Executive Summary: Key Legal and Evidentiary Issues

• Sanovest Holdings Ltd. sought to vary a Receivership Order to bring the Bear Mountain Litigation (four separate actions) within the ambit of insolvency proceedings involving Bear Mountain Resort assets.

• The Receivership Order, issued by consent on September 18, 2024, originally excluded the Bear Mountain Litigation and Resorts' business operations from the receivership.

• Competing claims of breach of fiduciary duty, oppression, and partnership agreement violations are advanced by both principal combatants, Mr. Tian Kusumoto (Sanovest director) and Mr. Daniel Matthews (599315 B.C. Ltd. director and president).

• Court determined the outcome of the Bear Mountain Litigation is critical to determining asset quantum and ultimate distributions in the Receivership.

• A sale of Lands and assets to Groundplay Developments Ltd. for just over $141 million was approved, though the Receiver must remain involved for distributions, holdbacks, and claims assessment.

• Variation was granted under the Receivership Order's terms and alternatively under s. 187(5) of the Bankruptcy and Insolvency Act.

Background and parties involved

This case concerns insolvency proceedings involving the Bear Mountain Resort, located near Langford, British Columbia. The petitioner, Sanovest Holdings Ltd., is both a limited partner and senior secured lender to Ecoasis Developments LLP ("Developments"). The ownership structure involves a tiered layer of entities, with Ecoasis Bear Mountain Developments Ltd. ("EBMD") as the parent entity and managing partner. Sanovest and 599315 B.C. Ltd. ("599") each own 50% of EBMD and 49.75% of Developments' units. EBMD owns the remaining 0.5% of Developments. Developments owns 99% of Ecoasis Resort and Golf LLP ("Resorts"), with EBMD owning the remaining 1%.

The two principal combatants in the litigation are Mr. Tian Kusumoto, a director and chief financial officer of EBMD, and Mr. Daniel Matthews, a director, chief executive officer, and president of EBMD. Both are also directors of the remaining corporate respondents, which are guarantors of Developments' indebtedness to Sanovest. Their highly fractious relationship has resulted in multiple competing claims alleging mala fide conduct, including breach of fiduciary duty and oppression, advanced on their own behalf and through various entities. Additionally, Mr. Tom Kusumoto, who is Tian Kusumoto's father and a former director of Sanovest, is a party in some of the actions.

The Bear Mountain Litigation

The Bear Mountain Litigation comprises four separate actions previously ordered to be tried together. The Sanovest Action (VA S223937), commenced on May 13, 2022, seeks an award of equitable compensation payable to Developments against Mr. Matthews and Tom Kusumoto for alleged breaches of fiduciary duties and failures to disclose self-interested transactions between January 2016 and June 2022. The Partnership Action (VA S234047), commenced on June 1, 2023 by 599 and on behalf of Developments and Resorts, claims damages on behalf of Developments against Sanovest, EBMD, and Tian Kusumoto for alleged breaches of the terms of Developments' partnership agreement and duties owed to it. The Oppression Action (VA S234048), commenced by petition on June 1, 2023 and converted to an action on April 18, 2024, seeks oppression remedies against Developments, Resorts, and EBMD by Mr. Matthews and 599. Finally, the Debt Action (VA S226218) was commenced by Tom Kusumoto seeking judgment against Mr. Matthews for $1.585 million plus interest arising from three loans that he advanced to Mr. Matthews between July 2019 and February 2020 in the context of their business relationship in Developments.

The parties ultimately agreed these actions are predominantly derivative actions rather than inter-creditor disputes. The trial was scheduled to commence in January 2026 but has been adjourned to January 2027, primarily because expert reports intended to deal with quantum issues cannot be properly instructed until the amount realized from the Receiver's sale of assets is known.

The Receivership Order and its variation provisions

The Receivership Order was issued by consent on September 18, 2024, following a lengthy and fractious hearing where nearly every issue was in dispute. The parties ultimately agreed to an order appointing Alvarez & Marsal Canada Inc. as receiver and manager over certain lands within the Bear Mountain Resort community, together with all of the assets and undertakings of the other respondents, including EBMD. The order specifically excluded the Bear Mountain Litigation and Resorts' business operations from the receivership, though it included provisions allowing any party to apply to vary or amend the order on not less than seven clear business days' notice.

Sanovest's application sought to bring the Bear Mountain Litigation within the receivership to promote its orderly, efficient resolution for the benefit of all stakeholders. The court noted that nothing was drawn to its attention at the time the Receivership Order was issued concerning any possible intersection between the Receivership and the Bear Mountain Litigation. The exclusion of Resorts' business was agreed to on a provisional basis to allow Mr. Matthews and 599 the opportunity to demonstrate that they could, contrary to Sanovest's assertion, operate its business as a going concern.

The court found that the Receivership Order was not a final order incapable of variation without demonstrating a change in material facts. The Receivership Order had in fact already been varied twice: in July 2025 to include Resorts' business and operations in the Receivership, and subsequently to include the Hotel Arbitration within the ambit of the Receivership.

Subsequent developments and settlement

On January 21, 2026, the parties returned to court on a sale approval application to advise that the limited partners – Sanovest, 599, and EBMD – had reached a Settlement Agreement concerning the sale of the Lands and other assets owned by Developments and subsidiary entities (including Resorts) to Groundplay Developments Ltd., an entity involving Mr. Matthews, for just over $141 million. The court granted the order sought and approved the asset purchase agreement, finding the sale to be fair and reasonable.

Even after this sale, the Receiver must remain involved to attend to distributions and holdbacks contemplated by the Settlement Agreement (including $3.4 million until after the resolution of the claims in the Bear Mountain Litigation), prepare financial statements, and attend to tax filings for 2025 and for a long and undefined period thereafter. The Receiver will also remain involved to assess claims that Sanovest and 599 and Mr. Matthews assert for legal expenses incurred in the Bear Mountain Litigation, and any claims Mr. Matthews and 599 assert for management fees and reimbursement of partnership expenses incurred personally. The Settlement Agreement provides that Sanovest is entitled to prove a claim for its costs of the Bear Mountain Litigation as a claim against Ecoasis, including under any of its loan agreements. Mr. Matthews and 599 represent and agree that the maximum amount of any claims they may submit in the claims process will not exceed $1,000,000 in aggregate.

The court's ruling and outcome

The court rejected arguments from 599 and Mr. Matthews that the variation provisions constituted a "come back" provision available only when circumstances change. The court disagreed with their characterization and found instructive the remarks of Justice Farley in Ravelston Corp. (Re) that no party using the comeback clause should feel constrained by the fact that the court has granted orders, and that the court is always willing to adjust, amend, vary or delete any term.

The court also rejected the assertion that Groundplay would be prejudiced if the order is granted because of the stigma of receivership, noting that Groundplay and the assets it purchased fall outside the Receivership. The contention that bringing the Bear Mountain Litigation within the ambit of the Receivership would draw undue public attention was found not supported by evidence, and the court noted that the litigation and its connection with the Receivership are already public knowledge.

Justice P. Walker determined that the outcome of the claims in the Bear Mountain Litigation is a critical factor to determining the quantum of the assets currently encompassed within the Receivership and the ultimate distributions to be made. The court found there is risk of inconsistent findings if the Bear Mountain Litigation is determined outside of the Receivership, particularly regarding claims for management fees and expense reimbursement. Accordingly, on January 29, 2026, the Receivership Order was varied to encompass the Bear Mountain Litigation within the Receivership. The court directed the parties to schedule a further hearing concerning Sanovest's application to establish summary procedures in the Bear Mountain Litigation. No specific monetary award was granted to either party in this decision, as the ruling addressed procedural consolidation rather than substantive claims resolution.