RBC Succeeds in Appointment of Receiver in Disputed Asset Transfer Case

On October 23, 2023, the Ontario Superior Court of Justice (Commercial List) (the “Court”) appointed msi Spergel inc. as receiver over the assets, undertaking and properties of Express GT Parts Serve Inc. (“Express GTPS”). The endorsement of The Honourable Justice Conway can be accessed at Royal Bank of Canada v. Express GT Parts Serve Inc. et al.

In this case, RBC was a secured creditor of both GT Parts Serve Ltd. and 2696009 Ontario Inc. (the “Original Borrowers”), which collectively operated an auto parts and aftermarket supply business in the Greater Toronto Area. Without notice to RBC, the Original Borrowers were voluntarily dissolved in February 2023 and the business operations were seemingly transferred to Express GTPS, a related entity which conducted similar business, used the same logo, had the same supplier and operated out of the same locations as the Original Borrowers.

Despite Express GTPS’ opposition to the receivership application, the Court found that the broad security afforded by RBC’s general security agreements covered any assets transferred from the Original Borrowers to Express GTPS, and that Express GTPS had been using the collateral to carry on its business without RBC’s debt having been repaid. In light of these circumstances, the Court held that it was just and convenient to appoint a receiver over Express GTPS, and that doing so would enable RBC to protect its collateral and the proceeds therefrom.

Aird & Berlis successfully represented RBC with a team consisting of Sanjeev Mitra, Jeremy Nemers and Samantha Hans.