Canada

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.

Chrysler LLC is expected to file for bankruptcy protection in the United States by the end of the week and the Canadian and Ontario governments will jump in to help backstop the company with financing that will enable it to keep making and selling cars while it restructures, sources said. The bankruptcy filing is expected even though a deal by Fiat SpA to create a strategic alliance with the No.

Nortel Networks Corp., the insolvent telephone-gear maker, won an extra three months to work out a plan that will allow the company to emerge from bankruptcy, Bloomberg reported. Ontario Superior Court Judge Geoffrey Morawetz today agreed to extend the order, which was due to expire May 1, to July 30, following a hearing in Toronto. The order protects the Toronto- based company from creditor demands and lawsuits. Nortel filed for bankruptcy in January in the U.S. and Canada after losing almost $7 billion since 2005.

Nortel Networks Corp. needs its protection from bankruptcy extended to July 30, says the court-appointed monitor in the telecom equipment maker's Canadian insolvency proceedings. The current extension of Nortel's stay under the Companies' Creditors Arrangement Act ends May 1, and Nortel is seeking a further 90-day period of shelter from creditors, The Canadian Press reported.