In 2014, Veris Gold Corp. and its subsidiaries began experiencing financial difficulties due to, among other things, the declining price of gold. It also received notice from its major secured creditor, Deutsche Bank A.G., that it was in default under its security agreements. What followed was a filing under the Companies' Creditors Arrangement Act (CCAA) and Chapter 15 proceedings in the United States. The principal assets of Veris included a gold mine in Nevada and mining properties in the Yukon.
The first decision, indexed as 2015 BCSC 399, involved an application for an order authorizing the payment of fees to a special committee of Veris' board of directors. The committee had been formed prior to filing under the CCAA for the purposes of investigating various restructuring options. The committee had decided on the remuneration to be paid to each of them, which they performed both before and after filing under the CCAA, but the fees had not been approved by the board. The British Columbia Supreme Court rejected the application. Because the board had not approved the fees, there was no contractual obligation to pay them. The Court also found that even if the board had approved the fees, it would been inappropriate to pay them for other reasons, including because the payment of pre-filing fees would be a preference as against other unsecured creditors and because the application had not been brought in a timely manner.
In the second decision, indexed as 2015 BCSC 2014, the Court-appointed monitor, Ernst & Young, applied for approval of an asset sale agreement and assignment of contracts to an entity wholly owned by a company that had provided interim financing to Veris. The Court reviewed the factors set out in ss. 36(3) and 11.3 of the CCAA and the case law, and approved the proposed transaction, finding that it was fair and reasonable. The restructuring efforts had met with little success and the Court found that the proposed transaction was the only realistic alternative to obtain value for the assets and see the continuation of operations.
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