Background:

• Bank of Nova Scotia (BNS) provided financing to SSLA under a 2022 Commitment Letter and subsequent agreements, with loans guaranteed by Uma Pujari and Prince Chahal up to $8.2M.
• The loans were secured by various agreements (e.g., General Security Agreement, collateral mortgage).
• Smiling Simba Learning Academy Inc. (SSLA) defaulted on its loans, with an outstanding amount exceeding $10M as of December 2024.
• BNS applied for a court-appointed receivership over SSLA’s assets.

Issues:

• Whether it is just and convenient to grant the receivership order sought by BNS.

Court's Analysis:

1. Legal Framework:

   • Jurisdiction under Bankruptcy and Insolvency Act and Judicature Act.
   • The court balances the interests of both parties and evaluates whether receivership is the most appropriate remedy.

2. Key Factors:

   • Irreparable Harm/Contractual Right: While irreparable harm wasn’t shown, BNS’s contractual right to appoint a receiver supports the application.
   • Risk to Security: SSLA’s defaults, unpaid taxes, and failure to account for rental income created uncertainty around BNS’s secured interests.
   • Consent Receivership Order: SSLA had agreed to a consent receivership order in earlier forbearance agreements.
   • Conduct of SSLA: Persistent defaults, unauthorized mortgages, and failure to pay or account for rent undermined BNS’s security.
   • Maximizing Return: The court found a receiver could manage the asset sale more effectively than SSLA.

3. Balance of Convenience: Favored BNS due to SSLA’s lack of cooperation and failure to resolve the defaults over an extended period.

Conclusion:

• The court granted the receivership order, noting that SSLA’s conduct and past agreements supported BNS’s application. The order allows for comprehensive control over SSLA’s assets, facilitating an orderly resolution. No monetary award was specified.