We were approached by a company to assist with its restructuring. Our client’s biggest problem was that its largest unsecured creditor was also its main supplier. Approximately 80% of the client’s business depended on the products supplied by this supplier. This would not be a problem if the client and the supplier had an ongoing agreement to continue to supply, but there was no such agreement. The supplier could cut our client off at any time and had no legal obligation to continue to accept our client’s business.

On November 20, 2021, long-awaited amendments to the Wage Earner Protection Program (“WEPP”) came into force. The amendments are a welcome change to WEPP and will close some of the remaining gaps in the program designed to protect some of the most vulnerable stakeholders in an insolvency proceeding – employees.

The Wage Earner Protection Program

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What is a tenant or landlord to do if the tenant can no longer afford the premises they have leased?

On November 1, 2019, several amendments to the Bankruptcy and Insolvency Act (the BIA) and the Companies Creditors’ Arrangement Act (the CCAA) will take effect. Previously, our colleagues reported on the amendments codifying and clarifying IP rights during an insolvency proceeding and granting broader protection to IP licence-holders introduced in Bill C-86.

The Ontario Superior Court of Justice recently reviewed the indicia of a sham trust in McGoey (Re).

Gerald McGoey, an undischarged bankrupt, and his wife, Kathryn McGoey, claimed to be holding two properties in trust for their children. The Trustee in Bankruptcy brought a motion to have the properties declared assets of the Estate of Gerald McGoey, subject to realization for the benefit of his creditors.

Often, when the parties to a financing are discussing priorities or intercreditor arrangements, there tends to be a simplistic view taken of these agreements. Once the competing creditors have sorted out their respective priorities over the various pools or types of collateral, they tend to think that the terms of the agreement are essentially settled and simply need to be put into writing.

In its recent decision in Walchuk v Houghton, 2016 ONCA 643, the Court of Appeal for Ontario clarified the interaction between the stay provisions of the Bankruptcy and Insolvency Act (BIA) and motions for contempt of court orders.

THE AUTOMATIC STAY PROVISIONS OF THE BIA

The BIA stays proceedings against a debtor when the debtor files a notice of intention to file a proposal (s. 69) or upon the debtor's bankruptcy (s. 69.3).

2011 ONCA 535 (Released July 28, 2007)

Landlord and tenant – Repudiation of Lease – Companies' Creditors Arrangement Act Proceedings

In June 2011, EDS Canada Corp. ("EDS") subleased premises to NexInnovations ("Nex"). On October 2, 2007, Nex obtained creditor protection under the CCAA (the "Initial Order"). The Initial Order gave Nex the right to "vacate, abandon or quit any leased premises and/or terminate or repudiate any lease…"

2001 ONCA 265 (Released 7 April, 2011)

Companies’ Creditors Arrangement Act – Pensions – Priorities – Fiduciary Obligations – Funding Pension Plans

2011 ONCA 160 (Released March 2, 2011)

Trustee – Constructive Trust – Fraud – Bankruptcy

In this case, the Court of Appeal for Ontario explained the conditions under which a constructive trust remedy can be granted in favour of defrauded creditors after the fraudster enters into bankruptcy proceedings.