Commercial Certainty Prevails: Ontario Court Upholds Consent to Receivership in Peace Bridge

In a recent decision, the Ontario Superior Court of Justice reinforced that courts will uphold a debtor’s consent to a receivership when it forms part of a negotiated arrangement, emphasizing the importance of commercial certainty.

In our previous article, Alberta and Ontario Courts Reaffirm Enforceability of Consents to Receiverships, we explained that there is an ongoing trend where courts will enforce a negotiated arrangement between a debtor and lender following an executed forbearance agreement. Should a condition of the forbearance include a consent to appoint a receiver, current judicial guidance suggests that those arrangements will be respected by the court.

Ontario Relies on Alberta Precedent

In RBC v. Peace Bridge Duty Free Inc., 2025 ONSC 7339 (“Peace Bridge”), the Honourable Madam Justice Kimmel relied on the holding of the Alberta case of ATB Financial v. Mayfield Investments Ltd., 2024 ABKB 635 (“ATB Financial”), discussed in our previous article, to support her conclusion that commercial certainty supported the appointment of a receiver based on the debtor’s consent to such relief in a negotiated forbearance agreement.

Peace Bridge serves as one of the first decisions to formally introduce ATB Financial into Ontario’s reported jurisprudence and serves as an additional decision supporting the enforceability of a consent to appoint a receiver.

ATB Financial dealt with a situation where a debtor attempted to stay a consent receivership order. The Honourable Mr. Justice Marion denied the stay and commented on the importance of commercial certainty in insolvency practice:

Negotiated forbearance agreements, including the use of consent orders, are an important part of insolvency practice. Commercial certainty for all stakeholders dictates that parties should expect that courts will hold them to their bargains, absent further agreement or circumstances that would make it appropriate to nullify or remove the order (including, for example, and without limitation, for matters such as fraud or misrepresentation) (para 40)

Justice Kimmel was presented with a similar situation in Peace Bridge where a debtor sought to oppose the appointment of a receiver, despite the debtor’s signed consent to receivership having been offered to support a requested forbearance arrangement. In Peace Bridge, the debtor was an operator of a duty-free shop at the Canada-U.S. border. Following defaults on its rent obligations to its landlord, Royal Bank of Canada (“RBC”), a secured creditor of the debtor, made demand against the debtor and pursued a receivership application. After various adjournments of the bank’s application and in exchange for periods of forbearance, the debtor executed a consent to receivership. Notwithstanding the forbearance arrangement and the breathing room provided to the debtor, the forbearance lapsed without a payout of the outstanding debt obligations to RBC.

At the hearing for an appointment of a receiver, RBC sought to rely on the signed consent to receivership. The debtor opposed the appointment of a receiver.

Commercial Certainty Guides Court’s Decision

In her analysis, Justice Kimmel held that the appointment of a receiver was just and convenient, noting that any realistic alternatives to a receivership had been exhausted. The debtor had failed to come up with any viable methods to protect the interests of RBC and the landlord, even though the debtor had been granted various adjournments. Notably, Justice Kimmel acknowledged that the appointment of a receiver was appropriate in order to uphold commercial certainty, citing ATB Financial as the relevant authority:

Commercial certainty also supports the appointment of the Receiver in this case where the Debtor consented to it in a negotiated arrangement while represented by counsel. Agreements to consent orders such as this are common in the insolvency practice and the parties should be able to expect the court to uphold their bargains, barring unforeseen or special circumstances: see ATB Financial v. Mayfield Investments Ltd., 2024 ABKB 635, at para. 40. (para 39)

These findings, among others, led Justice Kimmel to grant the appointment of a receiver.

As a result of the decision in Peace Bridge, among others, ATB Financial has formally become recognized in Ontario law. The adoption of ATB Financial supports the ongoing trend of Ontario courts recognizing the importance of commercial certainty in insolvency proceedings and the agreements that are central to the practice.

The Financial Services Group at Aird & Berlis LLP will continue to monitor developments in insolvency law and related court decisions. If you have questions regarding this decision or related matters, please contact the authors or a member of the group.