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ARTICLE · 29 DECEMBER 2014

Void "Ab Initio": The Dangers Of Insufficient Disclosure

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While it is common practice in Canada to seek certain emergency orders on an ex parte basis (i.e. where only one party (and not the adversary) appears before a judge), applicants for such orders are held to a high standard of candour with the court.

CanadaInsolvency/Bankruptcy/Re-Structuring
Natalie Levine
Natalie Levine
Monique Sassi
Monique Sassi
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While it is common practice in Canada to seek certain emergency orders on an ex parte basis (i.e. where only one party (and not the adversary) appears before a judge), applicants for such orders are held to a high standard of candour with the court. Recently, the Ontario Superior Court of Justice (Commercial List) took the unusual step of finding that the initial order (the "Initial Order") granting protection under the Companies' Creditors Arrangement Act (Canada) (the "CCAA") was void ab initio as against all of the applicants thereto (CanaSea Petrogas Group Holdings Limited (Re), 2014 ONSC 6116). This was because subsequently produced evidence did not support the Court's initial conclusions regarding the applicants' eligibility for CCAA protection. In reaching this decision, the Court was very critical of the applicants for not fulfilling their high obligations of candour and disclosure on the ex parte hearing.

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