceeding Under the Companies' Creditors Arrangement Act and Canada Business Corporations Act / Interlocutory/applications Regarding Set Off and Stay Under Amended Initial Order

Legal Issues

  1. 1 Whether there was a debt due and owing by NATC to GTP under the loan agreement
  2. 2 Whether the timing of when the debt falls due affects availability of set-off
  3. 3 Whether legal set-off is available between pre-filing and post-filing obligations in CCAA proceedings

Ratio Decidendi

The court found NATC was in default under the loan agreement such that a debt to GTP existed and that mutuality for legal set-off was not destroyed by the CCAA initial order; however, the court has discretion under the CCAA to stay enforcement of set-off rights to preserve the status quo and facilitate restructuring. Exercising that discretion, the court continued a temporal stay of enforcement of GTP's set-off rights for the duration of the amended initial order (to October 31, 2015) while recognizing the underlying set-off rights and ordering payment for certain post-filing deliveries as previously directed.

Court Disposition

Court recognized GTP's legal right of set-off but exercised discretion to stay enforcement of those rights until October 31, 2015; court found GTP breached the amended initial order with respect to attempted set-off and confirmed earlier direction requiring payment for tungsten delivered after June 9, 2015; costs...

Orders

  • Declare that GTP has legal set-off rights under s.21 of the CCAA
  • Continue the temporal stay of enforcement of GTP's set-off rights for the duration of the amended initial order, until October 31, 2015