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In the Kitchener Frame Ltd.1 decision, the Ontario Superior Court of Justice (Commercial List) confirmed that third-party releases in proposals made under the BIA2 are permitted. In doing so, the Court relied on the principle that the BIA and CCAA3 ought to be read and interpreted, harmoniously. Finally, the Court sanctioned a consolidated proposal on the basis it met the requirements set out in s. 59(2) of the BIA.
The decision relates to an unopposed motion requesting an order sanctioning an amended consolidated proposal pursuant to the BIA. The consolidated proposal put forward by the Applicants, Kitchener Frame Limited and Thyssenkrupp Budd Canada Inc., included broad third-party releases in favour of the proposal trustee, the union and its counsel, and certain affiliates of the Applicants that provided funding, to name a few. The releases contained in the proposal related to a variety of claims, and the releases provided that all such claims would be released and waived to the full extent permitted by applicable law. The proposal was approved over 99.9 per cent in number and over 99.8 per cent in dollar value of the affected creditors (achieving the required “double majority” voting threshold required under the BIA).
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