News + Insights

On December 16, 2025, the Ontario Superior Court of Justice (Commercial List) released its decision in Highbreed Financial Corporation v. Canada Tax Reviews Inc., 2025 ONSC 7014, delivering a detailed and commercially significant endorsement addressing the interaction between secured lending enforcement, shareholder agreements, and mandatory arbitration clauses in the context of applications by creditors under the Bankruptcy and Insolvency Act. 

Nathaniel Read-Ellis and David Ionis successfully represented the respondents in this "bet-the-company" litigation involving a request for the appointment of a receiver. The Court granted a stay of the application in favour of arbitration and declined to appoint an interim receiver.

The Court granted the stay under s. 7(1) of the Arbitration Act, 1991, holding that there was an arguable case that the creditor’s application—seeking declarations of default, judgment on secured debt, and the appointment of a receiver under the Bankruptcy and Insolvency Act—was, at least in part, “in respect of” disputes arising out of a unanimous shareholders’ agreement containing a broad arbitration clause. Applying the Supreme Court of Canada’s framework in Peace River Hydro Partners v. Petrowest Corp. and the Ontario Court of Appeal’s guidance in Husky Food Importers & Distributors Ltd. v. JH Whittaker & Sons Limited, the Court reaffirmed the primacy of the competence-competence principle and the standard applicable on motions to stay in favour of arbitration. 

This ruling reflected the judge's holding—for the first time by a Canadian court—that an arbitrator has jurisdiction to appoint a receiver under the Bankruptcy and Insolvency Act. The decision also underscores that where interrelated financing, investment, and shareholder agreements form part of a single commercial transaction, courts will not isolate loan and security documents from shareholder agreements if factual and legal overlap is arguable. Defences grounded in shareholder funding obligations, payment waterfalls, set-off, and alleged misrepresentations were sufficient to engage the arbitration agreement, even where the applicant framed its claims as purely creditor-based.

The Court also dismissed the applicant's cross-motion to appoint an interim receiver, confirming that allegations of information-sharing breaches and historical asset transfers will not, without evidence of immediate jeopardy, satisfy the stringent necessity threshold under s. 47 of the Bankruptcy and Insolvency Act.

This decision provides important guidance for secured lenders, corporate and insolvency practitioners, and commercial litigators on structuring transactions and enforcement mechanisms and strategy. Beyond making clear that arbitrators can appoint receivers, it stands as a leading Ontario authority on the threshold analysis for stays in favour of arbitration where secured creditor remedies intersect with shareholder governance disputes.

The decision was recently reported on by Insolvency Insider Canada.