On October 30, 2009, the Supreme Court of Canada released its long-anticipated decision in Quebec (Revenue) v. Caisse populaire Desjardins de Montmagny. At issue in this case (and two companion cases) was the legal characterization of Crown rights with respect to collected but unremitted GST and Quebec sales tax (QST) in the hands of a trustee in bankruptcy. The Supreme Court confirmed that the Crown is an ordinary unsecured creditor with respect to such amounts, subject to the rights of prior ranking security holders.

Summary of Facts

On October 30, 2009, the Supreme Court of Canada issued its much awaited decision regarding Revenue Quebec's creative "owenership" claim over the tax portions of a bankrupt's accounts recievable.

The Ontario Court of Appeal released its decision in Hydro One Inc. v. Ontario (Financial Services Commission) on January 11, 2010. This was an appeal from the Ontario Divisional Court – see our Labour & Employment in the News dated April 18, 2008, that reported on the Divisional Court’s decision. The court dismissed the appeal, in favour of members of the Hydro One Pension Plan (the “Plan”).

introduction

This document provides a brief overview of insolvency proceedings in Canada. It outlines the Canadian legislative framework and briefly describes the receivership process, the bankruptcy regime and the formal restructuring alternatives available to debtors.

legislative framework

At long last, amendments to the Bankruptcy and Insolvency Act (BIA) and theCompanies’ Creditors Arrangement Act (CCAA) have come into force, providing licensees of intellectual property (IP) with some additional level of protection.

Amendments to the Bankruptcy and Insolvency Act (BIA) and the Companies’ Creditors Arrangement Act (CCAA) have recently come into force that purportedly protect licensees of intellectual property (IP) if their licensors become insolvent or bankrupt. There are, however, a number of uncertainties surrounding the scope of protection afforded by these amendments. Until these uncertainties are resolved, licensees may wish to consider augmenting their statutory rights by contractual and other legal mechanisms. A Bankruptcy Remote Entity (BRE) is one potential mechanism.

The Federal Government has announced that September 18, 2009 has been established as the coming-into-force date for most of the remaining unproclaimed amendments to the Bankruptcy and Insolvency Act (BIA) and Companies’ Creditors Arrangement Act (CCAA).

The Alberta Court of Appeal recently released its decision with respect to the appeal of Brookfield Bridge Lending Fund Inc. v. Vanquish Oil and Gas Corporation and has rekindled discussion as to the risks associated with an Operator’s right to commingle his own general funds with trust funds held for the benefit of Joint Operators.

Facts

On September 18, 2009, a number of amendments to Canada's Bankruptcy and Insolvency Act (BIA) and Companies Creditors Arrangement Act (CCAA) came into force. The amendments were passed in 2005 and 2007 but, aside from a few provisions that became effective in July 2008, the amendments sat dormant, awaiting proclamation into force. Pursuant to Order in Council P.C. 2009-1207, almost all of these amendments have now been brought into force. Some of these provisions will be of interest to participants in the securitization market.

On September 17, 2009 our firm published a summary of recent amendments (the "Amendments") to Canada’s Bankruptcy and Insolvency Act ("BIA") and Companies’ Creditors Arrangement Act ("CCAA"). This summary provided a detailed review of the significant legislative changes that were brought into force on September 18, 2009.