Trinity Automotive: two directors removed and a CRO appointed

Boban James attended the October 1 hearing of the monitor's omnibus motion on his own behalf; the counsel slip lists him as self-represented. "The only opposition to any of that remaining relief sought came from Mr. Boban James," Justice Black wrote. Mr. James, the endorsement records, was resisting the monitor's request that he and Godshi Boban be removed as directors of the Trinity Auto Group's companies, per the Endorsement of Justice Black, Oct. 1, 2026, p. 2 and paras. 1(a)(iv), 5, 12. As at the initial order, the monitor reports, Mr. James was the president and a director of each of the fifteen debtor companies and Ms. Boban was a director of six of them. He is also the 100% shareholder in each, per the Third Report of the Monitor, Sept. 25, 2026, para. 41.

The court removed them both. The Omnibus Order Justice Black signed that day provides that each of them is "hereby removed from their positions as directors of the Debtors (as applicable)," under s. 11.5 of the CCAA and effective the date of the order, per the Omnibus Order, Oct. 1, 2026, para. 11. A second order, made on the monitor's motion, appoints FAAN Advisors Group Inc., acting through Naveed Manzoor, as chief restructuring officer, per the CRO Appointment Order, Oct. 1, 2026, recital and para. 3. The omnibus order also extends the stay until and including November 27, 2026, and lets the monitor borrow up to $5,000,000 in principal from Bank of Montreal as interim lender, where the limit had been $3,500,000, per the Omnibus Order, Oct. 1, 2026, paras. 3–4 and the Third Report of the Monitor, Sept. 25, 2026, para. 28. The floorplan dispute behind this creditor-driven CCAA was reported here on September 7, and the TD transfers and the September 10 sale process order on September 11.

The explanation, and the court's view of it

The transfers are the six transactions, associated with Trinity Car Sales Inc., Trinity Auto Inc. and Mississauga Chrysler, that TD Bank flagged. They were initiated from July 28 to August 6, 2026, "so effectively on the eve of the Initial Order," as Justice Black put it, per the Endorsement of Justice Black, Oct. 1, 2026, para. 6. The monitor's reports put their total at $769,659.95, per the Third Report of the Monitor, Sept. 25, 2026, para. 45. The endorsement gives the total as $769,959.95 at paras. 6 and 8 and as $769,659.95 at para. 14.

The endorsement sets out the account the group's chief financial officer gave a representative of the monitor at the Mississauga Chrysler location on September 8. She responded, "those are to me." The payments, she said, were amounts she asserts the companies owed her for services as a consultant or employee going back a number of years, and the transfers "were requested and made due to the pending CCAA Proceedings." She confirmed that at her request Mr. James had transferred the funds from the companies' TD accounts to other TD accounts "held by [her] personally and/or by a corporation she incorporated and controls." Her employment was terminated on September 9, per the Endorsement of Justice Black, Oct. 1, 2026, paras. 7–9, 11.

In resisting his removal and Ms. Boban's, the endorsement says, Mr. James "essentially echoed the explanation" she had offered "concerning the circumstances of the transfer of the Flagged Funds." Justice Black continued, per the Endorsement of Justice Black, Oct. 1, 2026, para. 12:

In my view, that explanation is wanting and in no way provides substantiation let alone justification of suspicious transfers in the face of a looming CCAA application. It smacks, frankly, of an attempt to misappropriate funds before the pending court order and the resulting appointment of a Monitor would make such removal of funds impossible.

Earlier in the endorsement he had described the transfers as "suspicious transfers of funds, identified by TD Bank and flagged for potential fraud," per the Endorsement of Justice Black, Oct. 1, 2026, para. 5. No written material from Mr. James is in the record read for this piece, and his position is known only from the endorsement; Ms. Boban does not appear on the counsel slip.

"Fortunately, I am advised, the Flagged Funds have been secured," the endorsement says, per the Endorsement of Justice Black, Oct. 1, 2026, para. 11. The monitor had said on September 9 that it would move "forthwith" for an order directing TD to return them, per the Third Supplement to the Monitor's Second Report, Sept. 9, 2026, para. 17. No such motion is in the record read for this piece. The Third Report says the monitor has worked collaboratively with TD, BMO and the former chief financial officer to obtain the return of substantially all of the funds. It adds that the monitor has identified other accounts not previously disclosed by the companies and is working with financial institutions to get access to them, "in order to determine the actual quantum of funds available to the Companies and the status of those funds," per the Third Report of the Monitor, Sept. 25, 2026, paras. 38–40.

The grounds and the finding

The monitor relied on s. 11.5(1) of the CCAA, which, as the endorsement quotes it, contemplates the removal of directors "if the court is satisfied that the director is unreasonably impairing or is likely to unreasonably impair the possibility of a viable compromise or arrangement being made….or is acting or likely to act inappropriately as a director in the circumstances," per the Endorsement of Justice Black, Oct. 1, 2026, para. 13.

Its grounds are in the Third Report, and the endorsement sets them out at para. 14 as what "the Monitor maintains." The report says that Mr. James "has been unable to identify the cause of the vehicles 'sold-in-violation'" or explain the use of the proceeds, which amounted to approximately $13 million at the date of the initial order. As of the report the value is approximately $17 million, a figure the report describes as the "crystallized SIV figure at date of filing of the CCAA Proceedings," per the Third Report of the Monitor, Sept. 25, 2026, para. 42. Ms. Boban was identified as an employee at the time of the initial order, the report says, but after the comeback hearing, through discussions with management and other employees, the monitor "determined that Ms. Boban did not perform employee or management functions at the Companies' dealership operations." The monitor terminated both of them from their employment on August 25, per the Third Report of the Monitor, Sept. 25, 2026, paras. 43–44.

In the monitor's opinion their continued incumbency as directors "would threaten to impair the ability of the Companies to restructure through the SISP and generally," and it holds that view "particularly" given "the uncontradicted facts reported in the Third Supplement concerning the non-arm's length transfers of significant funds by Boban on the eve of the CCAA filing and in view of the unaccounted for SIV balances," per the Third Report of the Monitor, Sept. 25, 2026, para. 46. Its factum of September 28 adds that Mr. James "has failed to respond to the allegations set forth in the Third Supplement," per the Factum of the Monitor, Sept. 28, 2026, para. 37(a).