Skymark Finance Corporation v. Mahal Venture Capital Inc. et al.
SKYMARK FINANCE CORPORATION
Law Firm / Organization
Chaitons LLP
Lawyer(s)

George Benchetrit

MAHAL VENTURE CAPITAL INC.
Law Firm / Organization
Not Specified
GOLDEN MILES FOOD CORPORATION
Law Firm / Organization
Not Specified
Santokh Mahal
Law Firm / Organization
Dickinson Wright LLP
KSV Restructuring, as Receiver and Trustee of Golden Miles Food Corporation
Law Firm / Organization
Blake, Cassels & Graydon LLP
Lawyer(s)

Christopher Burr

Alvarez & Marsal Canada Inc., as Court-appointed Receiver of Skymark Finance Corporation
Law Firm / Organization
Fasken Martineau DuMoulin LLP
Lawyer(s)

Dylan A. Chochla

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.

Superior Court of Justice - Ontario
CV-21-00664778-00CL
Corporate & commercial law
$ 95,000
Applicant