Simon's Legal Resources

Fairness - Insolvency

. Stevens v. Hutchens

In Stevens v. Hutchens (Ont CA, 2024) the Ontario Court of Appeal dismissed an appeal of an interlocutory insolvency motion that ordered "a pooled distribution of the assets of the individual debtors and three corporate debtors controlled by one of the individual debtors".

Here the lower insolvency court considered a 'procedural fairness' issue, outside of an administrative context:

(2) There was no procedural unfairness in the motion judge determining whether to pierce the corporate veil on the motion

[15] The appellant also argues that it was procedurally unfair for the motion judge to consider piercing the corporate veil in the motion for directions in the receivership. The appellant argues that creditor claims and priorities cannot be determined on a motion for directions and that the receiver’s role is limited to an orderly distribution of funds to creditors based on established claims. The appellant argues that the pooled distribution effectively permitted new claims by the Pennsylvania and Colorado plaintiffs against the corporate debtors.

[16] We see no procedural unfairness in the procedure employed by the motion judge. One of the functions of a court-appointed receiver is to establish a summary procedure for determining the validity and value of creditors’ claims, so that they are determined in a single proceeding. A court may make a summary determination of creditor rights on a motion for directions in receivership proceedings so long as there are no genuine issues that require a trial: Ontario Securities Commission v. Money Gate Mortgage Investment Corporation, 2020 ONCA 812, 153 O.R. (3d) 225, at paras. 10 and 40; Stevens v. Hutchens, 2022 ONCA 771, 3 C.B.R. (7th) 312, at paras. 13-15.