2020 NLSC 105, 2020 NLSC 105

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : Great North Data Ltd., (Re ) , 2020 NLSC 105 Date : July 27, 2020 Docket : 20190123048 In The Matter of the Bankruptcy and Insolvency Act , R.S.C. 1985, c. B-3 , as amended And In The Matter of the Bankruptcy of Great North Data Ltd. Estate No. 51-2586816 Court No. 20190123048 - AND – Docket: 202001G0847 In The Matter of the Bankruptcy and Insolvency Act , R.S.C. 1985, c. B-3 , as amended And In The Matter of the Bankruptcy of James Goodwin Estate No. 51-2593527 Court No. 202001G0847 Before: Justice Garrett A. Handrigan

Place of Hearing: St. John’s, Newfoundland and Labrador Date of Hearing: July 22, 2020

Summary: Bitmain applied to lift automatic stays in a consolidated proceeding of two actions it brought against GND and James Goodwin. Thestays took effect under

section 69.3 of the Bankruptcy and Insolvency Act when GND and Mr. Goodwin made assignments inbankruptcy. The Court allowed Bitmain’s notice of motion, so that Bitmain may proceed with the trial of its claims against GND and Mr. Goodwin.It found that if Bitmain succeeded in its claims of fraud and wrongful conduct, the bankrupts would not be discharged from any debt orliability resulting; that the claims were too complex to be dealt with effectively on the

summary process for proving claims under section135 (1.1) of the Act; that both GND and James Goodwin were necessary parties to the proceedings; and that the proceedings were so faradvanced it would be unfair and prejudicial to Bitmain not to allow it to go to trial. Appearances: Darren D. O'Keefe Appearing on behalf of Bitmain Technologies Limited John C. Taylor-Hood and Appearing on behalf of Sean M. Pittman PricewaterhouseCoopers, trustee in bankruptcy and receiverof Great North Data Ltd. Authorities Cited: CASES CONSIDERED: Re Advocate Mines Limited, [1984] O.J.

No. 2330 (O.S.C., in Bankruptcy); Re Francisco, (ON SC), [1995] O.J. No. 917 (O.C.J, General Division, in Bankruptcy); Re Ma, (ON CA), [2001] O.J. No. 1189(OCA); Re Panorama Parkview Homes Ltd., 2017 BCSC 2071 (BCSC); Re Taylor Ventures Ltd., 2002 BCSC 82 (BCSC). STATUTES CONSIDERED: Bankruptcy and Insolvency Act, RSC 1985, c. G-3; RULES CONSIDERED: Rules of the Supreme Court, 1986 S.N.L. 1986, c. 42,

Schedule D. Ruling on Application to Lift Stay of Proceedings in Bitmain Technologies Limited v. Great North Data Limited/James Goodwin REASONS FOR JUDGMENT Handrigan, J.:

INTRODUCTION [1] Bitmain Technologies Limited (“Bitmain”) applied to this Court by Notice of Motion on February 24, 2020 for an order undersection 69.4 of the Bankruptcy and Insolvency Act, RSC 1985, c. G-3 (“the BIA”). Bitmain asks for a declaration that

section 69.3 (1) ofthe BIA does not apply to a claim Bitmain brought against Great North Data Limited (“GND”) on March 16, 2017. Bitmain amended itsclaim against GND twice, first on May 1, 2017 and again on June 14, 2018. Bitmain also amended its Notice of Motion on March 4,2020. [2] GND filed an assignment in bankruptcy on November 22, 2019, by which PricewaterhouseCoopers Inc (“PWC”) wasappointed as Trustee. On February 25, 2020, this Court granted a Receivership Order appointing PWC as receiver of all GND’s assets,undertakings and property.

Paragraph 8 of the Receivership Order provides, in part; that “…all Proceedings currently under way againstor in respect of…[Bitmain]…are hereby stayed and suspended pending further order of this Court”. [3] I heard Bitmain’s Notice of Motion to lift the stay of proceedings on July 22, 2020 and reserved my decision until now. THE ISSUE [4] Bitmain’s Notice of Motion raises this issue: Should Bitmain’s claim against GND be stayed pending its bankruptcy, or mayBitmain proceed with its claim despite GND’s bankruptcy? THE LAW Statute – Bankruptcy and Insolvency Act [5]

Section 69.3 (1) provides: 69.3

(1) Subject to…[section] 69.4…, on the bankruptcy of any debtor, no creditor has any remedy against the debtor or the debtor’sproperty, or shall commence or continue any action, execution or other proceedings, for the recovery of a claim provable in bankruptcy. [6]

Section 69.4 provides: 69.4 A creditor who is affected by the operation of sections 69 to 69.31…may apply to the court for a declaration that those sections nolonger operate in respect of that creditor or person, and the court may make such a declaration, subject to any qualifications that the courtconsiders proper, if it is satisfied (

a) that the creditor or person is likely to be materially prejudiced by the continued operation of those sections; or (

b) that it is equitable on other grounds to make such a declaration. Case Law [7] Re Advocate Mines Limited, [1984] O.J. No. 2330 (O.S.C., in Bankruptcy) provides a useful synopsis of circumstances inwhich a Court may remove an automatic stay of proceedings under

section 69.3 of the BIA. Registrar Ferron lists five circumstances thatmight be “appropriate cases” for lifting a stay: 1. Actions against the bankrupt for a debt to which a discharge would not be a defence. 2. Actions in respect of a contingent or unliquidated debt, the proof of which and valuation has that degree of complexity whichmakes the

summary procedure prescribed by s. 95(2) of the Bankruptcy Act inappropriate. 3. Actions in which the bankrupt is a necessary party for the complete adjudication of the matters at issue involving other parties. 4. Actions brought to establish judgment against the bankrupt to enable the plaintiff to recover under a contract of insurance orindemnity or under compensatory legislation. 5.

Actions in Ontario which, at the date of bankruptcy, have progressed to a point where logic dictates that the action be permitted tocontinue to judgment. (Advocate Mines, paragraphs 3-7) [8] While Registrar Ferron’s “list” is comprehensive and is frequently cited, it is generally recognized as a beginning and not theendpoint for discussing the issue. I note, for example, Adams, J.’s comments, in Re Francisco, (ON SC), [1995] O.J.No. 917 (O.C.J, General Division, in Bankruptcy):

It should be understood that Re Advocate Mines Ltd., supra, is not an exhaustive codification of the policy underlying the Bankruptcyand Insolvency Act. It is but one thoughtful decision attempting to articulate the type of grounds which may provoke the exercise of ajudicial discretion. To view Advocate Mines as a limiting or exhaustive instrument is an error in principle. (Francisco, paragraph 13) [9] Adams, J. also stated how he thought a bankruptcy court should proceed on an application under

section 69.4 of the BIA: In considering an application for leave, the function of a bankruptcy court is not to inquire into the merits of the action sought to becommenced or continued. Instead, the role is one of ensuring that sound reasons, consistent with the scheme of the Bankruptcy andInsolvency Act, R.S.C. 1985, c. B-3, exist for relieving against the otherwise automatic stay of proceedings. (Francisco, paragraph 1) [10] In Re Ma, (ON CA), [2001] O.J. No. 1189 (OCA) the Ontario Court of Appeal endorsed Adams, J.’sapproach.

It quoted the preceding passage from Adams, J.’s judgment in its reasons and observed: As this passage makes clear, lifting the automatic stay is far from a routine matter. There is an onus on the applicant to establish a basisfor the order within the meaning of s. 69.4. As stated in Re Francisco, the role of the court is to ensure that there are ‘sound reasons,consistent with the scheme of the Bankruptcy and Insolvency Act’ to relieve against the automatic stay.

While the test is not whetherthere is a prima facie case, that does not, in our view, preclude any consideration of the merits of the proposed action where relevant tothe issue of whether there are ‘sound reasons’ for lifting the stay. For example, if it were apparent that the proposed action had littleprospect of success, it would be difficult to find that there were sound reasons for lifting the stay. (Ma, paragraph 3) [11] From my review of

section 69.4 of the BIA, these are some of the principles that are relevant to its application: • A creditor applying under

section 69.4 of the BIA must meet at least one of the two criteria stated in the section, not both; • A creditor applying under

section 69.4 of the BIA does not have to show it has a prima facie case in its action against the bankrupt:Re Ma; • The bankruptcy court need only consider the merits of the proposed action to see whether there are ‘sound reasons’ for lifting thestay: Re Ma; • A bankruptcy court on a leave application must ensure that sound reasons exist for relieving against the automatic stay ofproceedings: Re Francisco; • It is an error of law to accept the five circumstances enumerated in Re Advocate Mines Limited as “a limiting or exhaustiveinstrument”: Re Francisco; • If the creditor satisfies the court that one or more of the grounds referred to in Re Advocate Mines Limited is present and that thecreditor is likely to be materially prejudiced or that it is equitable on other grounds to make such a declaration then a court will lift thestay of proceedings: Re Panorama Parkview Homes Ltd., 2017 BCSC 2071 (BCSC); and, • Fraud alleged by a creditor to have been committed by the bankrupt is a complex matter which should not ordinarily be dealt withon a

summary basis and without a full hearing: Re Taylor Ventures Ltd., 2002 BCSC 82 (BCSC). [12] I turn now to analyze the issue that I stated above, starting with the background to it. ANALYSIS Background [13] While Bitmain is registered to do business in Hong Kong, China, it also operates as an extra-provincially registered company inthis Province. Bitmain develops and markets cryptocurrency mining computers and related programs that are used to produce, or “mine”the cryptocurrency, Bitcoin. Bitmain also engages in mining Bitcoin from third-party mining farm facilities.

GND developed and offeredwarehouse space to cryptocurrency miners (known in the business as “collocation”) for hosting the hardware used in miningcryptocurrencies, including Bitcoin. Late in 2015 and early in 2016, GND and Bitmain entered into negotiations by which GND offeredto host Bitmain’s mining hardware at facilities that GND owned in Labrador City, NL. Eventually, Bitmain and GND came to terms onthe arrangement and Bitmain supplied the GND facilities with substantial quantities of hardware, as well as power supply units.

GND setup the hardware and began operating in mid-November 2016. [14] Bitmain says operational issues plagued the project from the outset and only worsened as it proceeded. By February 2017, afterjust a few months of operations, Bitmain says that GND was having financial difficulties and it notified Bitmain on February 12, 2017that it was ending its collocation agreement with Bitmain. The relationship between Bitmain and GND deteriorated quickly.

Bitmainalleged that GND sold off to third parties most of the hardware that Bitmain supplied; that GND used funds that Bitmain provided toGND in trust inappropriately; and that GND generally acted in bad faith towards Bitmain.

[ 15 ] On March 16, 2017, as I noted earlier, Bitmain issued a statement of claim against GND in which (in some instances by amending its claim), it alleged that GND not only breached the collocation agreement contractually, but committed the torts of conversion, detinue, breach of trust and fraudulent misrepresentation, as well as theft, and the further torts of civil fraud (deceit) and intimidation (extortion).

Bitmain sought various relief from GND; including, return of its property, disgorgement of all profits that GND made from selling Bitmain’s property, a constructive trust over certain of GND’s assets, as well as special and punitive damages and costs. [ 16 ] On May 30, 2017, Bitmain issued a second statement of claim in the same cause, in which it made similar claims against James Goodwin, GND’s CEO; and it asked for similar relief against Mr. Goodwin in his personal capacity. Bitmain also claims that Mr. Goodwin is personally liable for GND’s actions.

Bitmain obtained an Attachment Order over GND’s realty in Labrador City on August 8, 2018. The order remains in effect and applies until Bitmain’s action is dismissed or discontinued or for 60 days from the date judgment is entered for Bitmain in the cause. [ 17 ] On October 12, 2018 this Court ordered that Bitmain’s actions against GND and Goodwin be heard together, either simultaneously or one immediately after the other; and further that the evidence in one proceeding, including discovery transcripts, interrogatories and documents, be evidence in the other.

The matters proceeded apace, so that certificates of readiness were filed in both matters on November 29, 2018. On the same date, a 25-day trial was scheduled, set to begin on March 23, 2020. GND filed an assignment in bankruptcy on November 22, 2019 and James Goodwin filed an assignment in personal bankruptcy on December 9, 2019. PWC was appointed GND’s trustee and MNP Ltd. was appointed Mr. Goodwin’s trustee. Bitmain served PWC with a Litigation Preservation Notice on December 3, 2019 for the actions against GND and Mr.

Goodwin. [ 18 ] This Court appointed PWC receiver of all the assets, undertakings and property of GND on February 25, 2020. The receivership order included, as I noted earlier, paragraph 8 which provides: 8.

No Proceeding against or in respect of the Respondent [GND] or the Property [of GND] shall be commenced or continued except with the written consent of the Receiver [PWC] or with leave of this Court and any and all Proceedings currently under way against or in respect of the Respondent [GND] or the Property of [GND] are hereby stayed and suspended pending further order of this Court. [ 19 ] PWC did not consent to lifting the stay of proceedings so that Bitmain might proceed with its actions.

In fact, in a Memorandum of Fact and Law that PWC filed in response to GND’s Notice of Motion to lift the stay, PWC opposes the motion. The final paragraph of its Memorandum reads: 21. The Respondent PWC] submits that it is inappropriate to lift the stay against GND at this time as Bitmain has failed to show that it has been materially prejudiced by the continued operation of the stay of proceedings. The Respondent [PWC] submits that it is not equitable to lift the stay at this time. [ 20 ] This is the background to the issue I stated earlier. I turn now to discuss the issue against this background.

Discussion [ 21 ] To succeed in its Motion, Bitmain must show that it is likely to be “materially prejudiced” by the automatic stay of proceedings effected by

section 69.3 of the BIA or that it is inequitable to maintain the stay. Bitmain relies on the law as stated in Re Advocate Mines Limited and asserts that four of the five circumstances enumerated by Registrar Ferron in that case exist in its claim against GND.

In particular, Bitmain says that if GND is discharged in bankruptcy, GND will not be released from the claim that Bitmain has against it; that its claim against GND is too complex to be settled by the procedure for proving claims under section 135 (1.1) of the BIA ; that GND and James Goodwin are necessary parties to its claim; and that it has advanced its claim so far procedurally that it should not be denied its denouement. No Discharge for Fraud [ 22 ] Section 178 (1) (

d) of the BIA reads, as is relevant here: 178

(1) An order of discharge does not release the bankrupt from (

d) any debt or liability arising out of fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity… . [ 23 ] Bitmain claims that GND and James Goodwin committed various torts, aside from breaching its allocation agreement with Bitmain. After setting out the facts on which it relies to support its claim, Bitmain states thus in paragraph 32 of its Amended Statement of Claim against GND: 32.

The Plaintiff [Bitmain] claims that the Defendant [GND] has acted in bad faith and states that the actions of the Defendant [GND] constitute breach of contract and the torts of conversion, detinue, breach of trust and fraudulent misrepresentation, as well as theft, the tort of civil fraud (deceit) and the tort of intimidation (extortion). (Underlining in original). [ 24 ] Bitmain claims that it provided GND with a $332,640 (USD) prepayment on the condition that GND maintain the funds in a trust account for Bitmain’s benefit and to be used as an advance against the fees that Bitmain would incur on a monthly basis to GND for hosting Bitmain’s cryptocurrency mining hardware.

Bitmain says it authorized GND to charge amounts to the trust funds each month to pay Bitmain’s invoices for fees, as and when GND billed Bitmain. But Bitmain claims that GND ignored the conditions on which Bitmain provided the funds and used the trust monies immediately as it received them to pay for construction costs associated with its hosting facilities. [ 25 ] In addition, Bitmain says that it provided GND large quantities of its mining hardware in November 2016, comprising 600 hardware units and 2,250 power supply units.

Bitmain believes that GND, sometime around February 2017, sold most of these units to third parties, after its arrangement with Bitmain broke down. Bitmain says that GND never sought or obtained its permission to sell its property and GND retained all of the funds from the sales; which Bitmain says GND also used to renovate its hosting facility. Finally,

Bitmain alleges that GND and/or James Goodwin issued false documentation on which GND and/or James Goodwin relied to claim GND owned the property it received from Bitmain outright and claimed that GND’s only obligation to Bitmain was to provide the space to host the equipment. [ 26 ] Bitmain says that the prepayment it advanced to GND was clearly in trust for Bitmain’s benefit; and it says further that it had and retained a constructive trust over the hardware and power supply units that it provided to GND.

Now Bitmain wants to follow the prepayment through the trust that it created over the funds when it provided them to GND and to follow the funds that GND received by selling the hardware and power supply units without its permission.

As to the latter, Bitmain relies on a constructive trust. [ 27 ] I note that the proof that GND and/or James Goodwin committed fraud, breach of trust, conversion, detinue, fraudulent misrepresentation, deceit and extortion lies on Bitmain; as does its allegations that it provided the prepayment to GND in trust and that it holds a constructive trust over the hardware or the proceeds GND received from selling it.

However, based on the statements of claim Bitmain has filed against GND and James Goodwin and the affidavits it filed in support of its application to lift the stay of proceedings, I am satisfied that Bitmain has an arguable case on those issues against both GND and Mr. Goodwin. If it succeeds in any or all of these claims, neither GND nor James Goodwin will be discharged in bankruptcy from any debt or liability arising from them.

Complexity of Claim [ 28 ] I noted earlier that the Court in Re Taylor Ventures Ltd. said that where a creditor alleges that a bankrupt committed fraud, investigating the claim is too complex a matter to be dealt with on a

summary basis and without a full hearing. I set out some of claims of fraud and wrongful behaviour that Bitmain relies on in the preceding paragraphs. It is clear that addressing them will involve a detailed examination of the relationship between Bitmain and GND and the people involved, especially James Goodwin. It will engage issues of credibility and reliability and require detailed findings of fact. A full hearing is the only process in which those concerns can be properly addressed. [ 29 ] I also note that Bitmain is an unsecured creditor of GND and that Bitmain is seeking unliquidated damages.

This is how Bitmain described the complexity of its claim in the memorandum it submitted in support of its Notice of Motion: 15. Bitmain’s claims against Goodwin and GND, as outlined in the Statements of Claim filed in both actions, will require determining a variety of complicated issues, including the amount and value of lost Bitcoin revenue associated with Bitmain’s inability to operate its equipment pursuant to the terms of its contract at GND’s facility and Bitmain’s entitlement to remedial constructive trust.

Necessary Parties [ 30 ] Stays of Bitmain’s claims against GND and James Goodwin took automatic effect when they filed their assignments in bankruptcy. Both are necessary parties to Bitmain’s claims. The statements of claim Bitmain issued against each defendant mirror each other and an examination of Bitmain’s Second Amended Statement of Claim against GND reveals how integral James Goodwin is to the claim. For example, in paragraph 23 of the Second Amended Statement of Claim, Bitmain alleges the following: 23.

Goodwin attached to the Termination e-mail a copy of the 29 October 2016 invoice for sale and indicated that this document stood as evidence that the Defendant [GND], through his (Goodwin’

s) representation, had had full legal ownership of the miners since 29 October 2016 and that the Defendant’s [GND’s] only obligation was to host them for the Plaintiff [Bitmain]. [ 31 ] In paragraph 27 of the same statement of claim, Bitmain alleges the following: 27.

Goodwin acknowledged that his attempt to assert ‘legal title’ to the Property had been a negotiation tactic and signed a written statement indicating that legal title had remained with the Plaintiff [Bitmain] at all times. (Underlining in original). [ 32 ] It is apparent from my earlier discussion of the several torts that Bitmain claims as well as its claim of constructive trust over the hardware and power supply units, that ownership of those units will be a critical consideration at trial.

Thus, it is necessary that GND and James Goodwin be parties to the proceedings as defendants so that those and related issues can be fully canvassed. Timing [ 33 ] The trial of Bitmain’s claims against GND and James Goodwin was originally scheduled for 25 days, to start on March 23, 2020. The trial date was set on November 29, 2018. The trial was stayed when GND and James Goodwin made assignments in bankruptcy on November 22, 2019 and December 9, 2019 respectively.

It is useful to examine how much Bitmain had achieved procedurally in preparing for trial: • Statement of Claim issued against GND on March 16, 2017; • Restraining Order granted on March 27, 2017, preventing GND from selling, dealing with or removing anything from its holding facilities, pending a further hearing; • Restraining Order remained indefinitely in place following hearing on March 30, 2017; • Statement of Claim first amended May 1, 2017;

• Statement of Claim amended again on June 14, 2018; • Statement of Claim issued against James Goodwin on May 30, 2017; • Attachment Order over all of GND’s facilities and their contents in Labrador City, NL issued on August 8, 2018; • Order consolidating the claims against GND and James Goodwin issued on October 12, 2018; • Certificates of Readiness for trial in the consolidated proceedings filed on November 29, 2018; • Trial date set on November 29, 2018, with the trial scheduled to begin on March 23, 2020; and • Litigation Preservation Notice served by Bitmain on PWC on December 3, 2019, re both actions. [ 34 ] Otherwise, I note what Bitmain said about “trial readiness” in paragraph 19 of its Memorandum in support of its Notice of Motion: 19.

Bitmain submits that the consolidated action against GND and Goodwin has progressed to the point where logic dictates that it must be permitted to proceed to trial. The GND matter was commenced nearly three years ago. Thousands of documents have been disclosed, over 10 days of discoveries have been conducted and both parties have made numerous court applications. Certificates of Readiness were filed in November 2018. Bitmain had already begun preparing for trial when GND and Goodwin both filed for bankruptcy.

Given the effort and expense required to get to this advanced stage of the proceedings, Bitmain submits that it would be materially prejudiced if the stay of proceedings is allowed to remain in place and prevent a full adjudication of its claim. The Trustee’s Response [ 35 ] PWC appears as the Respondent on Bitmain’s Notice of Motion. PWC filed a Memorandum of Fact and Law on the Motion on March 10, 2020 and appeared by counsel to address me on it at the hearing.

No other creditor responded to the Notice of Motion either in writing or by at the hearing; although, counsel for Waterford Capital Incorporated, one of the secured creditors, sat in and monitored the proceedings on behalf of his client. [ 36 ] In paragraph 13 of the Memorandum of Fact and Law that it filed on the Motion, PWC says it “takes no issue with the presence of factors (1) and (2) of the Advocated Mines Ltd. factors” although it denies that these factors “…alone do no constitute ‘ sound reasons, consistent with the scheme of the Bankruptcy and Insolvency Act ’ nor is Bitmain likely to be ‘materially prejudiced by the continued operation of [the stay]” (Italics in original). [ 37 ] It appeared from that statement that PWC acknowledged the validity of Bitmain’s motion and differed only over the onus a creditor has to meet to succeed in lifting a stay of proceedings. [ 38 ] More recently, however, PWC’s counsel sent this email to the Court: We write with respect to the above-noted matter.

We wish to advise the Court and parties of a clarification to our position on the stay-lift application, as articulated on July 7, 2020. Upon consultation with stakeholders in the matter, we clarify that if Bitmain satisfies the Court that it is entitled to have the stay lifted, our client [PWC] will not oppose the granting of that relief, and that should the stay be lifted, it should be lifted subject to the following conditions: * It is lifted with respect to Great North Data Ltd. ("GND") only for the limited purpose of allowing Bitmain to

schedule the trial in its claim against James Goodwin (provided that stay is also lifted); * That the action will not proceed as against GND; * That no findings will be made in respect of GND; and * That the Receiver/Trustee of GND is not required to participate in the trial. We will make a submission to this effect at the hearing on July 22, 2020 but wished to give advance notice to the Court and to the parties. [ 39 ] It appears to me from the preceding that PWC tacitly approves the merits of Bitmain’s request to lift the stay of proceedings, even though it is somewhat ambivalent on how it should be effected.

CONCLUSION [ 40 ] Overall, I am satisfied that Bitmain has shown by its Motion that it is likely to be materially prejudiced if the stay of proceedings against it in the GND action is not lifted and that it would be inequitable and unfair to continue it. It follows, for two reasons, that the stay of proceedings against James Goodwin in the claim Bitmain brought against him will also be lifted: First, that action was consolidated with the GND action under Rule 18.01 of the Rules of the Supreme Court, 1986 S.N.L. 1986, c. 42,

Schedule D , so that, as the Order of October 12, 2018 reads, in part, “…the proceedings…shall be heard together at the same time or one immediately after the other, and that the evidence in each proceeding…be considered the evidence in the other proceeding”; and otherwise, Bitmain’s Motion to lift the stay against James Goodwin has the same merit as its Motion to lift the stay against GND. COSTS [ 41 ] There is no reason to depart from the usual rule that costs follow the cause. I allow Bitmain its costs to be taxed under Column 3 of the Scale of Costs, to be apportioned equally between GND and James Goodwin, and paid on a priority basis, from their bankrupt estates.

SUMMARY AND DISPOSITION [ 42 ] Bitmain applied to lift automatic stays in a consolidated proceeding of two actions it brought against GND and James Goodwin. The stays took effect under

section 69.3 of the BIA when GND and Mr. Goodwin made assignments in bankruptcy. [ 43 ] The Court allowed Bitmain’s notice of motion, so that Bitmain may proceed with the trial of its claims against GND and Mr. Goodwin. It found that if Bitmain succeeded in its claims of fraud and wrongful conduct, the bankrupts would not be discharged from any debt or liability resulting; that the claims were too complex to be dealt with effectively on the

summary process for proving claims under section 135 (1.1) of the BIA ; that both GND and James Goodwin were necessary parties to the proceedings; and that the proceedings were so far advanced it would be unfair and prejudicial to Bitmain not to allow it to go to trial. ORDER [ 44 ] In the result, I order that:

Section 69.3 (1) of the Bankruptcy and Insolvency Act , RSC 1985, c. B-3 no longer operates and is deemed never to have operated, with respect to Bitmain Technologies Ltd. and its claim against Great North Data Ltd, arising from or related to Court matter number 2017 01G 2023, in the Supreme Court of Newfoundland and Labrador. 2.

The stay of proceedings provided for in paragraph 8 of the Court-appointed Receivership Order granted on February 25, 2020, appointing PricewaterhouseCoopers Inc. as Receiver of the assets and undertakings and property of Great North Data Ltd. no longer operates and is deemed to never have operated, with respect to Bitmain Technologies Ltd. and its claim against Great North Data Ltd. arising from or related to Court matter number 2017 01G 2023, in the Supreme Court of Newfoundland and Labrador.

Section 69.3 (1) of the Bankruptcy and Insolvency Act , RSC 1985, c. B-3 no longer operates and is deemed never to have operated, with respect to Bitmain Technologies Ltd. and its claim against James Goodwin, arising from or related to Court matter number 2017 01G 4015, in the Supreme Court of Newfoundland and Labrador. 4. Bitmain’s will have its costs of this Notice of Motion, to be taxed under Column 3 of the Scale of Costs, to be apportioned equally between GND and James Goodwin, and paid on a priority basis, from their bankrupt estates. _____________________________ Garrett A. Handrigan Justice