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

The Québec Court of Appeal confirmed that unpaid post-filing suppliers, which had neither sought a court-ordered charge to secure their post-filing claims nor availed themselves of their right to stop supplying goods or services to the debtor, cannot claim an implicit priority on the proceeds of sales of assets in proceedings under the Companies’ Creditors Arrangement Act proceedings.

Background: going-concern sales of optometry clinics

PLAN SPONSOR ENTITLED TO VOTE AS CREDITOR AND CREDITOR APPROVAL REQUIRED TO IMPLEMENT LITIGATION FUNDING AGREEMENT.

With two decisions (No. 1895/2018 and No. 1896/2018), both filed on 25 January 2018, the Court of Cassation reached opposite conclusions in the two different situations

The case

The Constitutional Court (6 December 2017) confirmed that Art. 147, para. 5, of the Italian Bankruptcy Law does not violate the Constitution as long as it is interpreted in a broad sense

The case

With the decision No. 1195 of 18 January 2018, the Court of Cassation ruled on the powers of the extraordinary commissioner to require performance of pending contracts and on the treatment of the relevant claims of the suppliers

The case

The Court of Cassation with a decision of 25 September 2017, No. 22274 confirms that Art. 74 of the Italian Bankruptcy Law provides a special rule, which does not apply to cases to which it is not explicitly extended

The case

With the decision No. 1649 of 19 September 2017 the Court of Appeals of Catania followed the interpretation according to which a spin-off is not subject to the avoiding powers of a bankruptcy receiver

The case

Applicable law

The Italian Government has been delegated to enact a comprehensive restatement of the whole set of rules of insolvency procedures, with specific innovative addresses regarding (to mention only the most important) the concordato preventivo procedure, venue rules, an out-of-court mediation alert process to timely address a risk of insolvency, new forms of security and a streamlined set of priorities among creditors

Introduction