Case information

Bankruptcy and insolvency — Procedure — Company seeking approval of a conversion of its intended proposal under the Bankruptcy and Insolvency Act (“BIA”) to an arrangement under the Companies’ Creditors Arrangement Act (“CCAA”) — Company requesting that timeline for serving its application for conversion be abridged — Application judge declining to allow the abridgement — Court of Appeal dismissing application for leave to appeal — Whether Court of Appeal erred in finding that leave to appeal was required — Whether the courts below erred in finding that s. 11 of the CCAA ought to be overruled in favour of the service requirements set out by the province’s rules of civil procedure — Whether the courts below erred in considering prejudice to an unsecured creditor given that the 2019 changes to the CCAA were designed to accommodate initial applications being made without notice and to mitigate any associated prejudice to interested parties — Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 — Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36.

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On May 1, 2023, the applicant, Atlantic Sea Cucumber Ltd. (“Atlantic Sea”) filed a Notice of Intention to Make a Proposal under the BIA. The respondent, Weihai Taiwei Haiyang Aquatic Food Co. Ltd. (“Aquatic Food”) is a judgment creditor of Atlantic Sea’s. On July 6, 2023, Atlantic Sea filed an application for approval of a conversion of an intended proposal under the BIA to an arrangement under the CCAA. As the application documents were not filed and served on Aquatic Food within the time period prescribed by Nova Scotia’s Civil Procedure Rules (“Rules”), Atlantic Sea applied for an abridgement of the time period. The application judge found Atlantic Sea had not provided a satisfactory explanation for why the abridgement was required. He also found that Aquatic Food was prejudiced by the insufficient notice. Accordingly, he declined to abridge the time period. Atlantic Sea filed an appeal to the Court of Appeal but it did not file an application for leave to appeal. The Court of Appeal concluded that leave to appeal was required pursuant to s. 13 of the CCAA. The Court of Appeal denied leave to appeal. The Court of Appeal also addressed the appeal on the merits and concluded that there is no legal or operational conflict between the CCAA and the Rules. Further, the application judge did not make any reviewable error in the exercise of his discretion.