When a Ponzi scheme collapses, as with musical chairs, there will be some investors with a place to sit, while others are bereft of such comfort.
Financiers and lenders to Canadian companies have become increasingly concerned about potential priorities of pension claims in Canada over the past year following the 1 February 2013 decision of the Supreme Court of Canada (SCC) in the Indalex case (Sun Indalex Finance, LLC v. United Steelworkers, 2013 SCC 6). Much of this concern may have been caused by conjecture as to how the SCC's decision would be applied in future insolvency proceedings, rather than the relatively narrow issue that was actually before the SCC in Indalex.
Today, the Supreme Court of Canada denied a group of investors leave to appeal the approval of a settlement releasing Ernst & Young LLP from any claims arising from its auditing of Sino-Forest Corporation. The settlement is part of Sino-Forest’s Plan of Compromise and Reorganization following a bankruptcy triggered by allegations of corporate fraud.
The Settlement
Norton Rose Fulbright’s Employment and Labour Team in Montréal raised a preliminary objection against an arbitrator’s jurisdiction on the basis of orders rendered pursuant to the Companies’ Creditors Arrangement Act (“CCAA“), which was upheld and led to the dismissal of the grievance.
- INTRODUCTION
S4 of the PPSA, provides that "except as otherwise provided" in the PPSA, the PPSA does not apply to a number of enumerated liens, charges or other interests, including as set out in s4(a) "a lien, charge or other interest given by an Act or rule of law in force in Alberta".
RELIEF MEASURES EXTENSION
On November 27, 2013, the Government of Québec published the Regulation Providing New Relief Measures for the Funding of Solvency Deficiencies of Pension Plans in the Private Sector (the “New Regulation”), which will come into effect on December 31, 2013.
On November 28, 2013, the Office of the Superintendent of Financial Institutions (OSFI) published its draft guideline entitled Liquidity Adequacy Requirements1 which set out the new liquidity requirements that may eventually apply to federal deposit-taking institutions, that is, the banks, bank holding compan
If Peter Morton and Cinitel Corp. had their way, every lender would have a distinct duty to a guarantor to permit the sale of a defaulting borrower’s assets as a going concern. In their view, a lender should be required to maximize its recovery from the borrower and to minimize any claim made on a guarantee. Fulfilling that duty would also obligate a lender to keep funding a borrower while that asset sale was negotiated and completed. It is enough to make any lender cringe.
Fortunately, the Ontario Court of Appeal disagreed with Morton and Cinitel’s view of the lending world.