Court Denies Motion to Strike Ontario Bankruptcy Application in Cross-Border Case Involving Delaware Corporation

On October 21, 2024, the Ontario Superior Court of Justice dismissed a motion by Winning Brands Corporation (“WBC”), a Delaware-based company, to strike or halt a bankruptcy application filed by creditor Charles Perlman in Ontario. WBC claimed that it operated exclusively in Delaware, did not possess property, business registrations or licences in Canada, and thus lacked the necessary “nexus” for Canadian bankruptcy jurisdiction.

In the words of the Court, the motion was “not a close call.” The Court pointed to WBC's extensive public disclosures, which described Ontario—specifically an office in Barrie and a subsequent move to Toronto—as its primary business location. Loan agreements between WBC and Perlman contained forum selection clauses favouring Ontario jurisdiction. Additionally, the Court noted that WBC’s debts arose from Ontario-based business operations. Given the compelling evidence connecting WBC to Ontario, the Court rejected the motion and ruled that the bankruptcy application should proceed in Ontario and Perlman should recover his legal costs for the motion (the Court has not yet determined the quantum of costs).

Aird & Berlis represented Charles Perlman with a team led by Josh Suttner (Litigation & Dispute Resolution) and including Shaun Parsons (Financial Services) and Linh Nguyen (Law Clerk).