Canada

Bankruptcies in Canada soared by over 50 per cent in March from a year ago as the rising unemployment rate left more consumers unable to pay their bills, the Toronto Star reported. At the same time, business bankruptcies declined during the month, according to figures released yesterday by the Office of the Superintendent of Bankruptcy Canada. There were 10,578 personal bankruptcies across the country in March, up 17.3 per cent from the month before, and up a staggering 57 per cent from March 2008. The biggest year-over-year increases came from the western provinces.

A superior court judge in Quebec has approved a further $100 million in debtor-in-possession financing for North America's largest newsprint producer, AbitibiBowater Inc., as it navigates joint bankruptcy proceedings in Canada and the U.S., Bankruptcy Law360 reported. The order, which was approved by a judge in Quebec Superior Court on Wednesday, will allow AbitibiBowater to enter a loan agreement with Canada's Bank of Montreal, the company announced. Investissement Quebec, the province's investment agency, will guarantee the $100 million loan, according to AbitibiBowater.

The leader of GM Canada's largest union says a filing by the car maker for court protection from creditors is likely, The Globe and Mail reported. The federal and Ontario governments have ordered the Canadian Auto Workers and General Motors of Canada Ltd. to slash hourly labour costs by May 15. CAW president Ken Lewenza says the company faces liquidation if a cost-saving agreement is not reached. “This is an unbelievable situation,” says Mr. Lewenza, who believes the car maker may have to file for Chapter 11 and CCAA creditor protection.

Tough conditions imposed by the Quebec government as part of its $100 million (U.S.) loan guarantee to insolvent AbitibiBowater Inc. are threatening to derail the company's financial restructuring, The Globe and Mail reported. Mr. Justice Clément Gascon of Quebec Superior Court is expected to issue a ruling today on the loan, which the company insists is crucial to its survival as it restructures under the protection of the Companies Creditors' Arrangement Act in Canada and Chapter 11 laws in the United States.

Struggling General Motors of Canada Ltd. has finally received about $500 million in short-term loans from the federal and Ontario governments to help keep the company alive, the Toronto Star reported. The auto company and two governments confirmed yesterday they had signed an agreement for the public loans from Export Development Canada, the federal agency that provides such funding.

Hundreds of unionized employees at AbitibiBowater will likely soon be able to take long-planned early retirements after a Quebec judge ruled illegal the company’s unilateral plan to amend their labour contracts, The Canadian Press reported. Justice Clement Gascon said the insolvent forestry company couldn’t prevent eligible workers from exercising their right to retirement. "None of the arguments (by AbitibiBowater) justify the illegality of the gestures it made," Gascon said Monday in a scathing verbal ruling.

Chrysler may not be filing for bankruptcy in Canada, but that doesn't mean there's a dearth of work for lawyers up north, The AmLaw Daily reported. Five Canadian firms have lined up to navigate various parties through the thicket of legal issues emanating from Chrysler's Chapter 11 filing. Canada's largest law firm, McCarthy Tétrault, is fielding a 16-lawyer team on behalf of Chrysler Canada. The firm has helped Chrysler Canada overcome a pricing tax dispute that threatened to scuttle the company's alliance with Italian automaker Fiat.

Canada's government will take an ownership stake in troubled automaker Chrysler in exchange for more than $2 billion in loans, under a sweeping North American rescue plan, government officials said on Thursday. Chrysler filed for Chapter 11 bankruptcy protection in the United States earlier in the day and also entered into an alliance with Italian automaker Fiat SpA. Ottawa and Washington demanded the Detroit company partner with Fiat by Thursday as a condition for funding.

Canada's Industry Minister said Thursday it would take at least three years to stabilize Chrysler LLC, which has filed for bankruptcy, Dow Jones Newswires reported. The federal and Ontario government will extend US$2.42 billion of financing to Chrysler and have a 2% stake in the overhauled company under the restructuring plan approved by the U.S. and Canadian governments. They can divest the stake after three years.

Although Chrysler Canada has no plans to follow the lead of its parent company and file for bankruptcy protection, the head of the Canadian Auto Workers says its plants will be forced to close until the company's U.S. court-supervised restructuring is complete, The Canadian Press reported. Chrysler LLC said Thursday it will temporarily stop most of its vehicle production until it has completed a technology-sharing alliance with Fiat--a cornerstone of its restructuring plan. The shutdown is effective Monday and could last between 30 and 60 days.