Pride Group: the securitization parties cannot be made to pay

When Pride Group filed in March 2024, its Tpine leasing arm was administering a portfolio of approximately 25,000 vehicles and leases through facilities from more than 45 financiers. Some of those leases had been pledged to secured lenders; others had been sold outright to securitization vehicles, with Tpine kept on as servicer to collect the payments and repossess the trucks; and some, the double-VINed ones, had been both. The Monitor eventually counted more than 1,750 vehicles or leases financed twice, and the work of sorting out who owned what, running the servicing and handing the securitized assets back was paid for, Justice Cavanagh found, "substantially from the DIP facility provided by the Syndicate Lenders, and payments by, and collateral proceeds withheld from, Recourse Lenders" (Reasons for Judgment, 2026 ONSC 4700, Aug. 14, 2026, paras. 4–5, 18, 28).

The question of whether the securitization side should now pay a share was argued over three days, August 5 to 7, and the positions were set out here on August 8. The answer came a week later. "For the following reasons, I conclude that the Securitization Parties cannot be required to contribute additional amounts, beyond any amounts already paid by them, towards the costs already (and remaining to be) incurred in respect of the Pride Entities' CCAA Proceedings" (Reasons for Judgment, Aug. 14, 2026, paras. 12–13).

A question with two halves

The Threshold Question had been framed under Justice Osborne's endorsements of November 23 and December 16, 2025, after an attendance before the mediator, the Honourable Thomas McEwen, on October 21, 2025: "Can and should the securitization parties be required to contribute additional amounts". The Pride Entities brought the motion and, with the Monitor, took no position on it; the only parties heard were the recourse lenders and the securitization parties (Reasons for Judgment, Aug. 14, 2026, paras. 9–12, 34).

The background the reasons recite runs through three earlier orders. The amended and restated initial order of April 5, 2024 excluded the securitization parties' property from the "Property" of the Pride Entities, so none of it ever sat under the administration charge or the DIP charge. On September 26, 2024, Justice Osborne declined to order the securitization parties to fund 25% of an estimated $40 million wind-down. On October 10, 2024, he let each recourse lender make a liquidity contribution, treated as a prepayment of wind-down costs "subject to future allocation", in exchange for the assets in which it claimed an interest. The wind-down costs, Justice Cavanagh noted, "have significantly exceeded the estimate made in October 2024" (Reasons for Judgment, Aug. 14, 2026, paras. 17, 30–33, 60).

The court's jurisdiction under s. 11 of the CCAA is "subject to the restrictions set out in this Act", and s. 11.01(b) provides that no order under s. 11 has the effect of "requiring the further advance of money or credit." The recourse lenders relied on s. 11 and on inherent jurisdiction. Justice Cavanagh disposed of inherent jurisdiction first: given the breadth of s. 11, "Parliament has not left a functional gap or vacuum" (Reasons for Judgment, Aug. 14, 2026, paras. 41–43, 52).

Osborne's endorsement, and New Skeena

The recourse lenders read the September 26, 2024 endorsement as leaving the door open. Justice Osborne had written there that if the wind-down were funded by others and the costs already incurred, "this Court would have jurisdiction to impose an allocation where appropriate." Justice Cavanagh accepted that the passage could be read that way, but held the question "was not before him," and declined to treat the endorsement as binding on it. On the narrower point he did follow it: the recourse lenders had argued, citing U.S. Steel Canada Inc. (Re), 2015 ONSC 6331, that s. 11.01(b) protects only a pre-existing credit relationship maintained on an involuntary basis after filing. Justice Cavanagh disagreed that the provision is that restricted, and held the securitization parties could rely on it although they had no such relationship with the Pride Entities (Reasons for Judgment, Aug. 14, 2026, paras. 61–67).

The decision turns on New Skeena Forest Products Inc., Re, 2005 BCCA 192, the only other case cited to him in which a court considered the provision in allocating CCAA costs. There, the City of Prince Rupert held a tax lien of more than $18 million on a defunct pulp mill appraised at $3,920,000, with decommissioning costs estimated at as much as $100 million, and a statutory duty to take the property if no bidder met the upset price. The receiver's allocation would have required the City to pay its share of approximately $4.5 million in priority charges in cash as a condition of taking title. The Court of Appeal held that this required "the further advance of money or credit in certain circumstances" and allowed the appeal (Reasons for Judgment, Aug. 14, 2026, paras. 68–81).

The recourse lenders answered that the B.C. court itself called those circumstances "almost unique," and that allocating costs already incurred is a different thing from compelling parties to pre-fund costs to come, which was all Justice Osborne had refused. Justice Cavanagh rejected both points. New Skeena, he wrote, "was decided in circumstances where the costs to be allocated had already been incurred," which aligned it with this motion, "where tens of millions of dollars of CCAA Costs have been incurred." And because the securitization parties' assets were never subject to a CCAA charge, any order allocating costs to them and imposing "a personal obligation to pay money" would put them "in the same position as was the City in New Skeena" (Reasons for Judgment, Aug. 14, 2026, paras. 83–90).

The charge that was never sought

The recourse lenders had also put forward cases in which true lessors and trust claimants bore part of an insolvency's costs. Justice Cavanagh distinguished each of them. Winnipeg Motor Express Inc., 2009 MBQB 204, and Atlantica Diversified Transportation Systems Inc. (Re), 2018 NSSC 77, allocated administration costs to true lessors, but neither engaged s. 11.01(b), and he was unable to find that the lessor's property in the Manitoba case had been subject to the priority charges at all. The trust cases (Kingsway General Insurance, 2006 ABCA 293; Consortium Construction, a 1992 Ontario Court of Appeal decision; Matrix Financial; and PriceWaterhouseCoopers v. Bank of Montreal, a 2017 Newfoundland and Labrador decision) each involved a charge on the claimed property, and none arose under the CCAA (Reasons for Judgment, Aug. 14, 2026, paras. 92–116).

The judge located the difference in what the Pride Entities never asked for: "If the Pride Entities had sought an order to secure payment of CCAA Costs by charging the assets of the Securitization Parties as being property in the possession of and under the administration of the Pride Entities after the initial filing, whether such an order could or should be granted could have been determined. No such order was sought at the time of the ARIO or later." The securitization parties have since taken their property back under the August 8, 2024 turn-over order. Without a charge, the judge wrote, an allocation "will have the effect of requiring them to pay fresh money to the Pride Entities or their estate" (Reasons for Judgment, Aug. 14, 2026, paras. 24, 108).