Guidance from the Court: Competing CCAA and Receivership Applications in Real Estate

With the turn of economic tides, the temptation to find creative solutions to financial problems increases as many borrowers barrel toward insolvency. Gone are the days of flourishing real estate markets. Today, the sector is grappling with a surge in insolvency proceedings fuelled by the uncertain interest rate environment, decreased liquidity, historically high building costs, and market sentiment. For many lenders and developers, current market conditions have delivered a harsh wake-up call.

At the outset of the COVID-19 pandemic, lenders were patient with borrowers and willing to work with them to help weather an unprecedented situation. As the years passed and economic conditions remained challenging, financial troubles persisted for many borrowers. As a result, both lenders and borrowers have been forced to consider their respective options to protect their interests. Lenders have increasingly been taking action to enforce their security on troubled loans. At the same time, some financially distressed borrowers have tried to pursue formal restructuring proceedings under the Bankruptcy and Insolvency Act (“BIA”) or the Companies’ Creditors Arrangement Act (“CCAA”). In some instances, competing applications from lenders and borrowers have ended up before the Courts, leaving the Court to determine who will ultimately control the insolvency proceeding.

Insight from the Courts

At the CAIRP Exchange held this September 2024 in Toronto, a judicial panel addressed the issue of competing CCAA and receivership applications in the context of real estate insolvencies. It provided insight into the approach taken by the Courts in assessing these applications.


The panel featured Justice Conway and Justice Osborne from the Ontario Superior Court of Justice (Commercial List) and Associate Chief Justice Nixon from the Court of King's Bench of Alberta. A number of factors were highlighted as considerations in these cases, including:

  • Is there any possibility of a 'rescue' for the company? If restructuring is indeed a viable option, CCAA is a valid consideration. If the plan proposed in the CCAA application is solely based on liquidating assets, there is no obvious reason to pursue a CCAA.
  • Is the debtor an operating company with an active landlord lease or a development that is significantly underway, or is it an inactive company where the primary asset is vacant land? An operating business may potentially sway the decision toward a CCAA.
  • Is there a risk of the secured lender's position deteriorating in a CCAA?
  • Has the CCAA applicant acted in good faith?
  • Has the CCAA applicant demonstrated a viable plan and secured the requisite financing to restructure the business?
  • Is the cost justified, understanding that CCAA proceedings are inherently more expensive than receivership proceedings?

Examples of the sentiment coming from the Courts can be seen in two recent cases. Firstly, in AFC Mortgage Administrative Inc. v. Sunrise Acquisitions (Stayner) Inc. et al. (the “Sunrise Case”), Justice Black's endorsement evaluated the competing applications using criteria similar to those noted above. In the Sunrise Case, the Court concluded that the appointment of a Receiver was just and convenient and ruled in favour of the lender’s application to appoint a receiver. The particular details of the Sunrise Case and Justice Black’s decision were discussed at length in a recent article by Roger Jaipargas and Charlotte Chien of Borden Ladner Gervais LLP. 

Shortly after Justice Black’s decision in the Sunrise Case, the matter of 1599285 Ontario Ltd. et al. v 1000195736 Ontario Ltd. et al. (the “Morgis Case”) was brought before the Court. The Morgis Case was a new situation with a different set of facts, but ultimately Justice Cavanagh arrived at the same conclusion, citing the decision in the Sunrise Case, among others, as support. In his decision, Justice Cavanagh noted, “The Debtors' proposal amounts, in substance, to a request for additional time to complete arrangements to refinance the indebtedness owed to the Lenders.” - A statement that sums up the Court's skepticism toward granting more time for a Debtor to seek financing under the guise of a formal restructuring proceeding.

Keys to Success?

The decisions in the Sunrise Case, the Morgis Case and other similar matters are consistent in their approach and conclusion. In considering these decisions, there appear to be three primary hurdles for a debtor to address if they hope to succeed with a CCAA application in the face of a competing receivership application in the real estate industry:

Contractual rights - If the Courts agree to leave control in the hands of management, what are the implications regarding the enforceability of legal contracts? Within most commercial mortgage agreements, there is a contractual right to appoint a receiver in the event of default. Rightly so, the Courts appear hesitant to override such a significant term of a contract agreed to on consent and in good faith.


An advantageous plan – If a borrower hopes to convince the Court and the stakeholders that a restructuring under the BIA or CCAA is the best alternative, a realistic and achievable plan needs to be put in place. A proposal or CCAA application must show a clear likelihood of success, the benefits of a restructuring as opposed to a receivership, and a bona fide commitment from a lender who is willing
to finance the process.


Faith in management - Once lenders lose faith in a debtor’s management, restoring that trust is challenging, at best. If a lender is bringing an application to appoint a receiver, there is a strong likelihood that the relationship between the lender and borrower has deteriorated, and communication has ceased. If a debtor hopes to maintain control and restructure its business, management would be best served by maintaining strong, transparent communication with its lenders. The Courts have emphasized that a lender's faith in management is a key consideration in any CCAA application.


Jeffrey Berger is a managing director at TDB Restructuring Limited, the court-appointed
receiver in the Sunrise and Morgis proceedings. Jeffrey provides corporate insolvency,
restructuring, and estate trustee services and is a trusted advisor to various stakeholders.

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