Canada

Oilsands Quest Inc. filed for protection from creditors under Canadian law after an unidentified buyer backed out of an agreement to acquire some of its assets, Bloomberg Businessweek reported. The court granted protection under Canada’s Companies’ Creditors Arrangement Act until Dec. 21 to allow the company to reorganize its financial affairs while continuing operations, Calgary-based Oilsands Quest said in a statement.

Back in 2003, an investment in Calgary-based Birch Mountain Resources Ltd. seemed like a sure thing. The junior resource company was sitting on a massive limestone deposit in the middle of Alberta’s booming oil sands, where it used for roads and concrete. Despite its promise, by 2007 Birch Mountain had run into trouble as oil sands development slowed, The Globe and Mail reported. The company sought bridge financing (ultimately about $50-million, mostly in debentures that could be converted into shares) from subsidiaries of Brookfield Asset Management Inc.

The bankruptcy trustee for the Canadian arm of MF Global has filed a motion to move client accounts from the failed futures broker to a unit of Royal Bank of Canada, Reuters reported. MF Global fired all 1,066 of its brokerage employees on Friday, triggering anger and resentment about the firm's collapse after bad bets on European debt under former CEO Jon Corzine's leadership. KPMG said on Saturday it filed the motion with the Ontario Superior Court of Justice, seeking authority to transfer certain MF Global Canada Co customer accounts to RBC Dominion Securities Inc.

Fortress Energy Inc. said Friday it has won a challenge against a tax reassessment that would have left it on the hook for $24 million, CanadianBusiness.com reported on a Canadian Press story. The Calgary-based energy company filed a notice of objection to the Canada Revenue Agency, which said Fortress owed $18 million in federal taxes and $6.2 million in provincial taxes. On Friday, Fortress said the CRA had decided in its favour at the federal level, and that a similar decision should come soon at the provincial level.

A major creditor is panning Aviawest’s proposal to restructure its finances, saying the high-profile British Columbia resort owner’s properties are “hopelessly insolvent” and the company should be forced into receivership, The Globe and Mail reported. The British Columbia Investment Management Corp. is owed about $20-million from the resort owner as a secured creditor, but estimates the company has little-to-no prospect of generating enough money under any restructuring plan to begin servicing its many debts.

The Manitoba Securities Commission and eight of the 10 former directors of the failed Crocus Investment Fund have arrived at a settlement agreement six-and-a-half years after regulatory action began, The Vancouver Sun reported on a Winnipeg Free Press story. The MSC's allegations against the directors involved the execution of their responsibilities as directors in the months leading up to the dramatic devaluation of Crocus shares and its subsequent receivership.

Retailer Sterling Shoes Inc. is restructuring under court protection from creditors after the economic downturn brought an aggressive expansion plan to its knees, CanadianBusiness.com reported on a Canadian Press story. The company, which operates 158 stores under several banners in addition to the Sterling name, including Shoe Warehouse, Freedman, Joneve and Gia, plans to close stores and reduce its corporate overhead to get back on track.

Shares in Norway's troubled oil production equipment contractor Sevan Marine ASA traded 63% higher Friday after the company said it will sell three production, storage and offloading vessels to Canada's Teekay Corp. in a deal that will give the cash-strapped company long-term financing, Dow Jones Daily Bankruptcy Review reported. Teekay, a provider of marine services to the petroleum industry, will also subscribe to a new issue of Sevan Marine shares to gain a significant shareholding, Sevan Marine said, but declined to give further details.

A Nova Scotia judge has approved a plan to pay a portion of the debts owed to about 300 wood suppliers and silviculture operators while a buyer is sought for the shuttered NewPage Port Hawkesbury paper mill, CanadianBusiness.com reported on a Canadian Press story. The Supreme Court order would see the money come from the provincial government and a fund set up by NewPage, which closed its Point Tupper operation earlier this month. The government is eager to keep the woodland operators in business as the search for a possible buyer continues.

Scott's Real Estate Investment Trust says it supports a motion to transfer the court-supervised restructuring of Priszm Income Fund to the Bankruptcy and Insolvency Act, the Canadian Press reported. Canada's largest operator of KFC restaurants has been operating under the Companies' Creditors Arrangement Act since March but Priszm's secured creditors say the income trust can't be salvaged as a going concern.