Case information

Bankruptcy and insolvency — Provable claim — Equity claim — Whether the definition of equity claim in the Bankruptcy and Insolvency Act is exhaustive and whether any claim not meeting the statutory definition of an equity claim is necessarily a provable claim under ss. 121 and 135 — Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, ss. 2, 121, 135.

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YSL Residences Inc. and YG Limited Partnership owned property on which they intended to develop an 85-storey building. YSL and YG filed a proposal under the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, before the project was built. The applicant, KSV Restructuring Inc., was appointed as proposal trustee. The respondent, Maria Athanasoulis, is a former employee of YSL who claimed $1 million in damages for wrongful dismissal and $18 million in damages for breach of a profit-sharing agreement. She filed a proof of claim against YSL for the two unsecured claims. The trustee accepted the wrongful dismissal claim but disallowed the profit-sharing claim on the basis that it was an equity claim, and it was too contingent and remote. Ms. Athanasoulis appealed the disallowance to the Ontario Superior Court of Justice. The first appeal judge allowed Ms. Athanasoulis’ appeal, finding that the profit-sharing claim was not a claim in equity, but was a claim for unliquidated damages for breach of contract that arose from her wrongful dismissal. The claim was not a contingent claim nor was it too remote. The next step in the proceeding was to hold a hearing for the purpose of quantifying Ms. Athanasoulis’ profit-sharing claim. The Court of Appeal dismissed the trustee’s appeal.