Executive Summary: Key Legal and Evidentiary Issues

• Alixpartners, as Monitor of Alphabow Energy Ltd., obtained enhanced investigative powers over former director Ben Li amid allegations of a $9 million unauthorized withdrawal.
   
• Li sought permission to appeal two orders and a stay of enforcement, arguing the orders violated his Charter rights.
   
• Justice Fagnan applied the four-part test under section 13 of the CCAA for leave to appeal.
• Central to the analysis was whether the chambers justice properly considered the predominant-purpose factors from R v Jarvis.
   
• Procedural fairness complaints were found unlikely to warrant appellate review on their own.
   
• Leave to appeal was granted in part, and a stay pending appeal was granted for specified paragraphs affecting Li.
   

Facts of the case

Alphabow Energy Ltd. filed a Notice of Intention to Make a Proposal under the Bankruptcy and Insolvency Act on March 28, 2024, with the proceedings later continued under the Companies' Creditors Arrangement Act (CCAA). Ben Li served as a director of Alphabow during part of the CCAA proceedings until his resignation effective June 15, 2026, after which corporate counsel withdrew from the record. On June 25, 2026, Alixpartners Restructuring, Inc., acting as Court-appointed Monitor, filed its Fourteenth Report disclosing allegations that Li had personally, or through an entity he controls, withdrawn approximately $9 million from Alphabow's bank account and concealed the withdrawals from the Monitor throughout the CCAA proceedings. The Report noted that the Calgary Police Service had been contacted and had requested evidence to determine whether a criminal offence occurred, and that the Monitor intended to cooperate fully with that investigation. On short notice, the Monitor sought enhanced investigative powers. The chambers justice granted a June 26, 2026 order without certain contested provisions, adjourned the matter, and on June 30, 2026 granted a further order including the disputed provisions. On July 13, 2026, the Monitor served Li with a Notice of Appointment for questioning and a demand for documents and records. Li applied for permission to appeal both orders and for a stay of enforcement of specified paragraphs.

Policy and legislative provisions at issue

The application engaged section 13 of the CCAA, which governs leave to appeal, and sections 11 and 23 of the CCAA, which concern the court's general discretionary authority and the Monitor's statutory duties. Li argued the orders infringed his rights under sections 7 and 8 of the Charter by compelling him to produce documents and submit to questioning in circumstances tied to an active criminal investigation. The chambers justice had found these concerns addressed by section 5 of the Canada Evidence Act and section 13 of the Charter, and had relied on the predominant-purpose framework from R v Jarvis, 2002 SCC 73, in concluding the Monitor's mandate under the CCAA was not displaced by its stated intention to cooperate with police.

Reasoning and analysis

Justice Fagnan applied the four-part test for leave under section 13 of the CCAA, considering whether the appeal was prima facie meritorious, whether it would unduly hinder the CCAA proceedings, and whether the issues raised were significant to the action and to the practice, citing Coast Automotive Group Inc (Re), 2026 ABCA 123 and Bellatrix Exploration Ltd v BP Canada Energy Group ULC, 2020 ABCA 178. She identified a non-frivolous issue as to whether the chambers justice had addressed all the factors set out in Jarvis regarding predominant purpose, noting that Jarvis involved separate branches of a state agency, whereas the Monitor is not a state agency but an officer of the court operating under section 23 of the CCAA. Given the active police investigation and the Monitor's stated intention to cooperate fully, she found it arguable that the chambers justice erred in not including provisions limiting the scope of the Monitor's powers to prevent exceeding its CCAA mandate or risking a breach of Li's Charter rights, and found this issue significant to both the action and the practice. She rejected Li's argument that the orders were generally overbroad, noting this Court has recognized that investigative activity can further legitimate insolvency objectives, citing Angus A2A GP Inc v Alvarez & Marsal Canada Inc, 2026 ABCA 156. She also found Li's procedural fairness complaints, while arguable, did not raise issues of significance to the practice, since granting leave on the primary issue would effectively address any procedural shortcomings. On the stay application, applying the test from RJR-MacDonald Inc v Canada (Attorney General), 1994 CanLII 117, as adopted in DGDP-BC Holdings Ltd v Third Eye Capital Corporation, 2021 ABCA 304, she found a serious question to be tried, potential irreparable harm absent a stay, and that the balance of convenience favoured granting the stay, given that the Monitor's broader investigation would remain unaffected.

Ruling and overall outcome

Li's application for permission to appeal was granted in part, limited to the issue of whether the chambers justice erred in failing to include provisions, or limit the scope of the orders, to ensure the Monitor's investigative powers were not used in a manner exceeding its CCAA mandate or risking a breach of Li's Charter rights. A stay pending appeal was also granted, restricted to paragraph 5(m) of the June 26, 2026 order and paragraphs 3, 5, 6, and 9 of the June 30, 2026 order, and only as those provisions relate to Li. The decision did not order any monetary payment, damages, or costs award; it addressed only the scope of procedural and investigative relief.