IE CA 3 Holdings Ltd. v. NYDIG ABL LLC
IE CA 3 Holdings Ltd.
IE CA 4 Holdings Ltd.
Iris Energy Ltd.
NYDIG ABL LLC
PricewaterhouseCoopers Inc. in its capacity as receiver and manager over IE CA 3 Holdings Ltd. and IE CA 4 Holdings Ltd.
Law Firm / Organization
Osler, Hoskin & Harcourt LLP
Lawyer(s)

Mary Buttery

Background:
IE CA 3 Holdings Ltd. and IE CA 4 Holdings Ltd., subsidiaries of Iris Energy Ltd., borrowed from NYDIG ABL LLC to purchase Bitcoin mining equipment. When Bitcoin prices dropped, the debtors defaulted. NYDIG appointed a receiver and sought legal relief, alleging that the companies' hashpower agreements were fraudulent conveyances.

Legal Issues:
NYDIG claimed that the hashpower agreements, under which the debtors sold computing power (hashpower) to Iris Energy Ltd., were made to defraud creditors by diverting value to the parent company. NYDIG also sought relief under the Fraudulent Conveyance Act, an oppression remedy, and substantive consolidation of the debtors’ and Iris's assets.

Court’s Findings:
The British Columbia Court of Appeal found that the lower court had erred in ruling the hashpower agreements were fraudulent conveyances. The court concluded that NYDIG was aware of the business model and accepted the arrangement when advancing the loan, thus rebutting any presumption of fraudulent intent. However, the court remitted NYDIG’s claim for an oppression remedy back to the trial court. The court dismissed the request for substantive consolidation.

Total Amounts:
The debtors owed NYDIG over $113 million (US $36 million for IE CA 3 and US $77 million for IE CA 4), but no specific award was made in this appeal. The fraudulent conveyance claim was overturned, and the oppression remedy was to be reconsidered.

Court of Appeals for British Columbia
CA49297
Corporate & commercial law
Appellant