Ontario civil | Bankruptcy and Insolvency
Companies’ Creditors Arrangement Act
Arrangements
Reopening sale and investment solicitation process would be unfair and foolhardy
Applicants, group of insolvent steel companies, sought Companies’ Creditors Arrangement Act (CCAA) protection. Sale and investment solicitation process (SISP) was authorized. E Global was deemed non-compliant bidder under SISP as it failed to prove it had adequate financial resources. In accordance with SISP, applicants accepted joint bid from approved joint bidders and brought motion for order approving asset purchase agreement (APA). Before motion was heard, one joint bidder decided not to proceed. Other joint bidder sought to close transaction in partnership with certain senior noteholders of applicant. Union filed cross-motion to advance purported transaction with O Steel, entity owned by E Global. E Ltd. brought motion to reopen SISP. Union brought motion for directions as to whether it could engage in discussions with O Steel regarding potential sale. Motions dismissed. Re-opening SISP in circumstances would be unfair and foolhardy. There was no evidence E Global had financial wherewithal to undertake asset purchase and no evidence of any interested, viable bidder. Fact that large percentage of senior noteholders replaced one of joint bidders made accepted bid more viable, not less reliable. There was no basis for order authorizing union to do anything with O Steel in current process. In Non-Disclosure Agreement signed by union, it was agreed that union needed applicants’ consent to talk to SISP bidder and that bidder needed to be qualified SISP bidder. O Steel was not SISP bidder.
Essar Steel Algoma Inc., Re (2017), 2017 CarswellOnt 4050, 2017 ONSC 1401, Newbould J. (Ont. S.C.J. [Commercial List]).
