MCAP Financial Corporation v. QRD (Willoughby) Holdings Inc.

MCAP Financial Corporation v. QRD (Willoughby) Holdings Inc.

The court granted approval of the RVO because MNP ultimately satisfied the Harte Gold factors including the contested factor regarding fairness of consideration by adducing additional evidence and explanation: the RVO legitimately preserves intangible assets and reduces PTT exposure, the negotiated $842,000 increase in purchase price reasonably allocates PTT savings to benefit the secured creditor CMSC, the proposed releases are appropriately limited and ancillary, and the overall process was fair and unopposed, thereby promoting the objectives of the BIA.

Citation
2024 BCSC 1654
Parties
Petitioner: MCAP Financial Corporation; Applicant / Receiver: MNP Ltd. (in its capacity as Receiver); Attendee / Proposed Purchaser: Redekop Ferrario Properties (DD) Corp.; Respondent: QRD (Willoughby) Holdings Inc.; Respondent: QRD (Willoughby) Limited Partnership; Respondent: QRD (Willoughby) GP Inc.; Respondent: Quarry Rock Developments Inc.; Respondent: Richard Lawson; Respondent: Matthew Weber; Respondent / Secured Creditor: Canadian Mortgage Servicing Corporation; Respondent: Overland Capital Canada Inc.; Respondent: Wubs Investment Ltd.; Respondent: Steelcrest Construction Inc.
Court
Supreme Court of British Columbia
Jurisdiction
Canada
Judgment Date
30 August 2024
Procedural Posture
Receivership / Approval of Reverse Vesting Order / Application to Approve RVO Following Prior Asset Vesting Order and Dismissed Appeal; Application Adjourned for Valuation Evidence and Subsequently Granted
Outcome
Application granted. Court approved the reverse vesting order transaction and authorized increased borrowings by the Receiver.
Legal Topics
Reverse Vesting Order, Asset Vesting Order, Property Transfer Tax (ptt) Avoidance, Creditor Priority, Broad Form Releases
Source Language
English
Insolvency Receivership Corporate Law Property Tax Reverse Vesting Order Asset Vesting Order Property Transfer Tax (ptt) Avoidance Creditor Priority +1 more

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Legal principles 3 Authorities cited 11 Party arguments 2 Amounts and remedies 6
Sign in to unlock

Parties

MCAP Financial Corporation

Petitioner

MNP Ltd. (in its capacity as Receiver)

Applicant / Receiver

Redekop Ferrario Properties (DD) Corp.

Attendee / Proposed Purchaser

QRD (Willoughby) Holdings Inc.

Respondent

QRD (Willoughby) Limited Partnership

Respondent

QRD (Willoughby) GP Inc.

Respondent

Quarry Rock Developments Inc.

Respondent

Richard Lawson

Respondent

Matthew Weber

Respondent

Canadian Mortgage Servicing Corporation

Respondent / Secured Creditor

Overland Capital Canada Inc.

Respondent

Wubs Investment Ltd.

Respondent

Steelcrest Construction Inc.

Respondent

Procedural Posture

Receivership / Approval of Reverse Vesting Order / Application to Approve RVO Following Prior Asset Vesting Order and Dismissed Appeal; Application Adjourned for Valuation Evidence and Subsequently Granted

Legal Issues

  1. 1 Whether extraordinary circumstances exist to justify an RVO
  2. 2 Whether the Harte Gold factors are satisfied, in particular reasonableness and fairness of consideration (factor f)
  3. 3 Whether the RVO improperly evades Property Transfer Tax obligations

Ratio Decidendi

The court granted approval of the RVO because MNP ultimately satisfied the Harte Gold factors including the contested factor regarding fairness of consideration by adducing additional evidence and explanation: the RVO legitimately preserves intangible assets and reduces PTT exposure, the negotiated $842,000 increase in purchase price reasonably allocates PTT savings to benefit the secured creditor CMSC, the proposed releases are appropriately limited and ancillary, and the overall process was fair and unopposed, thereby promoting the objectives of the BIA.

Court Disposition

Application granted. Court approved the reverse vesting order transaction and authorized increased borrowings by the Receiver.

Orders

  • Approve the RVO Transaction and authorize implementation of the reverse vesting/share sale on the negotiated commercial terms
  • Approve the increased purchase price and payment of the increased sales proceeds (net of implementation fees and appeal defence costs) to Canadian Mortgage Servicing Corporation as described