





CITATION:
Canrock
Ventures LLC v.
Ambercore
Software Inc., 2011 ONCA 414





DATE:
          20110531



DOCKET: C53668



COURT OF APPEAL FOR ONTARIO



Goudge, MacPherson and Karakatsanis JJ.A.



IN THE MATTER OF the receivership of
Ambercore
Software Inc. and
Terrapoint
Canada (2008) Inc.

AND IN THE MATTER OF the
Bankruptcy and Insolvency Act
, R.S.C. 1985, c. B-3, s. 243(1), as
          amended



BETWEEN



Canrock
Ventures LLC



Applicant(Respondent)



and



Ambercore
Software Inc. and
Terrapoint
Canada (2008) Inc.



Respondents(Respondents)



Fred E. Seller and Marcia
A.Green
,
          for Quorum Oil and Gas Technology Fund Limited, appellant



J. Brian Casey and Frank
Spizzirri
,
          for
Shimmerman
Penn Title & Associates Inc.,
          receiver of the respondents



E. Patrick Shea and Calvin J. Ho, for
Canrock
Ventures LLC



Andrea Rush and Ren
é
e
Brosseau
, for
GeoDigital
International Inc.



Heard
and released orally: May 20, 2011



On appeal from the judgment of Justice David M. Brown of the
          Superior Court of Justice dated April 13, 2011, with reasons reported at 2011
          ONSC 2308.



ENDORSEMENT



[1]

The appellant, the third ranked secured creditor of the
    respondents, appeals the order of Brown J. dated April 13, 2011, granting the
    motion of the respondents court appointed receiver for approval of a proposed
    purchase agreement and technology license agreement and approving the reports,
    activities, conduct and decisions of the receiver.

[2]

On February 18, 2011, Newbould J. rejected the receivers
    proposal to sell en block the assets of
Ambercore
,
    and its wholly owned subsidiary,
Terrapoint
. The
    appellant says that nothing has changed between that date and the order
    appealed from. We do not agree. We see the proposal that was approved by
    Justice Brown as being different from the proposal before Justice Newbould. The
    new proposal is different in several respects. For example, the receiver
    retains
Terrapoints
accounts receivable, cash, and
    work in progress;
Ambercore
retains ownership of its
    intellectual property; and time has
passed,
so much so
    that the time to conduct a new sales process would preclude sale of
Terrapoint
as a going concern.

[3]

The motion judge considered the receivers conduct and
    the reasons for not engaging in a further sales process (but rather pursuing the
    sale of
Terrapoint
on its own), the submissions of
    other creditors and the sale price in light of the valuation of the most
    significant asset. He considered the expert evidence led by the appellant and
    the receivers report outlining the change in circumstances from February 2011.
    He concluded as follows at
paras
. 33, 34 and 41:

I am satisfied that since the release of the
    Reasons of Newbould J., the Receiver has used sufficient efforts, appropriate
    in the circumstances, to pursue the sale of the assets.  Some degree of urgency surrounded the need to
    secure the sale of
Terrapoint
while still a going
    concern, so the Receivers decision to pursue the sale of
Terrapoint
on its own was reasonable.  Further, it
    is apparent that the Receiver has tried to take into account the interests of
    all parties, giving due recognition to the overall amount of liabilities
    attaching to both companies and the priorities amongst the secured creditors,
    and it has attempted to consult with the secured parties to ensure a fair sales
    process.

As to the proposed transaction, I am satisfied that
    the price in the Purchase Agreement, together with the allocation of the
    purchase price, when measured against the valuations obtained by the Receiver,
    is reasonable in the circumstances.

Balancing all these factors, I conclude that the
    Receiver has acted prudently and reasonably in its efforts to secure the sale
    of some of the assets since the release of the decision of Newbould J. and that
    the sale process, and the resulting proposed Purchase Agreement and associated
    Technology License Agreement, satisfy the principles set out in the
Soundair
decision.  Accordingly, I approve the
    proposed sale.

[4]

The motion judge appropriately applied the analysis in
Royal Bank v.
Soundair
in approving the sale agreement and technology license agreement. He explained
    why the proposed transaction was reasonable in the new circumstances, including
    why the earlier concerns were either addressed by the receivers subsequent
    actions or outweighed by the changed facts at the time of the motion before
    him. Given the deference that must be given to his decision, we see neither an
    error in principle nor any reason to interfere with his exercise of discretion.

[5]

The appeal is dismissed. Costs of $20,000 to be paid by
    the appellant to the receiver inclusive of disbursements and applicable taxes.

S.T. Goudge J.A.

J.C. MacPherson J.A.

Karakatsanis J.A.


