Effective November 1, 2019, amendments to the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (the BIA) and the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36 (the CCAA) will, among other things, impose a requirement of good faith on all parties to proceedings (BIA and CCAA), impose an additional form of director liability (BIA), and limit the scope of relief on initial orders (CCAA).

On July 11, 2019, the Supreme Court of Canada (the SCC) granted leave to appeal from the Alberta Court of Appeal's decision in Capital Steel Inc v Chandos Construction Ltd, 2019 ABCA 32 [Chandos].

On August 27, 2019, Quebec's Court of Appeal overturned the Quebec Superior Court's decision to give post-filing claims priorities over secured creditors' claims, stating that section 11.01 of the CCAA does not give automatic priority to post-filing creditors.

Background

FT ENE Canada Inc. (“FECI”) was in the nanofibre business, and was a wholly owned subsidiary of Finetex ENE Inc. (“Finetex”). As a result of insolvency difficulties separate and apart from the Canadian business, Finetex was engaged in bankruptcy proceedings in Korea (its home jurisdiction). There was animosity between Finetex and the director of FECI.

In Canada v. Canada North Group Inc., 2019 ABCA 314, the Court of Appeal of Alberta (the “ABCA”) upheld the decision of the Court of Queen’s Bench of Alberta (the “Lower Court”), which held that the Companies’ Creditors Arrangement Act (the “CCAA”) permits courts to subordinate statutory deemed trusts in favour of the Crown to court-ordered insolvency priming charges.

On August 29, 2019, the Alberta Court of Appeal released its decision in Canada v. Canada North Group Inc. The majority – Justice P. Rowbotham and Justice F.

Introduction

On August 29, 2019, the majority of the Alberta Court of Appeal held in Canada v. Canada North Group Inc., 2019 ABCA 314 (Canada North) that priming charges granted in a Companies’ Creditors Arrangement Act (CCAA) Initial Order can have priority over the Crown’s deemed trust for unremitted source deductions. ^[1]

The ongoing priority dispute between deemed trusts created under federal “fiscal statutes” (being the Income Tax Act, the Canada Pension Plan Act and the Employment Insurance Act) and priming charges arising under restructuring and insolvency legislatio

On November 1, 2019, reforms to Canada’s Bankruptcy and Insolvency Act (BIA) and the Companies’ Creditors Arrangement Act (CCAA) that were announced in Canada’s federal 2019 budget will come into force. Key changes to the insolvency regime include:

On July 31, 2019, the Ontario Court of Appeal rendered its decision in Ridel v. Goldberg, clarifying the interplay of the various provisions of the Limitations Act, 2002 at play in circumstances where judgment creditors are allowed to take proceedings in their own name pursuant to an order under the Bankruptcy and Insolvency Act.

The Facts