Précis: A provincial court may defer to the Federal Court to adjudicate existing in rem claims against a bankrupt.
Facts: While under Bankruptcy and Insolvency Act proceedings, on 23 October 2018 Openhydro requested that the BIA proceedings be converted to the Companies’ Creditors Arrangement Act with the issuance of an Initial Order and a Charging Order, seeking a 30 day stay of proceedings. The stay was opposed by creditors which had preexisting Federal Court actions against the Scotia Tide, a vessel owned by Openhydro, and an offshore turbine control center owned by Openhydro, on the ground that if there was to be a stay it should be decided by the Federal Court and not the Nova Scotia Supreme Court. Those opposed creditors did not object to the issuance of the Initial Order or Charging Order except with respect to the scope and application of the proposed stay of proceedings, which is part of the CCAA process to allow arrangement of the insolvent company to creditors.
Decision: Initial Order and Charging Order granted, subject to decision on the scope of the temporary stay.
Held: In reliance on the S.C.C. decisions of Holt Cargo Systems and Antwerp Bulkcarriers, the Court found that the Federal Court continues to have jurisdiction over the in rem claims advanced by the respondents, despite the on-going CCAA proceedings. In doing so, the Court looked at the decision in Sargeant III [2011] BCSC 767 to reconcile CCAA proceedings with Federal Court actions, deciding that each court should exercise their respective jurisdictions cooperatively. Key to this was Federal Court in rem proceedings pre-dated the CCAA stay and Initial Order request. Accordingly, the Court found that the in rem proceedings were exempt from the stay created by the Initial Order and requested the Federal Court for aid and recognition.