Crown Crest: the class action settled first, then the leases sold

Simply Green rented furnaces, hot water heaters, heat pumps, air conditioners, boilers and air filtration systems to consumers across the common-law provinces, most of them in Ontario. The customer generally paid no upfront fee, made regular payments over a term that typically ran ten years, and in the normal course was not responsible for repairs, per the Affidavit of Michael Lombard, Nov. 6, 2023, paras. 8–9. The business began in 2013. From 2015 most new leases were bought from third parties, often as whole portfolios, and by November 2023 the group serviced approximately 84,000 consumer equipment leases from an office in Toronto with 70 to 80 employees, per the Pre-Filing Report of the Proposed Monitor, Nov. 6, 2023, paras. 19–23, 31.

Peoples Trust Company had financed it since 2016 through warehouse loans, debentures and concurrent leases giving the trust company rights to the rent on specific portfolios, "effectively a form of securitization, through 'true lease' transactions," in the words of Mr. Lombard, its chief credit officer, per the Lombard Affidavit, para. 5. Around July 2023, his affidavit says, the group's senior management told Peoples Trust that contractual interest-rate increases were costing it approximately $300,000 a month before operating expenses. As he understood it from management, the distress came from fixed income on the lease portfolios set against variable rates on the debt, a market with little interest in assets of that class, and inflation in operating costs; management also said that, given its leverage and a pending class action, a near-term sale of the portfolio would not be viable, per the Lombard Affidavit, paras. 63–65. At September 30, 2023, Peoples Trust was owed approximately $39.7 million under its loan agreements and had further exposure of approximately $279.7 million under the concurrent leases, per the Pre-Filing Report, para. 35.

With the group's directors and officers resigning, Justice Conway of the Ontario Superior Court of Justice (Commercial List) granted Peoples Trust a creditor-led initial order on November 9, 2023, in what she described as a consensual filing. She appointed KPMG Inc. as monitor and HWS Consulting Inc. as chief restructuring officer (CRO), and approved up to $1.1 million of interim financing from Peoples Trust for the first ten days, per the Initial Order Endorsement, Nov. 9, 2023, paras. [2], [7], [12]–[15].

The customers' lawyers

Counsel in two pending suits against the group, one of them the proposed consumer class action, attended that first hearing and asked for an adjournment. Justice Conway refused, and added that by signing the order "the court makes no comment with respect to any practices or operations that may be the subject matter of any litigation," per the Initial Order Endorsement, paras. [3], [18] and n. 1.

The class plaintiffs' factum came a week later. "The business of the respondents in this proceeding is unlike almost any that have ever sought protection under the CCAA," it began, alleging that the business "is built on misrepresentation, deceit and financial exploitation, particularly that of the elderly." It turned on the applicant too: "PTC is no ordinary secured creditor," it said, alleging that Peoples Trust had been a concurrent owner of the leases since 2016 and "is a party to the impugned conduct in issue in the class action," per the Factum of the Class Action Plaintiffs, Nov. 16, 2023, paras. 1, 52, 54. The Bonnick action, commenced in July 2021, alleged that the consumer agreements breached Ontario's Consumer Protection Act, 2002, including by failing to disclose the total amount payable, and that notices of security interest registered on customers' home titles amounted to slander of title. Among other relief it sought rescission of the leases or a declaration that they were unenforceable. The corporate defendants and the group's former chief executive, also a defendant, denied all of the allegations, per the Sixth Report of the Monitor, Mar. 25, 2025, paras. 31, 33–34, 37.

At the comeback hearing on November 17, the class plaintiffs did not oppose the amended and restated order but asked for language reserving their rights against the DIP security and the liability protections for the monitor and the CRO. Justice Conway recorded that "there has been no adjudication of these allegations yet and they are being vigorously defended by the Respondents," and declined to add the language, since the court made no comment on practices that might be the subject of litigation. She also cut the interim financing that could be drawn to $10 million from the $15 million sought, as "more in line with the cash needs of the business," per the ARIO Endorsement, Nov. 17, 2023, paras. [4]–[7]. On December 21, 2023, the plaintiffs, joined by a third, started a companion national class action against Peoples Trust itself, alleging, among other things, a conspiracy with the corporate defendants, per the Sixth Report, paras. 39–40.

A settlement before a sale

The threat of rescission had concerned the monitor from the outset. After preliminary discussions with potentially interested parties and financial advisory firms, it concluded "there would be little or no interest in the Debtors' business or assets if the Actions are not resolved," and that if the plaintiffs won rescission the debtors "would be left with little or no assets," per the Sixth Report, para. 42. A mediation before the Honourable Thomas J. McEwen, over three days in August 2024 and a session on September 19, ended without a deal. The certification and summary judgment motion opened before Justice Akbarali on October 1, 2024, and after its first day the parties reached a tentative settlement, signed on November 1, per the Sixth Report, paras. 43–47.

As the monitor summarized it, the class would receive $17 million in cash, funded by Peoples Trust and the former chief executive, not by the debtors, and 25% of any price above $250 million in the CCAA sale process. Lease escalations were capped at 3.5% a year and buyout fees on furnaces, boilers, heat pumps and air conditioners cut by 25%. Leases with an aggregate value of $13.5 million would be cancelled, the customers keeping the equipment and losing the service, and no notice of security interest would be enforceable against class members by the settling defendants or their assignees, a buyer in the sale process included. The release covered any claim for rescission, and the settlement is no admission of liability. The monitor valued the package at a minimum of $32,946,000 before any share of sale proceeds, per the Sixth Report, paras. 48(a)–(h), 49.

The settlement class took in everyone in Canada who was party to a lease between July 17, 2013 and January 15, 2025. Thirty-one opted out, many because they had sued on their own contracts. Justice Akbarali approved the settlement on February 21, 2025, and in the monitor's summary of her endorsement, notice had reached "a few million people" and two class members objected. The monitor called it "in practice, a necessary precondition for the implementation of a successful SISP," and reported the support of Peoples Trust, owed approximately $274 million at February 28, 2025 and in the monitor's words "the Debtors' fulcrum creditor," per the Sixth Report, paras. 54, 56, 58–59, 62(c), (i). Justice Conway approved it in the CCAA on April 2, 2025, per the Order (Class Action Settlement Approval), Apr. 2, 2025, paras. 3, 5.

Go Lime's bid

The sale process was approved on June 2, 2025, in orders that also brought into the CCAA two joint venture partners, HCSI Home Comfort Inc. and HCSI Home Comfort 2 Inc., that had originated most of the group's residential new-construction business. The same orders engaged CIBC as sales agent, raised the DIP ceiling to $38.6 million and approved a key employee retention plan of up to $775,000, per the Twelfth Report of the Monitor, July 22, 2026, paras. 10–11.