Legal Blog

Forbearance

Royal Bank of Canada v. Everest Group Inc.  2018 Ont SCJ

Franchisee took out a small business financing loan and other indebtedness to the bank in order to finance its new franchised restaurant. The restaurant was not successful. The franchisee claimed rescission under the Arthur Wishart Act and damages in the millions for improper disclosure. The franchisor terminated the franchise and took control of the restaurant. The bank claimed that this, and the franchisee’s non-payment of the loan payments, were events of default entitling the bank to demand payment of the loans. The bank commenced an action and obtained summary judgment for $535,000. The judge noted that “I admire the audacity and originality of” the franchisee, but held that the bank did not have to forbear from collecting its debt on the hope that the franchisee would be successful in its action against the franchisor.

Written by Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.