The Supreme Court of Canada said that Finance Minister Jim Flaherty's proposal to create a national securities regulator is unconstitutional, arguing that the federal government overstepped its authority into provincial jurisdiction, Bloomberg News reported on Friday. The nine members of the country’s highest court said in its unanimous opinion that the federal government’s proposal "overreaches genuine national concerns." Canada is the only industrialized country in the world without a national securities regulator.

Sino-Forest Corp., already reeling from fraud allegations, has been slapped with default notices from debt holders, a setback that could mark the beginning of the end for what was once Canada’s largest publicly traded forestry company, The Globe and Mail reported. Sino-Forest management, including its Canadian chief executive officer Judson Martin, are now pleading with debt holders not to tip the company into insolvency. The TSX-listed Chinese timber firm had less than $600-million (U.S.) in cash in early November and more than $1.8-billion in debt. Mr.

Sino-Forest Corp.'s second-largest shareholder has joined calls for the Canadian-Chinese timber company to make interest payments on outstanding debt, signalling a battle could be brewing between equity and bondholders over the firm's assets, Dow Jones Daily Bankruptcy Review reported. Davis Advisors, which owns about 17% of Sino-Forest, urged the company to reconsider its decision against making an almost $10 million interest payment that was due Thursday on some of its convertible bonds, given Sino-Forest maintains it's a going concern with real assets.

The Supreme Court of Canada will weigh into the high-stakes debate about whether pension plan members have a claim on an insolvent company’s assets to cover shortfalls in their plan, The Globe and Mail reported. The court announced Thursday it has agreed to hear an appeal of a landmark Ontario court ruling that reversed the traditional pecking order for distributing corporate assets when a company goes bankrupt. The April decision by the Ontario Court of Appeal concluded former employees of aluminum processor Indalex Ltd.

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.