Canada’s Bankruptcy and Insolvency Act (BIA) is designed to give “honest, but unfortunate debtors” a “fresh start” by automatically staying litigation and dealing with the bankrupt’s debts and liabilities in an orderly fashion. But what if the bankrupt was dishonest? Should they be entitled to have litigation stayed and their debts discharged? The BIA contains tools to address this.

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

This week’s TGIF considers a recent case where the Supreme Court of Queensland rejected a director’s application to access an executory contract of sale entered into by receivers and managers on the basis it was not a ‘financial record’

Key Takeaways

This week’s TGIF looks at the decision of the Federal Court of Australia in Donoghue v Russells (A Firm)[2021] FCA 798 in which Mr Donoghue appealed a decision to make a sequestration order which was premised on him ‘carrying on business in Australia' for the purpose of section 43(1)(b)(iii) of the Bankruptcy Act 1966 (Cth) (Act).

Key Takeaways

This week’s TGIF considers an application to the Federal Court for the private hearing of a public examination where separate criminal proceedings were also on foot.

Key takeaways

This week’s TGIF looks at a recent decision of the Victorian Supreme Court, where a winding up application was adjourned to allow the debtor company to pursue restructuring under the recently introduced small business restructuring reforms.

Key takeaways

Protecting your business from exposure to supplier and customer insolvency

The risk of unforeseen counterparty customer or supplier financial distress and failure amidst the on-going challenges for businesses from COVID-19 means that pre-emptive legal and operational protections against the risk of heavy financial loss or business disruption from customer/supplier failure are more valuable than ever.

Treasurer Josh Frydenberg announced on 24 September 2020 (view announcement here) the introduction from 1 January 2021 of an innovative new restructuring process for Australian small incorporated businesses with liabilities less than AUD1 million, which adopts key aspects of the US Chapter 11 bankruptcy process.

On 22 May 2020, Justice Black of the Supreme Court of NSW issued judgment In the matter of Wollongong Coal Limited and In the matter of Jindal Steel & Power (Australia) Pty Ltd [2020] NSWSC 614. The judgment sets out his Honour’s reasoning for granting the orders sought in a largely unprecedented application to effectively ‘re-enliven’ two schemes of arrangement which automatically terminated prior to being completed.

The Australian Government has passed the "Coronavirus Economic Response Package Omnibus Bill 2020". The new legislation was announced on Sunday 22 March 2020 and was fast tracked through parliament as part of the Australian Government's response to the economic impact of COVID-19.