Prepayment Fee Not Recoverable Upon Acceleration Of Loan

Perhaps it was the magnitude of the prepayment fee.  Perhaps it was the timing of the Lender's early demand in relation to the five year term of the loan.  Nevertheless, the British Columbia Court of Appeal was definitely motivated to strictly construe the terms of a loan agreement against the Lender (Maxam Opportunities Fund) in Greenscape¹to deny the Lender recovery of its early prepayment fee upon an acceleration of the loan.

In Greenscape, Maxam established a $7 million non-revolving term credit facility in favour of the Borrower (Greenswitch Capital Ltd.) in January 2011.  That loan was guaranteed by multiple related corporations and individuals, including Greenscape Capital Group Inc.  The loan terms were structured such that Maxam's return was to be paid in the form of traditional cash interest, payment in kind interest (PIK) and a royalty fee based upon the Borrower's annual gross revenues.  The loan agreement offered the Borrower the right to prepay all of