A Decent Proposal: Hot Button Issues Under Part III Of The BIA

A recent decision of the Ontario Superior Court of Justice (Commercial List), Re Kitchener Frame Limited,¹ considered three hot-button issues in a proposal proceeding under Part III of the Bankruptcy and Insolvency Act (the "BIA").² In his reasons, Morawetz J. considered substantive consolidation, third party releases and the interaction between the BIA and the Companies' Creditors Arrangement Act ("CCAA").³

These reasons of Morawetz J. were written in connection with an unopposed motion requesting: (1) the sanction of a consolidated BIA proposal in respect of two related inactive companies; and (2) the authorization of the Proposal Trustee to take all steps necessary to implement the proposal. The two Applicants – Kitchener Frame Limited and Thyssenkrupp Budd Canada Inc. – were non-operating entities with mounting pension and other post employment benefits ("OPEB") obligations to their former employees. Upon the cessation of the companies' operations, such