Quebec - Superior Court (Commercial Division)

This is an unofficial translation. Please consult the official French court order.

CANADA
PROVINCE OF QUÉBEC
DISTRICT OF MONTRÉAL


No.: 500-11-058237-203

 

DATE : April 30, 2020

PRESIDING:  THE HONOURABLE LOUIS J. GOUIN, S.C.J.

In the Matter of the Consumer Proposal of:

MICHEL ST-PIERRE

Debtor

and

THE SUPERINTENDENT OF BANKRUPTCY

Applicant

and

BDO CANADA LIMITED

Trustee

OMNIBUS ORDER

[1] An Omnibus Motion for the extension of time limits and waiver of service (the "Omnibus Motion") was presented to the Court by the Superintendent of Bankruptcy (the "Superintendent") pursuant to paragraph 5(4)(a), subsections 66.31(1), 187(11) and 187(12) of the Bankruptcy and Insolvency Act ("BIA")Footnote 1.

  1. CONTEXT

[2] Considering the significant economic and social upheavals resulting from the current global COVID-19 ("COVID-19") pandemic, the Applicant is seeking an omnibus order from the Court to allow and ensure more flexibility in the administration of insolvency files, first regarding the consumer proposal filed on April 26, 2019, by the debtor Michel St-Pierre (the "Debtor")Footnote 2 and in all active insolvency files as well as those to be filed until June 30, 2020, in the province of Québec.

[3] In addition to exhibits R-1 to R-5, the Applicant filed in support of the Omnibus Motion, an affidavit of Superintendent Elisabeth Lang dated April 27, 2020, (the "Lang Affidavit") and the affidavit of André Bolduc from BDO Canada Limited (the "Trustee"), dated April 28, 2020, (the "Bolduc Affidavit"), the Administrator of the Debtor’s consumer proposal.

  1. OTHER MOTIONS IN ADDITION TO THE OMNIBUS MOTION

[4] At the same time as the Omnibus Motion, the Applicant is presenting similar motions in each of the provinces of Canada, seeking similar omnibus orders, to consistently and logically tie in all of the Applicant’s requests, especially considering that COVID-19 knows no borders.

[5] The Court underlines the fact that as soon as the period of health emergency was declared in the Canadian provinces, the Chief Justices of the provinces formed a National Judiciary Working Force (the "Committee") which involved one judge per province, who was specialized among other things, in the fields of insolvency, restructuring and bankruptcy, to properly assess the emergency situation and the extent of the significant economic and social impacts which COVID-19 entailed, including the multiplicity of judicial proceedings to be made in these fields.

[6] Collegiality between Committee members and the intent to be on the same page to simplify to a certain extent the task and the challenge, were remarkable, while ensuring the principle of judicial independence.

[7] The Committee members realized that it was essential and of the utmost importance to ensure that Courts reduce the number of motions which would otherwise have to be made to explain and excuse some obvious shortcomings due to COVID-19.

[8] To do so, the Committee members agreed with the Applicant, that the Applicant’s first omnibus motion would be presented in Ontario before Chief Justice Geoffrey B. MorawetzFootnote 3, who would render his "Order"Footnote 4 and his "Endorsement"Footnote 5 including his reasons, before the hearings in the other provinces were held, thereby preparing the field for these hearings, although the other judges were free to modify their judgments or add their own reasons.

[9] Moreover, the Court wishes to underline the fact that the Canadian Association of Insolvency and Restructuring Professionals and the Insolvency Institute of Canada both support the Omnibus Motion.

[10] From the outset, the Court adopts the reasons given by Justice Morawetz, specifically at paragraphs [45] to [76] of his "Endorsement"Footnote 6.

  1. SOME RELEVANT FACTS

[11] As it appears from the Bolduc Affidavit, the Debtor, who filed a consumer proposal on April 26, 2019Footnote 7, which was amended and accepted by his creditors on July 3, 2019,Footnote 8 is seeking a deferral of the monthly payments scheduled in April and May 2020.

[12] Considering the state of health emergency declared in reaction to COVID-19Footnote 9 and the general lockdown throughout Québec, the Debtor was temporarily laid off work, like hundreds of thousands of Quebecers and Canadians.

[13] The social distancing and lockdown measures imposed by the authorities are an unavoidable obstacle to compliance with the obligations specified under the BIA and the Rules for insolvency professionals and numerous debtors.

[14] As it appears in the Lang Affidavit, more than 451,536 insolvency files are currently active in Canada, including more than 288,939 consumer proposals.

[15] Lastly, considering the seriousness of the situation, courts throughout Canada have suspended or extensively restricted their operations for the obvious purpose of protecting the health and safety of litigants, attorneys, judges and staff in the various courthouses.

  1. CONCLUSIONS SOUGHT BY THE APPLICANT

[16] As it appears from the Omnibus Motion and the Lang Affidavit, the Applicant seeks an omnibus order to:

  1. increase the number of payment defaults or extend the time limit which may entail the deemed annulment of a consumer proposal pursuant to subsection 66.31(1) BIA;
  2. extend the time limit specified in sections 51, 66.15, and 102 BIA for holding a meeting of creditors;
  3. extend the time limit specified in subsections 105(4) and (10) of the Bankruptcy and Insolvency General RulesFootnote 10 (the "Rules") for holding mediation;
  4. extend the time limit under subsection 170.1(3) BIA to apply for an appointment before the court if the issues submitted to mediation are not resolved or the bankrupt failed to comply with conditions that were established as a result of the mediation;
  5. declare that the omnibus order to be rendered shall apply to all active consumer proposals, proposals and bankruptcies and to all those which may be filed with the Office of the Superintendent of Bankruptcy until June 30, 2020;
  6. order the waiver of service of individual motions in each and every file of the province of Québec, which come within the scope of the Omnibus Motion.

[17] For the purposes of the omnibus order sought, the Applicant requests that the following details and definitions be a part of it:

  1. The "Period of the Emergency" shall be defined as the period of March 13, 2020, to June 30, 2020. For greater certainty, the start date and the end date are included in the Period of the Emergency.
  2. The "Suspension Period" begins on April 27, 2020, to end on June 30, 2020. For greater certainty, the start date and the end date are included in the Suspension Period.
  3. All "Active Consumer Proposals" which include all Division II proposals filed with the Office of the Superintendent of Bankruptcy or automatically revived up to the end of the Period of the Emergency, but excluding the consumer proposals that were deemed annulled, annulled or that were fully performed on or before the date of this Omnibus Order;
  4. All "Active Commercial Bankruptcy Files" which include all Division I proposals filed with the Office of the Superintendent of Bankruptcy up to the end of the Period of the Emergency;
  5. All "Active Bankruptcy Files", which include all bankruptcies filed with the OSB, up to the end of the Period of the Emergency, but excluding the bankruptcies wherein the bankrupt had received his or her discharge on or before the date of the omnibus order.

[18] In fact, the main objective sought by the Applicant is to exclude the period corresponding to the Suspension Period from the calculation of the time limits to do something specified in the BIA and the Rules, as if it had never existed, for all Active Consumer Proposals, all Active Proposals and all Active Bankruptcy Files in the province of Québec, and regarding all those which could be filed with the Office of the Superintendent of Bankruptcy until June 30, 2020.

  1. LAW

[19] The Court reiterates and approves the principles of law applicable in these matters as stated in the "Endorsement"Footnote 11 of April 27, 2020, of the Ontario Chief Justice Geoffrey B. Morawetz, which are the following, among others, making the necessary changes regarding the Superior Court of Québec’s inherent power:

  1. The Applicant has the standing required to present the Omnibus Motion, as sub-paragraph 5(4)(a) BIA specifically provides that the Superintendent “may intervene in any matter or proceeding in court, where the Superintendent considers it expedient to do so, as if the Superintendent were a party thereto;”
  2. Sections 51, 66.15, subsection 66.31(1), section 102 and subsection 170.1(3) BIA, and subsections 105(4) and (10) of the Rules to which the Applicant refers to request an increase in the number of defaults of payments by a debtor or the extension of a time limit, provide that the Court has this power in certain cases,Footnote 12 and otherwise subsection 187(11) BIA specifically provides the following:

    “Where by this Act the time for doing any act or thing is limited, the court may extend the time either before or after the expiration thereof on such terms, if any, as it thinks fit to impose.”

  3. Under the Court’s inherent power pursuant to subsection 183(1.1) BIAFootnote 13, the Court may declare that this Omnibus Order applies to all Active Consumer Proposals, to all Active Commercial Bankruptcy Proposals, to all Active Bankruptcy Files in the province of Québec, and to all proposals and files which may be filed with the Office of the Superintendent of Bankruptcy until June 30, 2020;
  4. Lastly, the Court has the power to dispense with the service of individual petitions in each and every file of the province of Québec which comes within the scope of the Omnibus Motion, under its inherent power pursuant to subsection 183(1.1) BIA and pursuant to subsection 187(12) BIA, which reads as follows:

    “Where in the opinion of the court the cost of preparing statements, lists of creditors or other material required by this Act to be sent with notices to creditors, or the cost of sending the material or notices, is unjustified in the circumstances, the court may give leave to omit the material or any part thereof or to send the material or notices in such manner as the court may direct.”

  1. CONCLUSION

[20] The Applicant’s initiative is entirely warranted by the situation resulting from COVID 19, and as already mentioned previously, the Court will grant the Omnibus Motion.

FOR THESE REASONS, THE COURT:

[21] GRANTS the Omnibus Motion;

[22] ORDERS that the time limits for service and filing the Omnibus Motion are hereby abridged and validated so that this motion may be heard without any additional service;

[23] ORDERS the waiver of service of individual motions in all files of the province of Québec which come within the scope of the Omnibus Motion;

[24] ORDERS that the requirement for notice of this Omnibus Motion to any debtor, inspector or creditor within the bankruptcy and consumer proposal estates administered in the province of Québec be and is hereby waived;

[25] ORDERS AND DECLARES that for the purposes of this Omnibus Order:

  1. The "Period of the Emergency" begins on March 13, 2020, and ends on June 30, 2020. For greater certainty, the start date and the end date are included in the Period of the Emergency.
  2. The "Suspension Period" begins on April 27, 2020, and ends on June 30, 2020. For greater certainty, the start date and the end date are included in the Suspension Period.

[26] ORDERS AND DECLARES that this Omnibus Order applies to:

  1. All "Active Consumer Proposals" which include all Division II proposals filed with the Office of the Superintendent of Bankruptcy or automatically revived up to the end of the Period of the Emergency, but excluding the consumer proposals that were deemed annulled, annulled or that were fully performed on or before the date of this Omnibus Order;
  2. All "Active Commercial Proposals" which include all Division I proposals filed with the Office of the Superintendent of Bankruptcy up to the end of the Period of the Emergency;
  3. All "Active Bankruptcy Files", which include all bankruptcies filed with the Office of the Superintendent of Bankruptcy, up to the end of the Period of the Emergency, but excluding the bankruptcies wherein the bankrupt had received his or her discharge on or before the date of this Omnibus Order.

MATTERS APPLICABLE TO ACTIVE CONSUMER PROPOSALS

[27] ORDERS that the time for holding the meeting of creditors that is to take place during the Period of the Emergency, as provided by section 66.15 BIA is to be extended by the time of the Suspension period;

[28] ORDERS that an active consumer proposal shall not be deemed annulled pursuant to section 66.31 BIA unless the consumer debtor is in default:

  1. In the case when payments under the Active Consumer Proposal are to be made monthly or more frequently, the day on which the consumer debtor is in default for an amount that is equal to or more than the amount of three payments plus an additional amount equivalent to up to three other payments for defaults that occurred during the period of March 13, 2020, to December 31, 2020; or
  2. In the case when payments under the Active Consumer Proposal are to be made less frequently than monthly, the day that is three months after the day on which the consumer debtor is in default in respect of any payment except that for those payments due between March 13, 2020, to December 31, 2020, it shall be the day that is six months after the day on which the consumer debtor is in default.

MATTERS APPLICABLE TO ACTIVE COMMERCIAL PROPOSALS

[29] ORDERS that the time for holding the meeting of creditors that is to take place during the Period of the Emergency, as provided by section 51 BIA is to be extended by the time of the Suspension Period.

MATTERS APPLICABLE TO ACTIVE BANKRUPTCY FILES:

[30] ORDERS that the time for the holding of the meeting of creditors that is to take place during the Period of the Emergency, as provided by section 102 BIA, is to be extended by the time of the Suspension Period;

[31] ORDERS that the trustee’s obligation to apply to court for an immediate hearing during the Period of the Emergency, as provided by subsection 170.1(3) BIA, is to be extended by the time of the Suspension Period;

[32] ORDERS that the time for scheduling a mediation that is to take place during the Period of the Emergency, as provided by paragraphs 105(4) and (10) of the Rules, is to be extended by the time of the Suspension Period.

GENERAL

[33] ORDERS that this Omnibus Order and all of its provisions shall be effective as of 00:01 a.m., Montréal time, on April 27, 2020, concurrently with the omnibus order rendered in Ontario by the Honourable Chief Justice Geoffrey B. Morawetz in the consumer proposal of Stephen Francis Podgurski, No.: 31-2597721;

[34] ORDERS that any interested party may apply to the Court to have this Omnibus Order amended or obtain other remedies on providing notice of the application to do so on five days notice to the trustee, the Office of the Superintendent of Bankruptcy and any other party likely to be affected by the order sought;

[35] ORDERS the Superintendent of Bankruptcy to immediately publish this Omnibus Order on the website of the Office of the Superintendent of Bankruptcy;

[36] WITHOUT COSTS

 

 

_____________________

LOUIS J. GOUIN, J.C.S.

 

Chantal Comtois
Attorney General of Canada
Counsel for the Applicant

 

Date of hearing: April 30, 2020

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