Applicant
Respondent
Other
Background:
Santokh Mahal, sole shareholder of Golden Miles, claimed a secured interest in Golden Miles' assets for loans totaling CAD $2,182,914. Skymark Finance Corporation opposed, arguing the claim wasn’t a valid secured debt under the Personal Property Security Act (PPSA). Only CAD $281,600 of Mahal’s claims, representing his personal advance, had adequate documentation.
Court Findings:
The court recognized Mahal's CAD $281,600 personal advance as a valid secured debt under the PPSA, with priority over other creditors except those with prior-ranking securities. However, the court dismissed the remaining CAD $1,901,314 advanced through Mahal’s companies, citing insufficient documentation and an unsupported interpretation of "indirect indebtedness."
Key Legal Points:
A valid security interest requires proper documentation and PPSA registration. Claims must be directly linked to the borrower, not assumed through related companies. Mahal’s claims were deemed inconsistent and lacking credibility due to poor record-keeping and financial inconsistencies.
Outcome:
Mahal was awarded CAD $281,600 plus 5% interest per annum and costs for his personal advance. All other claims were dismissed. Costs were awarded to KSV Restructuring Inc. (Receiver for Golden Miles) and Skymark, totaling CAD $95,000, payable by Mahal.
Net Result:
Mahal’s partial award was offset by the costs of CAD $95,000 ordered against him, making KSV and Skymark the overall winners in the case, having successfully challenged the majority of Mahal’s claims regarding secured debt.
Court
Superior Court of Justice - OntarioCase Number
CV-21-00664778-00CLPractice Area
Corporate & commercial lawAmount
$ 95,000Winner
ApplicantTrial Start Date
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