Source: http://citoyens.soquij.qc.ca/php/decision.php?ID=652BE0FB24244A93B55987DCFE1153C1&captchaToken=03AF6jDqWi-vJVM-T86jGhRGi0KYChbd8vDR07XxZj00Z9UQHKdXFnhH_bkTpUYj7afM_I1JWe0kEvNjy4TGk7BJdupfBFIRskKa80ZoG4VBoamaEytPHBXRkNSgnrdYKBE3lkdf2UGOKVG7THH6nJ8wKlX167oVdyqTmANZp8OCL2mJj9BZMGkUuayEHcDDpkcVHCxYIcepLIuvzfacLhcYnokIIlPGJCNYgzdV7lu4o2tjHiIz4mQfTuxGyoNvU30a1ococUMRHzDM6vIa8Uczttneu2KkKJ2g3hIyBZ4Lh2fTeMKxBPdRTOZglDw9RS5kgLjKPrBEGvjqLA9QWO__vs3-0w2UsB8A
Timestamp: 2019-04-25 13:51:00+00:00

Document:
On appeal from the judgment rendered on March 16, 2018 by the Superior Court, District of Montreal, Commercial Division (the Honourable Jean-François Michaud), dismissing the Appellants’ Motion for an order for the convening of a creditors’ meeting and extension of the stay period dated February 12, 2018 (“Appellants’ Motion”) and granting the Respondents’ Amended Application for litigation funding and the litigation financing charge dated February 15, 2018 (“Respondents’ Application”) and issuing other orders, in the matter of the Company Creditors Arrangement Act (“CCAA”) filing of Respondents.
 DECLARES that each party shall bear its own legal costs in first instance.
For Ernst & Young Inc.
 A debtor company, subject to an order under the Companies' Creditors Arrangement Act, has no assets except a litigious claim against its secured creditor. Who should decide whether to pursue the claim or accept a settlement - the debtor or the creditors? This is the bare bones issue in this case.
 We are tasked to decide the appeal launched by Callidus Capital Corporation (“Callidus”), the secured creditor, as well as a group of creditors (“Creditors’ Group”) from the judgment of March 16, 2018, issued by the Superior Court, District of Montreal (the Honourable Jean-François Michaud), dismissing the Appellant’s Motion for an order for the convening, holding and conduct of a creditors’ meeting and extension of the stay period and granting the Debtors’ Amended Application for litigation funding and a litigation financing charge in order to file a $200 million lawsuit against Callidus.
 The judge authorized financing to allow the debtors (the Respondents) to proceed with their lawsuit. I propose that this Court intervene, as I believe that the judgment is tainted with errors in the appreciation of the facts, but more significantly, errors of law in the application of the CCAA, particularly the notion of that which constitutes a plan of arrangement.
 The “facts” are the product of a progressive filing of detailed proceedings supported by affidavits, documents and observations of the Monitor. While not unusual in CCAA practice, the lack of any trial or other contradictory fact-finding process leads, in the instant case, to certain questions about the judge’s conclusions concerning the proposed lawsuit which influenced the outcome of the proceedings before him in an erroneous fashion. I will explain below as required. However, the basic facts as stated by the judge are not the subject of contestation.
 In 1994, Mr. Gérard Duhamel founded Bluberi Gaming Technologies inc., now the Respondent 9354-9186 Québec inc. (“Bluberi Gaming”). The company developed and sold casino games and gaming machines.
 Bluberi Group inc. (now the Respondent 9354-9178 Québec inc., “Bluberi Group”) is a holding company and the sole shareholder of Bluberi Gaming; it also held the shares of Bluberi USA, which shares have now been sold. Through a family trust, Mr. Duhamel controls Bluberi Group and thus, Bluberi Gaming. At all relevant times, he appears as the sole director of Bluberi Gaming (even after a board of directors was established at the behest of Appellant Callidus).
 In 2012, the Respondents sought financing from the Appellant Callidus known in the industry as an asset-based lender. In August of 2012, it made available credit and advanced approximately $24 million to Bluberi. The credit facilities were amended over time such that by 2015, approximately $86 million was outstanding. The loan agreement and related documents do not form part of the appeal record, though much of their content and application are integral to resolving the issues here.
 Things did not go well. Sales and profits forecasted by Mr. Duhamel did not materialize. Bluberi Gaming was losing money. Callidus advanced still more funds and became more proactive. Having lost faith in Mr. Duhamel’s management abilities, it insisted in 2015 that a chief operating officer be hired and that a board of independent directors be formed. It appears that these directors, though active, never became de jure directors of Bluberi Gaming.
 On November 11, 2015, the Respondents filed a Petition for the issuance of an initial order under the CCAA. In the petition, they complained about Callidus’ de facto governance and the fact that ill-advised decisions made by the Appellant Callidus had brought about a liquidity crisis, making it impossible for Bluberi Gaming to respect its obligations, including paying its employees. The Respondents and the Monitor believed that Bluberi could sustain its operations through its cash flow, without the further advance of funds by Callidus.
 Callidus contested the motion on several grounds. As appears from its written contestation and supporting affidavit, its version of the governance and contractual issues paints a different picture as will be set forth in more detail below. Suffice it to say, that on November 12, 2015, the Respondents’ originating motion was granted and Michaud, J.S.C., issued an initial stay order under the CCAA. The impleaded party herein, Ernst & Young, was named CCAA monitor.
 On January 28, 2016, a sale solicitation process ("SSP") was sought by the Respondents and authorized by the CCAA Court to permit Bluberi Gaming to divest itself of all of its assets.
 Four offers were received; the best was submitted by Callidus. In June 2016, after months of negotiations the parties finalized an Asset Purchase Agreement ("APA"), on terms approved by the Monitor. By this transaction, Callidus and two companies under its control purchased all the Respondents’ assets through a credit bid. Consequently, except for an undischarged claim of $3 million, Callidus’ secured claim against Bluberi ($135.7 million) was extinguished.
 According to sections 1.1 and 3.3 g) of the APA, the Respondents excluded the "Bluberi Retained Claims" from the sale. This is their only remaining asset and they expressed their intention to file a lawsuit for damages against Callidus (and others) for a substantial amount.
 On September 11, 2017, Bluberi Gaming filed an Application for the issuance of an order extending the stay of proceedings and authorizing an interim financing, seeking approval for a $20 million interim lender priority charge to finance its litigation against Callidus. The lender was identified as a joint venture company (9364-9739 Québec inc.) in which Mr. Duhamel was involved. It would make available $2 million to finance the litigation against Callidus. Evidently, the $20 million charge was required to secure repayment of the loan and the success fee which according to Respondents’ plan would be half the net proceeds of the litigation.
 On September 18, 2017, in addition to contesting the interim financing application, the Appellant Callidus proposed a plan of arrangement. Supported by Deloitte, one of Bluberi Gaming's creditors, it filed a Motion for an order for the convening, holding and conduct of a creditors’ meeting and extension of the stay period. This plan, as amended, provided that accepted claims of Bluberi’s former employees would be paid in full and that on average, creditors having claims above $3,000 would recover approximately one third of amounts owing. The Monitor concluded that such plan was fair and reasonable and recommended its approval by the creditors.
 On October 4, 2017, in response to Callidus’ plan, the Respondents filed their own Plan of arrangement, which foresaw that half the proceeds of the litigation after payment of expenses would be distributed to creditors, if the net proceeds exceeded $20 million.
 On October 5, 2017, Justice Michaud ordered both parties to share the Monitor’s fees and expenses related to the presentation of the plans of arrangement. He considered it to the creditors’ advantage that two competing plans of arrangement be presented to them for a vote at one and the same meeting. The conduct of a claims process (to identify, verify and establish the provable claims) would be required, followed by the convocation of a creditors’ meeting. He provided that the failure to deposit funds with the Monitor in order to share such costs would be deemed a bar to the Respondents presenting their plan of arrangement.
 The Respondents withdrew their plan and did not comply with the funding requirements that the judge ordered.
 On December 15, 2017, Callidus’ plan, as amended, was submitted to a vote. Even though 92 out of the 100 creditors casting votes were in favour of the plan, the majority of two thirds in value was not reached because SMT Hautes Technologies (“SMT”), holding 36.7% of total debt, voted against. Callidus did not seek to vote on this plan since its $3 million remaining debt was secured and no valuation of that security was submitted by it with a view to voting the ordinary portion of the claim.
 On February 6, 2018, the Respondents filed an Application seeking the authorization of a litigation funding agreement (“LFA”) with IMF Bentham Limited and the constitution of a $20 million super-priority charge on the claim against Callidus. On February 12, 2018, the Creditors’ Group filed a contestation.
 In addition to this contestation, Callidus sponsored a new plan of arrangement and filed a motion to convene a creditors' meeting to hold a vote on the plan. Callidus increased its contribution to $2,880,000. Bluberi’s former employees would be paid in full while other creditors would recover from 35% to 100% of their accepted claims.
 The Appellant Creditors’ Group requested the CCAA Court to “declare that Callidus shall be entitled to exercise its voting rights at the Creditors’ Meeting for the unsecured portion of its amended proof of claim (…)”. If Callidus voted, the required two thirds of value majority would likely be achieved so that Callidus would obtain a release from the Respondents of their litigious claim.
 Justice Michaud issued his judgment on March 16, 2018 and leave to appeal was granted on April 20, 2018 to Callidus and the Creditors’ Group. The latter is comprised of former employees, a trade supplier and a professional firm. Both Bentham and the Monitor have filed memoranda in support of the Respondents’ position and were heard through counsel at the hearing before this Court.
 The judge decided that Callidus should not have the right to vote on the plan it was proposing. However, he recognized that Callidus had the right to propose a plan and that the $3 million balance of debt not extinguished by the credit bid was due, despite the Respondents’ arguments to the contrary.
 The judge did not consider that Callidus is related to the Respondents within the meaning of Sections 22(3) and 2(2) CCAA and Section 4 Bankruptcy and Insolvency Act. However, he precluded Callidus from voting as he found that its vote in favour of the plan (which would apparently carry the day) would serve an improper purpose and give rise to a substantial injustice. Obviously, the acceptance of its plan would mean no lawsuit would be instituted against Callidus by the Respondents. The judge believed that Callidus was using the CCAA proceedings for an improper purpose because it contested the issuance of the initial order, it sought to “exhaust Mr. Duhamel financially” and to delay or derail the launch of proceedings against itself. The judge added that the Callidus plan of arrangement was motivated by its desire to obtain a release from the debtors’ claim against it so that allowing it to vote would be “unfair and unreasonable” and “contrary to the purpose of the CCAA”.
 Given SMT’s stated intention to vote against the Callidus plan and the judge’s decision to prohibit Callidus’ vote, a creditors' meeting to approve the Callidus plan would suffer a predetermined outcome and was thus, useless. Therefore, the judge refused to order the convocation of such meeting.
 In the same judgment, the judge granted the debtors’ application and authorized the LFA to be entered into by the Respondents, Mr. Duhamel and Bentham. In so doing, the judge found that the proposed action in damages against Callidus was not frivolous. He observed that the LFA respected the provisions of the CCAA. Curiously, he does not mention that one of the parties to the agreement, indicated as co-Plaintiff, is Mr. Duhamel personally, who, by definition, is not eligible to be a CCAA debtor. Most significantly, he determined that the whole scheme of suing Callidus, financed by Bentham under the LFA with considerable contingency fees payable to it as well as to the debtors’ attorneys, did not constitute a plan of arrangement to be submitted to a meeting for approval by the statutory majority of creditors. He concluded that the scheme was the only option for any recovery by the creditors.
 The judge also ordered that certain clauses of the LFA should be kept confidential so that creditors were only allowed to see a redacted version. Financial clause thresholds were omitted so that creditors cannot know, for instance, the amount of litigation proceeds that need to be generated in order to produce some return to them. Also kept confidential was the Monitor’s analysis of the LFA referring to such thresholds, particularly the information on the funds that would need to be generated by the lawsuit in order to first pay Bentham and the lawyers so that something would be left over for the creditors.
1) Did the judge err in denying the Appellant Callidus the right to vote on the plan of arrangement proposed by it?
2) Did the judge err in authorizing the LFA without submitting it and the proposal to sue Callidus by way of a plan of arrangement to a vote of the creditors?
3) Did the judge err in approving the terms of the LFA while authorizing significant portions to be kept confidential?
 While there is a debate amongst the parties as to the applicable standard of review or more precisely whether the alleged errors of the judge raised by the Appellants present questions of law or fact, I am of the opinion that both are present and that the errors on questions of fact and mixed fact and law are palpable and overriding. The exercise of the judge’s discretion is not founded in law nor on a proper treatment of the facts so that irrespective of the standard of review applied, appellate intervention is justified as I will explain in the body of these reasons.
 On December 15, 2017, the creditors voted on the amended plan of arrangement proposed by Callidus, whereby it would fund a $2.5 million distribution to the creditors of Bluberi, excluding itself. It did not value its security to allow it to vote its claim as ordinary. The plan provided that it would receive a release from the Respondents’ claim in damages against it. As previously stated, the Monitor opined that the plan was fair and reasonable. 92 creditors representing $3,450,882 of debt voted in favour while 8 creditors representing $2,375,913 voted against. Thus, while there was a majority in number of creditors, the vote of 59.27% of total value of claims in favour did not achieve the 2/3 majority in value required under the CCAA. In fact, it was one creditor, SMT, with a claim of $2,313,085 representing 36.7% of the value which voted against and which was apparently and remains the impediment to the acceptance of such arrangement.
 The new Callidus plan is essentially the same as the old one except that its contribution is increased to $2,880,000 and it is proposed that Callidus vote with the ordinary creditors though it does renounce to receiving any dividend. The plan provides that employees and the first $3,000 of other claims be paid in full. The balance of claims will be paid on a pro rata basis.
 While supporting the judge’s conclusion that Callidus should be excluded from voting because it intended to vote for an improper purpose, the Respondents and Bentham proffered in their memoranda that Callidus is related to the debtors and is thus, precluded from voting in favour of the arrangement in virtue of Section 22(3) CCAA. The Respondents plead that the de facto control exercised by Callidus over the affairs of Bluberi Gaming makes it a “related person”.
 There is no validity to such argument as the judge correctly decided. “Related person” is defined in Section 4 BIA to which Section 2(2) CCAA refers. Voting control is required. Callidus holds no shares nor the voting rights over any shares of either the Respondents.
 If Callidus had acquired voting rights attached to the shares of the Respondents then it could be maintained that Callidus was a “related person” within the meaning of Section 2(2) CCAA and Section 4 BIA so that it could vote against but not for the plan of arrangement in virtue of Section 22(3) CCAA.
 Indeed, in the spring of 2015, Callidus presented Mr. Duhamel with a voting trust agreement, which purportedly (the draft is not filed in the record) would have transferred the voting rights in the shares of the Respondents, though Mr. Duhamel or entities controlled by him would retain ownership of the shares. However, Mr. Duhamel refused to sign. Callidus later contended that voting control was nevertheless wrested from Mr. Duhamel or his family trust by the effect of the charging provisions in the deeds of hypothec and the defaults of the Respondents. However, that contention was dismissed, without appeal, by Justice Michaud in a judgment of November 8, 2015. Indeed, throughout the process up to the instant application before the Superior Court, Mr. Duhamel continued to act as the Respondents’ director. He resigned from the US entity pursuant to the request of Callidus to accommodate the sale transaction. However, there is no indication that the voting control of Mr. Duhamel (or his family trust) was altered, let alone transferred to the Appellant Callidus.
 Accordingly, it cannot be asserted that Callidus had voting control over the shares of the Respondents so that it would be a related person within the statutory definition of the CCAA.
 There is no impediment to a creditor proposing a plan of arrangement as the judge himself acknowledged in ordering the first creditors’ meeting. That a creditor sponsors a plan and stands to gain by it is not an indication of bad faith and does not preclude the sponsoring creditor from voting on the plan. Moreover, there is nothing improper in voting as ordinary for the deficiency in security as long as such deficiency is reasonably calculated. Here, the amount of $3 million is the balance remaining due to Callidus after its purchase of the Respondents’ assets by way of the credit bid. The amount was approved by the judge at the time of the APA and found to be in order in the a quo judgment. Valuing the security for the remaining debt of $3 million at nil is on its face, reasonable given that the litigious claim is the sole remaining asset. It was not considered otherwise by the judge.
 However and as indicated above, the judge essentially decided that the behaviour of Callidus and the purpose it sought to achieve by filing the plan and voting thereon was improper and thus, he precluded it from voting.
 Improper purpose developed as a reason for a court to exercise its jurisdiction to dismiss or stay a petition for a bankruptcy order under what is now Sections 43(7) and 43(11) BIA, even though the basic prerequisites (debt and act of bankruptcy) for the making of such an order are present. The discretion arises from the statute. Improper purpose in filing the petition is a reason to exercise the discretion; it is not the source of the existence of the discretion in law. The exercise of discretion, which is not legally available, is an error in principle to which deference is not due by an appellate court.
 The judge relied primarily on the Laserworks judgment of the Nova Scotia Court of Appeal where it was found, based on evidence before the court of first instance that the purchase of debt with a view to exercising votes against the approval of a proposal under the BIA was done in order to bankrupt the debtor company and eliminate a competitor from the marketplace. The court decided that this was improper and justified precluding that creditor from voting its claims. It underlined that the party was not originally a creditor and set out deliberately to cause injury to the debtor by bankrupting it.
 It must also be underlined that the result of a vote defeating a proposal is a deemed assignment in bankruptcy. As such, the reliance on the notion of improper purpose to deny the creditor a vote in Laserworks exhibits some harmony with the general scheme of bankruptcy law where improper purpose can justify the exercise of judicial discretion to dismiss or stay a petition. Indeed, case law relied on by the Nova Scotia Court of Appeal provide examples of bankruptcy petitions being denied or stayed under Sections 43(7) and 43(11) BIA because they were filed for an improper purpose. The dynamic of a vote on an arrangement under the CCAA is different in that failure to achieve the statutory majority for approval does not automatically result in bankruptcy.
 Even if Laserworks is correctly decided as a matter of law and the discretion to preclude a creditor from voting exists despite the absence of statutory language, its application should be reserved for the clearest of cases. The facts here are entirely different from those in Laserworks as they were in Blackburn Developments where the British Columbia Supreme Court refused to preclude the “vulture fund” who had purchased a controlling block of claims from voting to defeat a plan of arrangement with a view to the debtor’s liquidation. The vulture fund intended to acquire the debtor’s tax credits in such liquidation. The monitor contended that this was an improper purpose which should preclude the fund from voting. After a trial on the issue before the CCAA supervising judge, it was held that it remained unclear that the fund’s negative vote was intended solely to acquire tax credits. Moreover, the monitor’s analysis of the liquidation scenario did not indicate that creditors would be worse off than under the proposed plan of arrangement. In the case at bar, it is far from clear that creditors will not ultimately be better off with the Callidus settlement than the financed litigation option.
 The clear and transparent purpose of Callidus in proposing the plan is to obtain a release from the Respondents’ claim against it, or, in other words, to settle the threatened lawsuit. I cannot fathom that seeking a settlement of litigation for valuable consideration constitutes an improper purpose. I underline that the proposed settlement yields full payment to employees and creditors of small amounts while providing payment of 35-39% of larger claims. A more modest payout (under the initial plan as amended) was, in the opinion of the Monitor, fair and reasonable.
 Obtaining a release through a plan of arrangement even for third parties and plan sponsors is not improper and has been recognized as an integral part of the CCAA arrangement landscape.
 The Callidus offer to settle was only proposed once the Respondents appeared to have secured financing to institute the lawsuit. The Monitor who took an active role in this appeal finds something sinister in this timing but it strikes me merely as business pragmatics, which is not an improper purpose.
 As for the judge’s finding of heavy-handed behaviour and strenuous contestation of proceedings by Callidus, I fail to see how this justifies the exclusion of the Appellant’s voting rights. Firstly, a perusal of the contestation filed by Callidus to the initial CCAA filing paints a very different factual picture of the relationship between it and the Respondents, which I will discuss in more detail below in looking at the proposed lawsuit. Moreover, there was no sanction issued by the judge against Callidus over the life of the matter for any abuse in its conduct before the court or of any proceedings or contestation filed by it. I underline as I indicated at the outset of these reasons that there was no fact-finding inquiry by the judge. He relied on affidavits and evidently, his impressions formed during the course of the CCAA process, which he supervised.
 SMT voted against the Callidus’ plan which, given the quantum of its claim, was sufficient to defeat it. There is an allegation by Callidus in its contestation to the approval of the LFA that SMT offered to sell its debt to Callidus for more than the Callidus sponsored arrangement would yield. Should SMT’s voting rights be annulled because of the promotion of such self-interest? Obviously not, but I mention this as an illustration of the unstable legal (if not evidentiary) terrain upon which such process rests.
 This Court long ago decided that voting rights should not be excluded on supposed “equitable grounds”. Each creditor is entitled to vote unless the law specifically precludes such right. Even when the debtor is suing the creditor, such fact is not justification to exclude such creditor from a vote. The BIA provides that such creditor could be disqualified from acting as an inspector but no part of the BIA precludes the voting rights in such circumstances. I am well aware that operating under the CCAA regime may open the door to the exercise of greater judicial discretion, but there is no reasonable basis in law for the judge’s exercise of discretion to exclude the Callidus vote because it is seeking a release from the debtors’ proposed lawsuit for alleged damages arising from the parties’ commercial dealings. The “courts should not use equity to do what they wish Parliament had done through legislation”. While the discretionary nature of much of a supervising judge’s jurisdiction should make an appeal court reticent to interfere, errors in principle and unreasonable exercise of discretion, justify appellate intervention. Such is the case here.
 Cancelling voting rights for behaviour which allegedly caused the debtors’ financial demise based on allegations and a proposed lawsuit, is a slippery slope. It is perilous to embark on this type of inquiry in a superficial manner based on allegations (even if supported by affidavits). Voting rights are basic to the scheme of creditor democracy under the BIA and CCAA. Creditors have two basic rights: to participate in the distribution of the debtor’s assets and to participate in the decision-making process of the insolvency through the exercise of their voting rights. Here the judge relied on allegations of a yet to be instituted lawsuit against the creditor to deny the latter’s voting rights. This is not an appropriate exercise of discretion. Denial of a fundamental right should not depend on unproven allegations.
 Moreover, the judge’s enquiry begins to resemble the application of equitable subordination. This doctrine, where a creditor guilty of inequitable conduct towards the debtor has its claim subordinated in the debtor’s insolvency is part of American bankruptcy law. It has not been recognized by the Ontario Court of Appeal as forming part of the insolvency law of Canada.
 Our Court has also made it clear that a creditor has a right to vote its own self-interest even if that interest appears contrary to that of the mass of creditors or to the debtor. In Cantrex, the debtor had sued its secured creditor for improvident and negligent realization. The only asset remaining when the debtor put its proposal to a vote was the lawsuit against such secured creditor. The latter sought to vote the unsecured portion of its claim in order to defeat the proposal. Our Court allowed it to vote. Equally, it is not open to disallow a vote in similar circumstances by arguing a conflict of interest. I see no reason not to respect the precedent established in Cantrex.
 It was urged by the Respondents and the Monitor that if Callidus is permitted to vote, it should do so in a separate class since it alone amongst ordinary creditors receives a release of a claim of $200 million. This argument appears not to have been raised before the supervising judge as he does not treat it in his reasons. Nevertheless, in response to this submission, I would state the following.
 It is not unknown to the practice that a plan sponsor votes on a plan (if it is also a creditor) and that the plan includes a provision for a release in favour of the sponsor. After all, the obtaining of a release is the reason that Callidus is sponsoring the plan. It is also not unknown that a plan sponsor votes in the same class as ordinary creditors.
 In this case, Callidus is both a creditor and a plan sponsor. Upon valuation of its security, it should vote with the ordinary creditors. The plan is a settlement of proposed litigation targeting it. In such capacity, it is only natural that it receives a release. The crossover between the two capacities is that it has renounced to participation in the dividend. I see nothing in this state of affairs to justify an order that Callidus exercise its voting rights in a separate and distinct class of ordinary creditors.
 As for the quantum of the benefit received from the plan by Callidus (i.e. $200 million) the amount of the proposed claim is not supported by the slightest substantiation in the record before us.
 In summary, Callidus seeks to vote its own claim, the quantum of which was previously approved by the judge. The self-interest it promotes is the release from the debtor’s proposed litigation. In consideration of the release, Callidus will fund payment to the mass of creditors on terms that the vast majority of such creditors wish to accept. This is not an improper purpose either legally or on any interpretation of the facts of this case so that in precluding Callidus from voting, the judge committed a reviewable error.
The premise underlying interim financing is that it is a benefit to all stakeholders as it allows the debtor to protect going concern value while it attempts to devise a plan of compromise or arrangement acceptable to creditors.
 While the original premise of maintaining operations may have been expanded in the applications and manifestation of such financing in recent years, characterizing the LFA as interim financing in the circumstances of this case transcended the nature of such financing. There is no connection between the financing and the debtors’ commercial operations. The financing is an accessory to and part of the plan of arrangement previously proposed by the Respondents as a means to making some payment to unsecured creditors through the lawsuit. As such, it should be submitted to the creditors for their vote. The judge’s failure to so construe the LFA constituted reviewable error as he misconstrued in law the notion of interim financing and misapplied that notion to the factual circumstances of the case. Moreover, given the circumstances and sequence of events, I think that the judge’s approval of the LFA as interim financing after he had previously ordered a similar scheme to be submitted to the creditors as part of a plan, constitutes a manifest error of fact and a non-judicious exercise of his discretion. It will be remembered that the judge initially ordered that both the initial Callidus plan and the debtors’ plan be submitted to the creditors subject to the condition that each party support the meeting costs which the debtors failed to do. Following the failure of the Callidus plan to receive a vote of the statutory majority, the judge approved the LFA exercising his powers under Section 11.2 CCAA. This juridical “about face” appears, if nothing more, to be an inappropriate exercise of discretion constituting palpable error.
 “Compromise” or “arrangement” are not defined terms in the CCAA. The Respondents, like the judge, rely heavily on the reasons of the Court of Appeal for Ontario (“ONCA”) in Crystallex for guidance to determine whether the LFA should be submitted to a creditors’ vote. In that case, the debtor mining company’s primary asset was the right to develop a gold mine in Venezuela together with a state-owned corporation. The right was suddenly and unilaterally rescinded without compensation. The debtor had spent millions of dollars on the venture up to that point. This led to a default on its financed debt and a CCAA filing. The only asset of significance was an arbitration claim in Venezuela seeking compensation for the expenses and lost profit arising from the aforementioned unilateral resiliation. The debtor sought approval of litigation financing pursuant to Section 11.2 CCAA. A group of creditors, the holders of $100,000,000 of debt (the “noteholders”) contested, raising amongst other things the argument that in context, the financing should be submitted to the creditors as part of a plan of arrangement. It must be underlined that the noteholders proposed to finance the litigation themselves. Ultimately, their goal was to convert their $100,000,000 of debt to equity and take over the debtor company.
 I emphasize that both the debtor company and the noteholders in Crystallex wanted the arbitration to be pursued. There was no issue nor any debate as to the advisability of pursuing such recourse or accepting another route to creditor recovery, like the settlement of the litigation through the plan offered by Callidus in this case.
 (…) While the approval of the (…) DIP Loan affected the Noteholders’ leverage in negotiating a plan, and has made the negotiation of a plan more complex, it did not compromise the terms of their indebtedness or take away any of their legal rights. It is accordingly not an arrangement, and a creditor vote was not required. In this case it was within the discretion of the supervising judge to approve the (…) DIP Loan.
Incidentally, in Crystallex, the debtor was scheduled to file a plan of arrangement within two months of the hearing before the Court of Appeal. Apparently, the presentation of a plan was not contingent on the financing or on the outcome of the litigation as is the situation with the Respondents’ project.
 In my view, the judgment of the Court of Appeal does not have any precedential value for the present case. The factual matrix of this case is completely different. We are faced with two possible and competing sources of creditor recovery - i.e. litigation or the offer of settlement of that litigation by Callidus, the secured creditor and potential defendant in the litigation. The only competing interests in Crystallex were as between the debtor (together with the DIP lender) and the noteholders as to who would finance the litigation.
 The Respondents contend that by rejecting the initial Callidus plan as amended, the creditors in effect approved the litigation scenario. I strongly disagree. Firstly, the LFA, which greatly effects the creditors’ share in any eventual litigation proceeds, has never been submitted to creditors for approval. Secondly, the vote against the Callidus plan was carried by one creditor. Nothing indicates that the 92 votes in favour of the Callidus plan, in any way, favour the Respondents’ scheme. This is all aside from Callidus’ vote in the matter.
 Aside from Crystallex, the only other case law I am shown treating litigation financing in a comparable CCAA context is the case of Strateco which is an ex parte judgment, no stakeholders having objected to the proposed financing. The other cases submitted (Marcotte and TMI Education) dealing with class actions involved different issues and concerns and are not particularly relevant in the present context.
 I do not subscribe to a restrictive definition of what constitutes an arrangement. There is no justification in the statute, nor consistent support in the practice or case law for such a view. The term should be given a broad interpretation appropriate to the remedial purpose of the CCAA. An arrangement or proposal can encompass both a compromise of creditors’ claims as well as the process undertaken to satisfy them. The tool of the “liquidating proposal” under the BIA is an example where creditors are asked to approve the debtor liquidating its assets to then pay creditors pro rata from the proceeds. The “holding proposal” simply called for a vote by creditors to “wait and see”. Such schemes seek to arrange the terms of payment or manner of satisfying claims; they are also “arrangements”.
 The Court of Appeal for Ontario itself in Metcalfe adhered to a broad meaning of arrangement which requires examination of the content of the scheme overall as well as the context in which it is proposed. An arrangement includes any scheme to reorganize the affairs of the debtor and virtually any content is permissible subject to the creditors’ agreement. The Court of Appeal cited with approval case law from the United Kingdom for the proposition that it is not a necessary element of an arrangement that it should alter the rights existing between the debtor and its creditors. This is where the focus should be with a view to determining whether the scheme put forward by Respondents is an arrangement.
 Bluberi Gaming is not operating and there is no indication that it will recommence any business operations. The Respondents’ only “raison d’être” is the pursuit of the proposed litigation which is the only potential source of recovery for the creditors (other than the Callidus plan). As such, focusing on whether the LFA viewed in isolation altered creditors’ rights is overly restrictive as an analysis to determine whether the scheme constitutes an arrangement. However, if I were to apply such criteria as a test, the scheme proposed by the Respondents with the LFA would qualify as an arrangement, since it allows the Respondents to decide with Bentham whether to accept any settlement of the litigation. The scheme sets the stage for “alteration of creditors’ rights” as the reasons of the Court of Appeal in Crystallex would have it. They could very well receive nothing in a settlement where the funds generated were only sufficient to pay the lawyers and Bentham.
 Sophistry aside, rather than being paid on normal contractual or commercial terms, the creditors are told to await the outcome of the prosecution of a litigious claim for the debtors to obtain cash to perhaps pay something at some future date. I think their legal rights are “taken away” or “compromised”.
 It is fundamental that creditors approve the Respondents’ scheme as a whole, including the LFA which is accessory to the major thrust of the proposal - i.e. sue the secured creditor and distribute the proceeds net of lawyers’ fees and lender advances and success fee. As such, as part of their approval of the financing of such litigation, they should be able to exercise control at the approval stage by introducing measures to have input in managing the litigation on an ongoing basis, if they so desire. For example, the LFA, as currently written, allows Bentham to discontinue at any time, which could conceivably mean no recovery for creditors without any say in the process. Moreover, as it stands, any eventual offer of settlement is decided by the Respondents upon consultation with Bentham (which as stated always has the option to withdraw). No committee of creditors has any say in this or any other decision going forward in the proposed litigation. The decision on risk acceptance should be the dominion of the creditors and not the judiciary. The scheme (litigation and LFA) should be submitted as a plan to the creditors for their approval.
 I refrain from further comment on the LFA so has not to prejudice any eventual negotiation and to be consistent with myself that in the present circumstances the LFA should be approved by the creditors and not the judiciary. However, I do add my agreement with the creditors that the LFA is akin to an equity investment. The contingent nature of the repayment is such that Bentham is investing in the Respondents because of the litigation asset and it will benefit by preference over the existing creditors upon any successful judgment or settlement. Seen in this manner, the LFA does alter the creditors’ rights by means of subordination and is a further justification for characterizing the scheme as an arrangement. In this regard, it must be pointed out that in Crystallex it was only the advances and interest due to the litigation lender that benefitted from a priority. The success fee ranked subsequent to the ordinary claims. That is not the case under the LFA, which provides for priority payment of Bentham for advances and success fee.
 In the present case, there was a choice of recovery for the creditors - i.e. the Callidus plan as amended and now the second Callidus plan or, alternatively the scheme put forward by the Respondents. This distinguishes this case from the facts in Crystallex. In my mind, the only manner of proceeding that made and makes sense for the creditors is to put both options before them for a vote. This was the initial reaction of the supervising judge. However, as indicated above, he imposed a condition that in order for either parties’ plan to be submitted to the creditors, they had to deposit funds with the Monitor to support the costs of the claims’ process and the meeting, which the Respondents failed to do. They withdrew their plan from the creditors. I think the judge’s initial approach was the correct one - i.e. that both plans be presented to the creditors for a vote. Events may have taken on a momentum of their own but it became a mistake in the exercise of discretion after these events to approve the LFA under Section 11.2 CCAA, when a previous funding agreement should have but was not presented to the creditors because of the Respondents’ inability or unwillingness to contribute to the funding of the decision-making process, the whole as the judge originally ordered.
 Incidentally, the Respondents’ initial plan provided for a scheme of distribution of litigation proceeds where after payment of half of the proceeds to the litigation financier and professional fees, the creditors could receive up to 100% of their claims. With the LFA, there is no undertaking of any payment to the creditors. Rather, after payment of Bentham and fees, the Respondents will be left to decide whether to file a plan and what to offer in such plan.
 I find it incongruous that the Respondents can now bypass the judge’s rationale of the original order, that their funding arrangements for the proposed litigation be submitted as part of a plan to the creditors and that the LFA should be approved as interim financing under Section 11.2 CCAA. It appears that the creditors have been dragged into a process by default given the debtors’ failure to comply with the judge’s order to deposit funds with the Monitor coupled with the vote of one creditor against the Callidus’ plan.
 The judge states that a prime motivation for him to authorize the LFA was the absence of any other avenue of creditor recovery. However, as the Respondents point out, in the absence of any plan, bankruptcy is an option. The Respondents’ recourse against the Appellant would accrue to a trustee who, with the advice of elected inspectors, would have the option to sue the Appellant and seek such financing and other assistance required to support the litigation initiative. In this regard, the Respondents’ objection to submitting their litigation scheme including the LFA hints of an attempt to protect the interest of the shareholder, Mr. Duhamel. We know that he had an interest in the first litigation financier proposed (9364-9739 Québec inc.); we are not aware of any interest he could have in the LFA, although, I note that he is, together with the Respondents and Bentham, a party to that agreement. Moreover, the “waterfall” or scheme of distribution of litigation proceeds provides that after the lawyer and Bentham, the Respondents, which Mr. Duhamel controls, receive the funds. There is no protection of the creditors.
 The Respondents seek to justify the LFA and its approval by the judge without a creditors’ vote as fundamental to their access to justice. This is perhaps so but the issue in this insolvency case is whether the scheme of which the LFA forms part should be submitted to the creditors for their approval. This is particularly fitting given that the competing plan seeks the settlement of the litigation, which the LFA would finance.
 As part of his analysis, the judge reproduced some of the allegations from the proceedings that underpinned the proposed lawsuit and found that they are serious or at least not frivolous. He remarked that the allegations are in substance also found in the motion he granted for an initial CCAA order. These allegations, not proven, nor subject to any serious contradictory debate let alone a trial were contested by Callidus in writing in the court record which contestation was supported by an affidavit. The content of this contestation is nowhere mentioned by the judge. I find some of the Respondents’ accusations, which the judge considered serious, to be vague at least without the backdrop of the loan documents that would disclose default clauses and available remedies. Moreover, not mentioning the Callidus version of events is erroneous. A brief summary of such contestation indicates that after Callidus commenced financing the Respondents in 2012, the hard facts on the ground led it to take a more stringent attitude towards its debtors. In such regard, rather than selling 3,300 machines in 2013 as Mr. Duhamel had apparently forecasted, he sold 324. Forecasted gross revenue of $46,355,000 in 2013 became $17,442,000 generating a loss of $9,661,000, which continued with losses of approximately $3,800,000 in 2014 and $ 17,500,000 in the first 9 months of 2015. This appears to predate, at least in part, the alleged heavy-handed behaviour of Callidus leading to the CCAA filing. Moreover, the proposed litigation does not attempt an explanation of how a company that had generated considerable financial losses by the end of 2013 could subsequently have suffered $200 million of damage at the hands of Callidus. As well, the proceedings and positions of Callidus before the lower court nowhere appear to have been sanctioned by the judge as abusive as permitted by the provisions of Articles 51 and following of the Quebec Code of Civil Procedure. The presence of competing facts, which the judge does not mention, underlines the perilous nature of the exercise he embarked upon. Appropriate disclosure of the apparent merit of the lawsuit is one element for the creditors to consider in deciding whether to pursue the litigation proposed by the Respondents.
 Since I propose to quash and substitute an order that the Respondents’ scheme be the object of a plan of arrangement subject to creditor approval, it would make sense, as the judge originally ordered, that the plan of arrangement (including the LFA) of the debtors be submitted to a meeting of creditors at one and the same time as the new plan of Callidus.
 There remains the outstanding issue of what access to the LFA the creditors should have.
 The copy of the LFA made available to the Appellants was redacted to mask important financial and strategic clauses. The judge agreed to the ban based on litigation privilege in that the information could be tactically advantageous to the Appellant, the eventual defendant. The judge and Monitor who saw the unredacted version of the LFA found that its terms were reasonable.
 Since I find that the LFA should be submitted to the creditors for approval, they must have an unredacted copy in order to approve or disapprove with full knowledge or even seek to renegotiate certain terms. The redacted clauses contain essential knowledge to evaluating the merits of the proposed financing. However, the rationale of litigation privilege continues to apply to the defendant of the potential litigation - i.e. Callidus. Even though it will have the right to vote, the manner in which it will exercise the right is obvious and does not require the details of the LFA. It does not consequently require the unredacted LFA. To balance the rights of the creditors and the litigation privilege, I would order that only the Creditors’ Group and their professionals be supplied with an unredacted copy of the LFA subject to the undertaking not to reveal such unredacted copy to any other person, particularly Callidus, its representatives and professionals. As well, other creditors and their professionals should have a right to consult an unredacted version of the LFA in the hands of the Monitor without retaining a copy and upon execution of a confidentiality agreement to the similar extent of not disclosing the unredacted elements to any other person, particularly Callidus.
 For all of the above reasons, I propose to allow the appeal and set aside the a quo judgment. The appropriate orders should issue so that a meeting of creditors be ordered where the new Callidus plan is submitted for a vote. The actual orders can be determined by the judge. His meeting order of October 12, 2017 can serve as a guide with the appropriate modifications.
 The meeting expenses will be for the account of Callidus as it has offered accordingly to the Monitor. It will have the right to vote its claim of $3 million as an ordinary creditor (upon the filing of the appropriate claim valuing its security), at such and any other meeting and including particularly the right to vote on the plan sponsored by it.
 At one and the same meeting, if the Respondents with the support of Bentham so desire, they may also submit a plan of arrangement, which will include the pursuit of the proposed litigation and the LFA by reference or incorporation. The complete unredacted terms of the LFA should be presented to members of the Appellant Creditors’ Group and their professionals upon signature of a non-disclosure agreement, which the Monitor’s counsel should prepare. Similarly, other creditors and their professionals should have an opportunity to consult a non-redacted LFA through the Monitor upon execution of the non-disclosure agreement. Callidus will not have access to an unredacted version of the LFA.
 If the Respondents present a plan, which includes the LFA, then they, together with Bentham, should support half the meeting costs.
 The matter should be referred back to the supervising judge for the issuance of orders comprising the foregoing and such other matters (such as additional extensions of the stay period) deemed advisable by the judge with the input of the parties’ and their counsel. Obviously, should the Respondents present their plan to pursue the litigation financed by Bentham under the LFA, the creditors must be instructed that they could vote against both plans but not in favour of both plans.
 As to the costs, I see no reason to depart from the rule except that the imposition of costs against the Respondents may ultimately be borne by creditors or, in this case, perhaps, not paid, given the Respondents’ insolvency. On the other hand, both the Monitor and Bentham took part in the appeal and actively supported the cause of the debtors/Respondents. They both concluded for their costs against the Appellants in first instance and appeal, which would militate for a costs order against them. However, as an officer of the Court, the Monitor should not have to support costs and ultimately, it did not stand to profit from the LFA as did Bentham. Accordingly, Bentham alone should be condemned to legal costs in favour of the Appellants.
 Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36 [CCAA].
 Arrangement relatif à 9354-9186 Québec inc. (Bluberi Gaming Technologies Inc.), 2018 QCCS 1040 (Judgment in appeal).
 Sections 9, 11 ff. CCAA.
 IMF Bentham Limited and its Canadian subsidiary Bentham IMF Capital Limited are both Impleaded Parties and referred to hereinafter as such or collectively as “Bentham”.
 Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 [BIA].
 New Bluberi refers to the corporate entity through which Callidus acquired the assets of Bluberi Gaming.
 Canadian Airlines Corp. (Re), 2000 ABQB 442, para. 104.
 Judgment in appeal, note 2, paras. 28-30.
 Lloyd W. Houlden, Geoffrey B. Morawetz & Janis Sarra, The 2018 Annotated Bankruptcy and Insolvency Act, 2018, Thomson Reuters, s. D16, pp. 162-163 [Houlden & Morawetz]; JICO Holdings Inc. v Lynco Construction Ltd., 2016 SKCA 126, paras. 25-29; Buth-Na-Bodhiaga Inc. v. Lambert, 2002 CanLII 45022 (ON CA), para. 40; Daniel Diena (Re), 2012 ONSC 5849, paras. 9, 10, 11 and 22.
 Grant Forest Products Inc. v. The Toronto-Dominion Bank, 2015 ONCA 570, paras. 97-99 [Grant]; Crystallex (Re), 2012 ONCA 404, para. 70 [Crystallex].
 Laserworks Computer Services Inc. (Re), 1998 NSCA 42 [Laserworks].
 Laserworks, supra, note 13, paras. 62-63.
 Laserworks, supra, note 13, pp. 13-15 citing Dimple Drapers Inc. v. Paperboard Industries Corporation, (1992) 15 C.B.R. (3d) 204 (Ont. G.D.); Re E. De La Hooke, (1934) 15 C.B.R. 485 (Ont. S.C.), Re Pappy’s Good Eats Limited, (1985) 56 C.B.R. (N.S.) 304 (Ont. S.C.), Re Shepard, (1996) 40 C.B.R. (3d) 145, (Man. Q.B.).
 Blackburn Developments Ltd. (Re), 2011 BCSC 1671, para. 45.
 Century Services Inc. v. Canada (Attorney General),  3 S.C.R. 379, para. 62; Montréal, Maine & Atlantique Canada Cie (Montréal, Maine & Atlantic Canada Co. (MMA)) (RE), 2014 QCCS 737. Dans l’affaire de l’arrangement de Montréal, Maine & Atlantic City Canada Co./(Montréal, Maine & Atlantique Canada Cie) (Arrangement relatif à), 2015 QCCS 3235; Canadian Red Cross Society / Société canadienne de la Croix-Rouge, Re, 2000 CanLII 22488 (ON SC); Metcalfe & Mansfield Alternative Investments II Corp., (Re), 2008 ONCA 587 [Metcalfe]; Charles-Auguste Fortier inc. (Arrangement relatif à), 2008 QCCS 5388; Muscletech Research and Development Inc., (Re), 2006 CanLII 34344; Sino-Forest Corporation (Re), 2012 ONSC 7050; Société industrielle de décolletage et d’outillage (SIDO) ltée (Arrangement relatif à), 2010 QCCA 403.
 Meublerie André Viger inc. v. Groupe Cantrex inc.,  R.D.J. 509, para. 39-40 (QCCA) [Cantrex] citing Bédard Louis Inc. v. Teac Canada Ltd., C.A.Q. 1991 CanLII 3533 (QC CA) and (1992) R.L. 640 (C.A.), p. 643 [Bédard].
 Section 11 CCAA; Houlden & Morawetz, supra, note 11, s. N62, p. 1330; Century Services Inc. v. Canada (Attorney General),  3 S.C.R. 379, para. 1.
 Sun Indalex Finance, LLC v. United Steelworkers,  1 S.C.R. 271, para. 82.
 Grant, supra, note 12; Crystallex, supra, note 12.
 U.S. Steel Canada Inc. (Re), 2016 ONCA 662.
 Re 4519922 Canada Inc., 2015 ONSC 4648; Muscletech Research and Development Inc., Re, 2006 CanLII 34344 (ON SC), para. 9.
 Canadian Airlines Corp. (Re), 2000 ABQB 442, paras. 103-104; Société industrielle de décolletage et d'outillage (SIDO) ltée (Arrangement relatif à), 2010 QCCA 403 (Bich, J.A.), para. 30.
 Industrial Properties Regina Limited v Copper Sands Land Corp., 2018 SKCA 36, para. 37.
 Janis Sarra, Rescue!, The Companies’ Creditors Arrangement Act, 2nd Edition, Carswell, 2013, p. 197 [Sarra, Rescue].
 Id., p. 199 and 210.
 Crystallex, supra, note 12, para. 93.
 Strateco Resources inc./Ressources Strateco inc. (Arrangement relatif à), 2015 QCCS 4671.
 Marcotte v. Banque de Montréal, 2015 QCCS 1915.
 TMI-Éducaction.com inc. (Syndic de), 2015 QCCS 4116: appeal dismissed on November 2, 2015 (2015 QCCA 1795).
 Houlden & Morawetz, supra, note 11, s. N3.
 Metcalfe, supra, note 18, para. 66.
 T & N Ltd. and others (No. 3) (Re), 2006 E.W.H.C. 1447,  1 All E.R. 851 (Ch).
 Crystallex, supra, note 12, para. 28, citing the first instance judgment: Crystallex International Corp. (Re), 2012 ONSC 2125, para. 23 (f).
 However and oddly, counsel later informed the panel that proceedings had been issued, though not yet served on Callidus.
 Judgment in appeal, supra, note 2, paras. 84-86; Seedling Life Science Ventures LLC v. Pfizer Canada Inc., 2017 FC 826 and Stanway v. Wyeth Canada Inc., 2013 BCSC 1585.

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