The economies of the United States (U.S.) and Canada are closely intertwined. As operations expand across the border, so too do the complexities associated with carrying on business - particularly the insolvency of a company spanning both jurisdictions. As such, understanding how to navigate the complexities of Canadian insolvency regimes is essential to successfully doing business in the country.

In 2015, Justice Wilson-Siegel approved a new form of vesting order, referred to as the "reverse vesting order" (or RVO) as part of the restructuring in Plasco Energy (Re). An RVO is a court order that transfers unwanted assets and liabilities out of a debtor company into a (oftentimes newly incorporated) affiliated company, referred to as "ResidualCo." The debtor company is left holding only the assets and liabilities the purchaser wants to acquire.

Bankruptcy & restructuring

The economies of the United States (U.S.) and Canada are closely intertwined. As operations expand across the border, so too do the complexities associated with carrying on business - particularly the insolvency of a company spanning both jurisdictions. As such, understanding how to navigate the complexities of Canadian insolvency regimes is essential to successfully doing business in the country.

1. Legislation and court system

In MNP Ltd. v. Canada Revenue Agency (MNP v CRA), the Alberta Court of Queen’s Bench (“ABQB”) clarified the effect of bankruptcy on a writ of enforcement’s “binding interest” acquired on registration against a debtor’s land, ultimately holding that whatever priority a writ’s binding interest has before bankruptcy, it is undercut by the debtor’s bankruptcy. In so doing, the ABQB reaffirmed the validity of a “priority flip” between secured creditors and unsecured judgment creditors upon a debtor’s bankruptcy.

Background

In its unanimous decision, Ernst & Young Inc. v. Aquino, the Ontario Court of Appeal modified the common law doctrine of corporate attribution in the bankruptcy and insolvency context to uphold a decision of Ontario Superior Court’s Commercial List, which ordered a corporate officer and his associates, whom collectively orchestrated a fraudulent invoicing scheme, to repay over $30 million to company creditors pursuant to s. 96 of the Bankruptcy and Insolvency Act (“BIA”).

Background

The economies of the United States (U.S.) and Canada are closely intertwined. As operations expand across the border, so too do the complexities associated with carrying on business - particularly the insolvency of a company spanning both jurisdictions. As such, understanding how to navigate the complexities of Canadian insolvency regimes is essential to successfully doing business in the country.

1. Legislation and court system

The economies of the United States (U.S.) and Canada are closely intertwined. As operations expand across the border, so too do the complexities associated with carrying on business - particularly the insolvency of a company spanning both jurisdictions. As such, understanding how to navigate the complexities of Canadian insolvency regimes is essential to successfully doing business in the country.

1. Legislation and court system

On June 19, 2019, the Ontario Court of Appeal released its decision in Third Eye Capital Corporation v. Ressources Dianor Inc./Dianor Resources Inc. [1], addressing the following issues:

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