In Re Sino-Forest Corporation1, the Ontario Court of Appeal upheld the interpretation of “equity claims” employed by Justice Morawetz of the Ontario Superior Court of Justice (Commercial List).
This bulletin is a cross-country update presented by the national Restructuring & Insolvency Group. It discusses the key cases across the country involving debtor-inpossession (DIP) financing, court-ordered charges and other priority claims and disputes in recent Canadian insolvency proceedings.
Introduction
Today the Supreme Court of Canada (“SCC”) released a decision finding that the Province of Newfoundland and Labrador is not exempt from claims proceedings under the Companies’ Creditors Arrangement Act (“CCAA”) relating to unfulfilled remediation obligations of an insolvent company. Due to general financial stress, AbitibiBowater Inc. ended industrial operations in the Province and filed for insolvency protection.
After reserving judgment for more than a year, the Supreme Court of Canada (“SCC”) has released its decision in the matter of Her Majesty the Queen in Right of the Province of Newfoundland and Labrador v. AbitibiBowater Inc., et al [1].
On December 7, 2012, the Supreme Court of Canada issued its ruling in Newfoundland and Labrador v. AbitibiBowater Inc., 2012 SCC 67 and in so doing, closed an important chapter in the successful cross-border restructuring of AbitibiBowater Inc. - now Resolute Forest Products - under the Companies' Creditors Arrangement Act (the "CCAA") and Chapter 11 of the U.S. Bankruptcy Code.
Facts of the Case
In Newfoundland and Labrador v. AbitibiBowater Inc., 2012 SCC 67, the Supreme Court of Canada was called upon to consider whether orders issued by a regulatory body with respect to environmental remediation work are “provable claims” in a proceeding commenced under the Companies’ Creditors Arrangement Act, R.S.C. 1985, c.C-36 (the “CCAA”).
The Take-Away
Missing the limitations period for bringing a court action to recover a debt does not extinguish other legal rights and remedies in respect of that debt, such as bringing an application for bankruptcy or proving a claim in a bankruptcy estate.
The Case
A recent case illustrates the importance of clarity in the contractual arrangements associated with the disposition of a debtor’s assets. In the case, the Court appointed receiver was given Court approval for an auction services agreement. Under that agreement, the auctioneer was to conduct an auction sale of the debtor’s assets and was entitled to charge and collect a buyer’s premium equal to a minimum of 12% of the sales price.