The Cayman Islands Court of Appeal has recently delivered helpful clarification on the principles which apply with respect to security for costs when the official liquidators of an insolvent fund seek to bring claims against its former management. Where it is clear to the Court that a defendant was responsible for management decisions immediately before a company entered insolvency, the Court may exercise its discretion, notwithstanding the impecuniosity of the plaintiff company, not to order payment of security for costs.
On October 7, 2015, the British Columbia Court of Appeal reversed the Supreme Court of British Columbia's decision in Barafield Realty Ltd. v. Just Energy (B.C.) Limited Partnership ["Barafield Realty"].1 In July of 2014, we wrote the attached bulletin http://www.mcmillan.ca/Assigning-contracts-in-Canadian-insolvency-proceedings on the lower court decision.
Canadian restructuring and liquidation legislation provides struggling companies and bankruptcy trustees with powerful tools to restructure their affairs and maximize value for stakeholders. For example, in the right circumstances valuable contracts can be assigned, on notice to the counterparties, to buyers prepared to pay well for the rights conferred under the contracts. In such circumstances, the counterparty’s bargained for right to withhold its consent to an assignment can be effectively overridden by court order.