The Ontario Superior Court will not take over the hearing of the
appeal of the former Northstar directors against their personal
cleanup order for TCE contamination in Cambridge Ontario.
The former directors applied to the Commercial List of the
Superior Court of Justice to change the venue of the appeal from
the Environmental Review Tribunal to the Commercial Court,
which handled the Northstar insolvency/bankruptcy. According to
Justice Geoffrey Morawetz, his court might have
jurisdiction to decide whether officers and directors of insolvent
companies could face personal environmental cleanup costs, but only
if the case came before him as part of an insolvency law plan
of compromise or arrangement. The Northstar insolvency
was handled through a different process, a court approved sale, a
process that is now complete:
" In the context of an entity that is undergoing a
restructuring under the CCAA, the foregoing arguments put
forward by the Former D&Os' counsel may have merit.
However, in the circumstances of this case, it seems to me
their arguments are flawed.
 In this case, there is no CCAA Plan of Compromise or
Arrangement. There will be no compromise of claims as against
directors and officers. In my view, the factors that counsel
put forth as reasons why the claim should be adjudicated in
the CCAA court are not persuasive for the following
The nature of the issue to be determined is an MOE Claim
against directors and officers. There is no CCAA plan of
arrangement and consequently claims against the Former
D&Os will not be the subject of any type of compromise under
With respect to the need to protect the integrity of the CCAA
process, there is no ongoing CCAA process to protect.
With respect to the expertise of the CCAA court versus the ERT,
although the CCAA court has had considerable experience with
the Northstar insolvency proceedings and the relationship
between Northstar and its Former D&Os, this does not
alter the fact that, in these circumstances, the outstanding issue
to be determined is the environmental liability claim against
the Former D&Os. This is an area within the core
competence of the EPA.
With respect to the interests of other stakeholders, in these
circumstances, where the operating assets have been sold and
the proceeds have been paid to the secured creditors and
there are no further assets to distribute, the function of
the CCAA court is very limited.
 It seems to me that, in these circumstances, there is no
basis for the MOE Claim to be adjudicated in the CCAA court
and there is no basis to question or distinguish the Maybrun
analysis. Further, there is no obvious area of conflict as between
the CCAA and the EPA."
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