A late proposal promising better recoveries for lenders did not justify replacing a receiver’s approved sales of nine apartment buildings, the New Brunswick Court of Appeal has ruled.
In 2026 NBCA 13, the unanimous court upheld the sales after finding that the competing proposal depended on uncertain financing, lacked sufficient capital and did not meet the court-approved bidding requirements. A potentially attractive outcome on paper did not make it a better executable offer. Reasons, paras. 51–60
The February 12 decision arose from a New Brunswick receivership proceeding. The debtor, 720434 N.B. Inc., owned nine apartment buildings in New Brunswick and Nova Scotia. Caisse Populaire Acadienne Ltée held first mortgages on all nine. Second-mortgage lenders also held security on eight properties. By the time the Caisse sought a receiver in April 2024, its claim was approximately $16 million. (Paras. 1–2, 11–14; cover.)
A refinancing proposal arrived after bids were accepted
The court-approved sale process began in June 2024 and set an August 21 bid deadline. Among its requirements were a prescribed bid form, payment of outstanding property taxes and a deposit of at least 10 per cent. The receiver contacted 273 potential bidders, received 21 bids and accepted three offers covering the nine properties in September. (Paras. 14, 20, 24.)
Second-mortgage lenders had supported an earlier refinancing proposal involving Collard Properties Inc. That company’s insolvency prevented it from participating. A revised plan was later advanced through Banox Investment Trust, a corporation owned by a Canada’s Mortgage Choice agent. Supporting affidavits reached the court and receiver on November 1, shortly before the November 5 sale-approval hearing. (Paras. 18–30.)
The revised plan proposed paying the first mortgage and receivership expenses, exchanging the second lenders’ mortgage interests for equity, and giving unsecured creditors a five-per-cent recovery. It relied on a $16-million financing commitment from Peakhill Capital Inc. The motion judge instead approved the receiver’s transactions. (Paras. 27–32.)
The second-mortgage lenders argued on appeal that maximizing creditor recovery was the overriding objective and that their proposal better served secured and unsecured creditors. The receiver disputed that the late proposal was a superior bid and maintained that the judge had considered every affected group. (Paras. 41–44.)
Sale approval involves more than a promised price
Writing for Justices Quigg and LeBlanc, Justice Robichaud applied the Soundair framework: whether the receiver sufficiently sought the best price and avoided an improvident sale; the interests of all parties; the effectiveness and integrity of the process; and fairness in carrying it out. Sale approval is discretionary, attracting appellate deference rather than a fresh choice between competing business plans. (Paras. 35–39, 45–49.)
A later offer can matter if its substantially higher price shows that the receiver may have accepted an unreasonably low offer or otherwise conducted the sale improperly. But a court-approval hearing is not ordinarily a new auction at which an already reasonable transaction is displaced merely because another offer arrives. (Para. 49.)
Here, the proposed financing was subject to conditions including mortgage insurance and satisfactory financial, appraisal, environmental and building reports. The bid was late, used the wrong format and lacked the required deposit. (Paras. 54–56.)
Even unconditional financing of $16 million would have been insufficient. The first-mortgage debt alone exceeded that amount as of August 1, before priority receivership charges, more than $667,000 in property taxes, financing costs and the proposed unsecured-creditor payment. The suggested additional contributions did not remove the uncertainty about filling the funding gap. (Paras. 57–60.)
The appeal court found that all four Soundair considerations were satisfied. Creditors’ interests were the primary concern, but not the only or overriding one. The motion judge was entitled to conclude that this tentative proposal did not warrant displacing the established process. (Paras. 61–67.)
The court expressly left undecided whether a mortgage-redemption right survives between a receiver’s acceptance of bids and the sale-approval hearing: this appeal did not involve the exercise of such a right. Nor did the public reasons disclose the successful bids’ confidential amounts. (Paras. 50, 53.)
The appeal was dismissed. Costs of $2,500 were awarded to the receiver from the estate, not imposed personally on the appellants. (Para. 68.)
