UTI ENERGY CORP. Respondent (Plaintiff) - v. -, 1999 ABCA 178

Uti Energy Corp. v. Fracmaster Ltd., 1999 ABCA 178 Date: 19990609 Docket: 99-18326 99-18327 99-18331 99-18335 IN THE COURT OF APPEAL OF ALBERTA ____________________________________________________ THE COURT: THE HONOURABLE MADAM JUSTICE CONRAD THE HONOURABLE MR. JUSTICE O ’LEARY THE HONOURABLE MADAM JUSTICE FRUMAN ____________________________________________________ IN THE MATTER OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT R.S.C. 1985, c.C-36 AS AMENDED AND IN THE MATTER OF FRACMASTER LTD. BETWEEN: UTI ENERGY CORP. Respondent (Plaintiff) - and - FRACMASTER LTD. Respondent (Defendant) APPEAL FROM THE ENTIRE ORDER OF

THE HONOURABLE MADAM JUSTICE M.S. PAPERNY MADE MAY 17, 1999 AND ENTERED ON MAY 19, 1999 AND BETWEEN: ROYAL BANK OF CANADA, and ROYAL BANK OF CANADA, as agent for ROYAL BANK OF CANADA, CANADIAN IMPERIAL BANK OF COMMERCE, BANK OF NOVA SCOTIA, HONG KONG BANK OF CANADA, BANQUE NATIONALE DE PARIS (CANADA) and CREDIT SUISSE FIRST BOSTON CANADA Respondents (Plaintiffs) - and - FRACMASTER LTD. Respondent (Defendant) - and - UTI ENERGY CORP. Appellant APPEAL FROM THE ENTIRE ORDER OF THE HONOURABLE MADAM JUSTICE M.S. PAPERNY MADE MAY 21, 1999 AND ENTERED ON MAY 25, 1999 AND BETWEEN: THE JANUS CORPORATION Appellant (Plaintiff)

- and - FRACMASTER LTD. Respondent (Defendant) APPEAL FROM THE ENTIRE ORDER OF THE HONOURABLE MADAM JUSTICE M.S. PAPERNY MADE MAY 17, 1999 AND ENTERED ON MAY 19, 1999 AND BETWEEN: ROYAL BANK OF CANADA, and ROYAL BANK OF CANADA, as agent for ROYAL BANK OF CANADA, CANADIAN IMPERIAL BANK OF COMMERCE, BANK OF NOVA SCOTIA, HONG KONG BANK OF CANADA, BANQUE NATIONALE DE PARIS (CANADA) and CREDIT SUISSE FIRST BOSTON CANADA Respondents (Plaintiffs) - and - FRACMASTER LTD. Respondent (Defendant) - and - UTI ENERGY CORP. Appellant - and -

CALFRAC LIMITED Appellant APPEAL FROM THE ENTIRE ORDER OF THE HONOURABLE MADAM JUSTICE M.S. PAPERNY MADE MAY 21, 1999 AND ENTERED ON MAY 25, 1999 ____________________________________________________ MEMORANDUM OF JUDGMENT DELIVERED FROM THE BENCH ____________________________________________________ COUNSEL: H.A. Gorman For UTI Energy Corp. V.P. Lalonde For The Janus Corporation & Alfred H. Balm E.W. Halt L. Berner For Calfrac Limited T.J. Mallett A.D. Little For BJ Services Company B.P. O’Leary A.Z.A. Campbell For Arthur Andersen Inc. (The Receiver)

F.R. Dearlove For Royal Bank et al. (The Lending Syndicate) R. Dudelzak, Q.C. For Global Securities Ltd. W.E.B. Code For BNPI G.B. Davison For Fracmaster (For the Corporation) S.T. Fitzgerald For TD Asset Finance ____________________________________________________ MEMORANDUM OF JUDGMENT DELIVERED FROM THE BENCH ____________________________________________________ CONRAD, J.A. (For the Court): [ 1 ] The decision of the Court is unanimous and will be delivered by Madam Justice Fruman.

FRUMAN, J.A. (for the Court): [ 2 ] Fracmaster Ltd., an oil and gas services company with world-wide operations, encountered serious financial difficulties. With liabilities that greatly exceeded its assets, its inevitable insolvency gave rise to hurried attempts to restructure the company. A series of court proceedings and a court-authorized tender process, all conducted at break neck speed, resulted in a court order approving the sale of Fracmaster’s assets to BJ Services Company for $80 million.

That order, and the events which led up to it, are the subject of four appeals by prospective purchasers whose bids for Fracmaster were unsuccessful. [ 3 ] We make two preliminary observations. First, this is a court of review. It is not our task to reconsider the merits of the various offers and decide which proposal might be best. The decisions made by the chambers judge involve a good measure of discretion, and are owed considerable deference.

Whether or not we agree, we will only interfere if we conclude that she acted unreasonably, erred in principle or made a manifest error. [ 4 ] Our second observation is that events unfolded rapidly, with short time periods and offers arriving, literally, at the last

minute. Parties did not always have time to prepare and file affidavits. On occasion representations of fact were mixed with submissions of law made by counsel to the chambers judge. As a result, our record is not as complete as we might have wished. We imply no criticism. We understand Fracmaster’s serious financial jeopardy, the need for haste, and the accommodation by the parties and the court to conclude matters quickly.

However, the frailties of the record require that we give considerable deference to fact findings made by the chambers judge and further illustrate why leave is and should be required to appeal proceedings under the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36 (

section 13 ). I will refer to that statute as the “CCAA”. FACTS [ 5 ] Fracmaster is an Alberta company. Beginning in the fall of 1998, when its financial condition was precarious, it unsuccessfully attempted to restructure its financial affairs. With the indulgence of a lending syndicate to whom Fracmaster owed $96 million, and whose debt was registered as a first charge on its assets, it subsequently filed a petition under the CCAA. On March 18, 1999, Fracmaster was granted an order imposing a stay of proceedings and appointing Arthur Andersen Inc. as the monitor.

Fracmaster then conducted another sale process, in order to restructure the company, inject equity or sell its assets. The sale process was neither supervised nor controlled by the monitor. Several companies submitted offers or proposals, including UTI Energy Corp., Calfrac Limited and The Janus Corporation together with its principal, Alfred H. Balm. [ 6 ] When the matter returned to court in May of 1999 four applications were heard: First, Fracmaster applied for approval of the sale of its assets to UTI.

The members of the lending syndicate supported that application, in accordance with a contractual commitment they had made to UTI. Second, that same lending syndicate, as an alternative to Fracmaster’s application, applied to lift the stay, appoint Arthur Andersen as receiver, direct the receiver to approve the UTI sale and permit the lending syndicate to begin to realize on its security.

Third, Balm/Janus applied to continue the stay, adjourn the other applications, appoint an interim receiver and have the court direct the calling of meetings of secured creditors, unsecured creditors and shareholders, to consider the Balm/Janus plan of arrangement. Fourth, Calfrac applied for approval and acceptance of its proposal to purchase Fracmaster’s assets. [ 7 ] In reasons dated May 17, 1999, the chambers judge dismissed the Fracmaster, Balm/Janus and Calfrac applications.

She appointed Arthur Andersen as the receiver/manager on certain terms and conditions, including the power to sell the assets of Fracmaster subject to court approval. She denied the lending syndicate’s application to direct the receiver to sell the assets to UTI. Alive to concerns about delay, she asked the receiver to quickly report its recommendations about a sale of assets or other immediate action that the receiver considered appropriate for the benefit of all claimants, including the secured creditors (CCAA A.B. 333).

The May 17 order in the CCAA proceedings is the subject of appeals by Balm/Janus and UTI. [ 8 ] The next day, May 18, the receiver returned to court with a notice of motion seeking directions for approval of a sale process by way of sealed bids. The process was designed to respond to the principles and objectives established by the chambers judge for a sale of assets. As there had been no independent valuations, the proposed tender process would test the market to determine whether offers were available in excess of the amount of the lending syndicate’s secured debt.

The process was also designed to maximize the value to the creditors; respond to concerns about delay and the need for finality; provide a process for the benefit of all creditors; and be fundamentally fair by establishing a level playing field for all participants. [ 9 ] The proposal was not greeted with unanimous approval by the prospective purchasers, and its terms were the subject of heated debate in court. At the conclusion of the May 18 proceedings, the chambers judge ordered a tender process.

The order set out the terms and conditions of offers that would be considered, with final offers to be submitted by 2:00 p.m. on May 20, 1999, by way of sealed bids. The receiver would advise the interested parties of its recommendation by 8:00 p.m. on May 20, and make its recommendation to the court at 10:00 a.m. on May 21. The tender process established in the May 18 order has not been appealed.

[ 10 ] Offers were submitted by UTI, Calfrac and BJ Services, a company which had previously shown interest in acquiring Fracmaster, but had not participated in the CCAA company-conducted sale process. Balm/Janus did not submit an offer. The lending syndicate continued to support the UTI offer, in accordance with a contractual commitment its members had made to UTI. The receiver recommended acceptance of the BJ Services offer, for a number of reasons, including the fact that it provided the highest cash purchase price, exceeding the Calfrac offer by $13 million and the UTI offer by $19.3 million.

The chambers judge, in reasons dated May 21, 1999, approved the BJ Services offer recommended by the receiver. UTI and Calfrac appeal that decision. THE CCAA APPEALS [ 11 ] Balm/Janus appeal the chambers judge’s decision in the CCAA proceedings, declining to order a meeting of creditors and shareholders of Fracmaster to consider and implement Balm/Janus’ proposed plan of arrangement.

The appeal is supported by certain shareholders of Fracmaster and by Banque Nationale de Paris, a subordinated lender. [ 12 ] The chambers judge acknowledged that the restructuring proposed by Balm/Janus was a true plan which fit within the CCAA, leaving an after-life for Fracmaster and its shareholders. However, she noted the commercial reality that there was no equity left in Fracmaster, and that the lending syndicate had the only realistic remaining financial interest (CCAA A.B. 329-330).

Under the terms of the CCAA and the Balm/Janus proposal, the plan would require the approval of the lending syndicate, which had indicated that it would not support the proposal. The chambers judge found as a fact that the lending syndicate had valid commercial reasons for its refusal (CCAA A.B. 331). She decided that it would be pointless to order meetings of creditors and shareholders and dismissed the Balm/Janus application. [ 13 ] There is no requirement under the CCAA that all proposed plans of arrangement be put to meetings of creditors and shareholders for their consideration.

Sections 4 and 5 specifically employ the word “may”, giving the court discretion. In exercising its discretion, the court must consider whether the proposed plan of arrangement has a reasonable chance of success: Bargain Harold’s Discount Ltd. v. Paribas Bank of Canada (1992), 1992 CanLII 7611 (ON SC) , 10 C.B.R. (3d) 23 (Ont. Gen. Div.), or instead, is doomed to failure: Re Inducon Development Corp. (1991), 8 C.B.R. (3d) 306 (Ont. Gen. Div.) . Here it was clear that the lending syndicate did not support the plan. They would be entitled to vote as a class at the meeting and defeat the plan.

It was also clear that the Fracmaster situation was urgent, requiring rapid resolution, and that the delays that would be occasioned by calling the meetings would further jeopardize Fracmaster’s financial condition and the value of its assets. The chambers judge did not err in concluding that the Balm/Janus plan was doomed to failure. We grant leave to appeal to Balm/Janus, but dismiss their appeal. [ 14 ] We wish to make a further observation. Under the CCAA the court has no discretion to sanction a plan unless it has been approved by a vote of a 2/3 majority in value of each class of creditors (section 6).

To that extent, each class of creditors has a veto. This procedure is quite different from a court-appointed receivership. In a receivership the desires of the creditors are a significant factor, but the approval by a specific majority of creditors is not a pre-condition to court sanction, and creditors do not have an absolute veto. The difference in the procedures gives rise to different tests and considerations to be applied in each type of proceeding.

While in this case the lending syndicate’s desires in the CCAA and receivership proceedings were consistent, the chambers judge was not required to give the same weight to their wishes in each proceeding. [ 15 ] UTI also appeals the May 17, 1999 order denying Fracmaster’s application to approve the sale of its assets to UTI under the CCAA. The chambers judge noted that the proposed sale of assets to UTI did not create any monetary return for the unsecured creditors or shareholders of Fracmaster, nor did it contemplate that they would receive any benefit.

The transaction was effectively a sale of assets for the benefit of the lending syndicate, a transaction which she concluded could be accomplished in a manner that did not require the use of the CCAA (CCAA A.B. 331-332).

Without deciding whether the UTI offer was commercially provident, she concluded that the sale should not be approved under the CCAA, and dismissed Fracmaster’s application. [ 16 ] Although there are infrequent situations in which a liquidation of a company’s assets has been concluded under the CCAA, the proposed transaction must be in the best interest of the creditors generally: Re Lehndorff General Partner Ltd. (1993), 17 CBR (3d) 24 at 31 (Ont. Gen. Div.) . There must be an ongoing business entity that will survive the asset sale.

See, for example, Re Canadian Red Cross Society , 1998 CanLII 14907 (ON SC) , [1998] O.J. No. 3306 (Ont. Gen. Div.), online: QL (OJ); Re Solv-Ex Corporation and Solv-Ex Canada Limited , (19 November, 1997), (Calgary), 9701-10022 (Alta. Q.B.). A sale of all or substantially all the assets of a company to an entirely different entity, with no continued involvement by former creditors and shareholders, does not meet this requirement.

While we do not intend to limit the flexibility of the CCAA, we are concerned about its use to liquidate assets of insolvent companies which are not part of a plan or compromise among creditors and shareholders, resulting in some continuation of a company as a going concern. Generally, such liquidations are inconsistent with the intent of the CCAA and should not be carried out under its protective umbrella. The chambers judge did not err in concluding that the sale of assets to UTI would be an inappropriate use of the CCAA. We grant leave to appeal to UTI, but dismiss its appeal.

RECEIVERSHIP APPEALS [ 17 ] Calfrac appeals the May 21 order which approved the sale of Fracmaster’s assets to BJ Services. Its primary complaint is that the receiver failed to administer the sale process in strict compliance with the May 18 court ordered procedure. Calfrac’s complaints about the process were considered by the chambers judge, and dealt with in her May 21 reasons (Receivership A.B. 119 to 122). She concluded that the terms of the May 18 order had to be read in light of the commercial realities of the business world and the bidding process.

She viewed the variations as minor and not problematic and decided that the BJ Services offer was in substantially the same form as the offer proposed by the receiver. [ 18 ] A review of Calfrac’s offer indicates that it too was not in strict complaince with the terms of the May 18 order. This is not entirely unexpected as the order, tender process and submission of offers came about quickly, without time to contemplate all the intricacies of fine legal drafting. Amendments to the form of agreement were contemplated in paragraph 4. c of the May 18 order. The other paragraphs of

section 4, setting out other terms and conditions, did not specifically mention amendments. [ 19 ] The tender process in this case was not a distinct and final process designed to provide a complete set of bid documents to the bidders, with no possibility of negotiation or variation, as might be the case in a construction bid. See, for example, M.J.B. Enterprises Ltd. v. Defence Construction

(1951) Ltd. , 1999 CanLII 677 (SCC) , [1999] S.C.J. No. 17 (S.C.C.), online: QL (SCJ). Time did not permit the creation of such definitive conditions. Instead the process was designed to be court supervised. The amendment provisions contained in paragraph 4. c illustrate the intent to build flexibility into the process, rather than requiring strict compliance with the order. All parties were entitled to be present and make representations at the court proceedings to approve an offer, with the court to have ultimate discretion to determine whether the principles and objectives of the sale process had been met.

The chambers judge did not act unreasonably in considering the commercial realities and the nature of the variations, and in accepting the form of BJ Services offer. This ground of appeal fails. [ 20 ] A second ground of appeal advanced by both Calfrac and UTI, is that the receiver and the chambers judge failed to properly consider the closing risks associated with the BJ Services offer.

The chambers judge considered the closing risks in her reasons (Receivership A.B. 112 to 113) and accepted the receiver’s conclusion that the closing risks associated with the BJ Services offer were more than the Calfrac offer, no greater than the UTI offer, and more than offset by the BJ Services purchase price. [ 21 ] Calfrac is critical of the

summary manner in which the receiver communicated its risk assessment, and the lack of detail to back up its analysis. The receiver had 6 hours in which to analyze the offers and indicate its recommendation to the parties. The expedited procedure was set out in the May 18 order which has not been appealed. With the benefit of more time, the receiver undoubtedly would have proffered a more detailed analysis. But one cannot be overly critical of the receiver’s work product, given the time constraints. [ 22 ] Both UTI and Calfrac contend that the chambers judge erred in her assessment of the closing risks.

UTI suggests that she erred in concluding that the closing risks of the BJ Services offer were no greater than the UTI offer. Even if that were so, the chambers judge also concluded that the BJ Services closing risks were more than offset by the greater purchase price. If that was the case for the Calfrac offer, which involved fewer closing risks and a higher purchase price than the UTI offer, it would certainly be the case for the UTI offer, which involved greater closing risks and the lowest purchase price. We are not satisfied that the chambers judge’s conclusions on risks were unreasonable.

We defer to her findings and dismiss this ground of appeal. THE LENDING SYNDICATE’S WISHES [ 23 ] UTI’s principal ground of appeal is that the chambers judge erred in acting upon the receiver’s recommendation and approving the sale of Fracmaster’s assets to BJ Services. UTI submits that the prevailing consideration for the receiver should have been the wishes and business decision of the lending syndicate, which supported the UTI offer.

UTI’s appeal is supported by the lending syndicate and, if the Balm/Janus appeal does not succeed, by Banque Nationale de Paris, the subordinated lender. [ 24 ] The facts in this case are unique. After the preliminary stay and CCAA order, Fracmaster conducted a company supervised sale process, which resulted in offers or proposals from several companies, including Balm/Janus, Calfrac and UTI. The lending syndicate considered the proposals, preferred the UTI offer and contractually agreed to support it. An acknowledgment to the April 26

UTI offer, signed by the lending syndicate, stated: “The above Offer is hereby acknowledged by each of the undersigned and each of them agree to support the Offer at the CCAA Proceedings.” [ 25 ] On April 27, 1999 the lending syndicate signed a side letter which contemplated that the sale of assets might not be completed under the CCAA, but under an alternate transaction, such as the appointment of a receiver and conveyance of assets by the receiver to UTI.

The letter stated: “It is agreed that the Term Lenders and the Operating Lender will use their reasonable best efforts to conclude any such alternate transaction so long as they receive the same consideration as they would have received under the Offer.” [ 26 ] Fracmaster applied for an order approving the sale of its assets to UTI under the provisions of the CCAA. Although the lending syndicate supported that application, in the same proceeding the lending syndicate applied for an alternate order appointing a receiver and directing the receiver to sell the assets to UTI.

The chambers judge dismissed Fracmaster’s application under the CCAA. She appointed a receiver but refused to direct the receiver to transfer the assets to UTI, concluding that this would fetter the receiver’s discretion and largely defeat the purposes of its appointment (CCAA A.B. 333). Although the chambers judge noted that the receiver could have recommended a sale to UTI if it felt comfortable doing so, the receiver instead recommended a new sale process, involving sealed tenders. Both UTI and Calfrac participated in the sealed tender process, repeating their earlier offers.

BJ Services, which had not made an offer in the CCAA proceedings, put in a new bid. It offered cash consideration to the lending syndicate of $80 million for Fracmaster’s assets, compared to $60.7 million plus warrants offered by UTI and $66 million plus warrants offered by Calfrac.

The lending syndicate, which had agreed to support the UTI offer before the BJ Services offer was made, stuck by their commitment and continued to support the UTI offer. [ 27 ] In accordance with the May 18 order, the receiver was required to make a recommendation to the court, bearing in mind the interests of all claimants, including the secured creditors. The bid process confirmed that the lending syndicate had the only remaining financial stake in the company. The amount of its secured debt was $96 million, which exceeded the bids.

The receiver was aware that the lending syndicate supported UTI’s offer, and was also aware of the letter agreement. Nevertheless, the receiver concluded that the BJ Services offer was the best offer, and recommended its acceptance. [ 28 ] The chambers judge followed that recommendation and approved the BJ Services offer. There is no suggestion that the BJ Services offer was prejudicial to the lending syndicate. The chambers judge considered the case law and concluded that although the creditors’ interests were an important consideration, they were not the only consideration (Receivership A.B. 117).

Accepting the principle that the creditors’ views should be very seriously considered, she indicated that if she were satisfied that the receiver acted properly and providently, she would be reluctant to withhold approval of a transaction recommended by the receiver. (Receivership A.B. 118) [ 29 ] UTI concedes that had the bid process resulted in a bid which exceeded the lending syndicate’s secured claim of $96 million, parties other than the lending syndicate would have had a financial interest in the outcome, and different considerations would apply.

Because none of the bids exceeded $96 million, only the lending syndicate had a financial interest in the proceeds of sale of assets. UTI submits that the lending syndicate made a bargain with UTI, and that bargain should be the paramount consideration. The thrust of UTI’s argument is that its offer should be accepted so long as no one else offered more than $96 million. In effect, it would have a reserve bid. [ 30 ] The narrow issue raised in the appeal is the weight to be given to the lending syndicate’s wishes to accept the UTI offer.

But this appeal raises a competing issue, the integrity of the bid process. [ 31 ] Lenders have the ability to appoint private receivers and deal with assets without court approval. In the circumstances of this case, where Fracmaster has many offshore assets, we are told that a private receivership without court involvement would not be expedient. Once a creditor embarks upon a court appointed receivership, the creditor loses an element of control, including the power to dictate the terms of the disposition of assets.

Although the lending syndicate’s preferences are an important factor to be considered by the court, its preferences do not fetter the court’s discretion and are not necessarily determinative. [ 32 ] The receiver’s role in a liquidation of assets is clear and well defined. Its obligation is to make a sufficient effort to obtain the highest possible sale price for the assets: Salima Investments Ltd. v. Bank of Montreal (1985), 1985 ABCA 191 (CanLII) , 21 D.L.R. (4 th ) 473 at 476 (Alta. C.A.). In Royal Bank of Canada v. Soundair Corp. (1991), 1991 CanLII 2727 (ON CA) , 83 D.L.R. (4 th ) 76 at 93 (Ont.

C.A.), Galligan J.A. set out the principles which govern the function of the court and the exercise of its discretion when considering an application by a receiver for court approval of a sale:

1. It should consider whether the receiver has made a sufficient effort to get the best price and has not acted improvidently. 2. It should consider the interests of all parties. 3. It should consider the efficacy and integrity of the process by which offers have been obtained. 4. It should consider whether there has been unfairness in the working out of the process.

The chambers judge considered each of these principles in turn, then accepted the receiver’s recommendation. [ 33 ] Only in rare cases will the receiver’s recommendation diverge from the wishes of the only stakeholder, and those cases must be carefully scrutinized by a judge who is asked to approve that recommendation.

But we cannot say that the chambers judge acted unreasonably by following the recommendation of the receiver in this case, because of the unique facts and manner in which events unfolded. [ 34 ] After the court learned of the existence of the lending syndicate’s contractual commitment to support the UTI offer in a receivership, it nevertheless ordered a sealed tender process. The receiver asked for the sale process in order to determine whether offers might be made which would exceed the amount of the lending syndicate’s debt.

The receiver also submitted that only a sale process would satisfy the court that it had fulfilled its mandate to maximize recovery and “give everyone a fair and reasonable attempt at bidding on the assets of the company” (Receivership A.B. 56). Once the sale process was engaged, it had to be fundamentally fair, with a level playing field for all participants. [ 35 ] The receiver contacted all parties who had previously made an offer for Fracmaster’s assets or expressed an interest in making an offer. The receiver also issued a press release outlining the terms of the sale.

It was therefore clearly contemplated that the bidding process would not be confined to previous bidders. [ 36 ] Some reference to a reserve bid could have been incorporated into the May 18 order indicating, for example, that UTI’s offer was to be accepted unless a bid exceeded $96 million. The order was silent. Under the order, UTI was not required to repeat its earlier offer and could have changed the consideration. In fact, it could have made no offer at all.

Anyone entering the bidding process might well know, as BJ Services did, that the lending syndicate supported UTI’s offer and that this could create some impediments. But they could not know that UTI’s offer would have the effect of a reserve bid up to $96 million. To default to the UTI bid without prior notice to the other bidders would undermine the integrity of the independent bidding process. [ 37 ] UTI chose to resubmit its earlier offer, but must have been mindful of the risks. Clause 6. (

b) of UTI’s offer specifically stated that the offer was conditional on court approval. [ 38 ] While neither the receiver nor the court had an obligation to sweeten the lending syndicate’s negotiated deal, the fact that the effect of the recommended bid was to increase the lending syndicate’s cash consideration was not itself a reason to dismiss the receiver’s recommendation. Once the court embarked upon a sealed tender process other interests were engaged. The chambers judge considered the interests and desires of the lending syndicate.

She also considered the other factors set out in Soundair , including fairness and the efficacy and integrity of the process. She balanced the competing interests, as she was required to do, and we cannot say that her conclusion was unreasonable or that she erred in principle. This ground of appeal fails.

SUMMARY [ 39 ] We grant leave to appeal the CCAA orders to Balm/Janus and UTI. The Balm/Janus appeal, Calfrac appeal and two appeals by UTI are dismissed.

(DISCUSSION AS TO COSTS) CONRAD, J.A. (For the Court): [ 40 ] We have concluded that there is no reason to depart from the normal rule that costs follow the success of the appeal. Accordingly, we will order one set of costs to BJ Services to be payable in equal amounts by UTI, Calfrac and Balm/Janus. The costs are to be assessed on Column 5. APPEAL HEARD on June 4 th and 7 th , 1999 MEMORANDUM FILED at Calgary , Alberta, this 9 th day of June , 1999 ___________________________________ FRUMAN, J.A.