Two recent Supreme Court of Canada decisions demonstrate that the corporate attribution doctrine is not a one-size-fits-all approach.

Executive Summary

In my most recent blog post, I provided some tips for creditors who find themselves in the Subchapter V arena. This is somewhat of a follow-up to that one.

Court approval of a sale process in receivership or Bankruptcy and Insolvency Act (“BIA”) proposal proceedings is generally a procedural order and objectors do not have an appeal as of right; they must seek leave and meet a high test in order obtain it. However, in Peakhill Capital Inc. v.

The overwhelming majority of my practice has involved larger, complex Chapter 11 cases and out-of-court restructurings, and representing debtors, Chapter 11 trustees, committees or creditors.

When Subchapter V came to be in 2019 under the Small Business Reorganization Act, I honestly did not think that I would have the opportunity to participate in those types of cases due to the debt limitations imposed by statute.

Over the past several years, unitranche facilities have become increasingly prevalent. This growth has been driven by the ever-growing class of private credit and direct lenders who initially developed the unitranche facility structure, along with traditional bank lenders now joining this market. The unitranche structure has several advantages, including typically quicker execution for the parties involved and in some cases a lower cost of capital to the borrower.

The overwhelming majority of my practice has involved larger, complex Chapter 11 cases and out-of-court restructurings, representing debtors, Chapter 11 trustees, committees, or creditors. However, with the expansion during Covid of the Subchapter V debt limit to $7.5 million, I have found myself participating in multiple Subchapter V cases as counsel to creditors. I discovered quickly that habits developed in larger Chapter 11 cases do not necessarily translate to Subchapter V.

When a debtor receives a bankruptcy discharge, section 524(a) of the U.S. Bankruptcy Code prohibits a creditor from seeking to collect a prepetition debt against the discharged debtor or its property. Importantly, the discharge does not extinguish the debt—it merely limits recourse against the discharged debtor. Section 524(e), however, provides that the discharge does not affect the liability of non-debtors for the discharged debt.

Bed Bath & Beyond, the home goods retailer, has filed bankruptcy under Chapter 11 and plans to conduct liquidation sales and close all of its brick-and-mortar stores by June 30, as reported by The New York Times. The retailer points to an inability to adjust to the growth of online shopping as a reason for its downfall.

On February 13, 2023, Ultra Petroleum Corporation (“Ultra”) filed a petition for a writ of certiorari with the US Supreme Court seeking review of the Fifth Circuit’s October 2022 ruling that, in solvent-debtor cases, debtors must pay unsecured creditors applicable contractual make-whole premiums and postpetition interest at contractual default rates in order for such unsecured creditors to be considered unimpaired.