There was no requirement to establish prima facie case to find material prejudice

Appellant was debtor, who worked for corporation. Plaintiff investment company advanced loans to corporation. Investment company brought action against debtor and another employee of corporation, for alleged misrepresentation. Court action was set down for trial. Before scheduled pre-trial conference, debtor filed proposal in bankruptcy. Debtor applied to have proposal approved. Company moved to have automatic stay of proceedings lifted. This motion was granted by master. Debtor appealed from motion judgment. Appeal dismissed. There was no requirement to establish prima facie case to find material prejudice. Merits of company’s claim depended on credibility, which master could not determine. Company established that there was some chance of success. Summary proceeding under bankruptcy law was not proper proceeding in this case. Determining claim against debtor ran risk of inconsistent findings. Court action was proper forum to determine all claims. Lifting stay would not undermine debtor’s proposal. Issue of prejudice only pertained to creditors. Debtor could bring summary judgment motion, to obtain same relief sought under bankruptcy law.

Re: In the Matter of the Proposal of Rajneesh Mathur (2018), 2018 CarswellOnt 11949, 2018 ONSC 4425, H.J. Wilton-Siegel J. (Ont. S.C.J.).