



COURT OF APPEAL FOR ONTARIO

CITATION: New Solutions Financial Corporation (Re), 2017 ONCA
    553

DATE: 20170629

DOCKET: M4
7
7
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Sharpe, Lauwers and Miller JJ.A.

BETWEEN

In the Matter of the
Companies Creditors
    Arrangements Act
, R.S.C. 1985, c. C-36, as amended

and in the matter of a Plan of Compromise or
    Arrangement of New Solutions Financial Corporation, New Solutions Financial
    (II) Corporation, New Solutions, New Solutions (III) Corporation, New Solutions
    (IV) Corporation and 2055596 Ontario Limited

Applicants

(R
e
s
pon
d
en
ts

in

A
pp
e
a
l)

Catherine Francis, for the appellants, Feldstein&
    Associates LLP and Warren Feldstein

Neil S. Rabinovitch, for the respondents

Heard: in writing

REASONS FOR DECISION

[1]

The responding parties sought and obtained protection under the
Companies
    Creditors Arrangement Act
, R.S.C. 1985, c. C-36

(CCAA). Their
    assets have been monetized and there is no intention to proceed with a
    restructuring plan. The main remaining asset is a claim for professional
    negligence against Feldstein & Associates LLP, and Warren Feldstein
    (Feldstein), the principal applicants former auditor.

[2]

Feldstein seeks leave to appeal the order of the CCAA judge: (1)
    extending the stay period from March 30, 2017 to June 30, 2017; (2) approving
    the Monitors 23rd report; (3) declaring the litigation trustee, appointed by
    the court to pursue the litigation against the moving parties, is not in a
    conflict of interest; and (4) staying the litigation against Feldstein until
    June 30, 2017.

[3]

Feldstein raises a number of proposed grounds of appeal:

1.

that
    the pursuit of a lawsuit by an insolvent company on behalf of its secured
    creditors does not fall within the purpose and scheme of the CCAA;

2.

that
    the CCAA judge ignored evidence of bad faith by the responding parties and
    others involved in the proceeding;

3.

that
    it was inappropriate to make a declaratory order with respect to the role of
    the litigation trustee
.

[4]

It is well-established that leave is granted sparingly in CCAA
    proceedings. The considerations on a leave application are whether:

1.

the
    proposed appeal is
prima facie
meritorious or frivolous;

2.

the
    points on the proposed appeal are of significance to the practice;

3.

the
    points on the proposed appeal are of significance to the action; and

4.

the
    proposed appeal will unduly hinder the progress of the action.

[5]

In our view, the proposed appeal fails to meet the test for leave to
    appeal and leave to appeal must be denied.

[6]

The CCAA judge carefully considered all of the submissions made by
    Feldstein and provided cogent reasons for the order he made.

[7]

There is authority for the proposition that a CCAA stay may be extended
    purposes other than effecting a restructuring and, in our view, the CCAA judge
    did not err in granting a three-month extension of the stay in the
    circumstances of this case.  In any event, the stay expires on June 30, 2017
    and so by the time an appeal could be heard on this issue it would be moot.

[8]

Feldstein raised objections to the conduct of the litigation trustee in
    response to the request for an extension of the stay and cannot complain that
    the CCAA judge ruled on that point.

[9]

The findings of the CCAA judge, including that the responding parties
    have acted in good faith and with due diligence and that the litigation trustee
    is acting in an appropriate manner, are essentially factual in nature and
    attract deference on appeal. Moreover, those findings do not have sufficient
    significance to the practice to warrant granting leave.

[10]

Leave to appeal dismissed is with costs to the responding parties fixed
    at $2,500 inclusive of disbursements and applicable taxes.

Robert J. Sharpe J.A.

P. Lauwers J.A.

B.W. Miller J.A.


