One of the main advantages for a debtor to seek protection under the Companies’ Creditors Arrangement Act (CCAA) or the Bankruptcy and Insolvency Act (BIA) is the stay of proceedings that prevents creditors faced with a default in payment from taking any action against the debtor. This allows the debtor, among other things, to reorganize itself or dispose of some or all of its assets under the court’s supervision. Be that as it may, there are exceptions.
L’un des principaux avantages pour un débiteur de se placer sous la protection de la Loi sur les arrangements avec les créanciers des compagnies (« LACC ») ou de la Loi sur la faillite et l’insolvabilité (« LFI ») consiste en la suspension des procédures pouvant être intentées par un créancier faisant face à un défaut de paiement. Cette suspension des procédures permet notamment à la débitrice de se réorganiser ou de disposer de certains ou de l’ensemble de ses actifs sous la supervision du tribunal. Or, certaines exceptions existent.
In brief
The courts were busy in the second half of 2021 with developments in the space where insolvency law and environmental law overlap.
In Victoria, the Court of Appeal has affirmed the potential for a liquidator to be personally liable, and for there to be a prospective ground to block the disclaimer of contaminated land, where the liquidator has the benefit of a third-party indemnity for environmental exposures.1
In brief
Australia's borders may be closed, but from the start of the pandemic, Australian courts have continued to grapple with insolvency issues from beyond our shores. Recent cases have expanded the recognition of international insolvency processes in Australia, whilst also highlighting that Australia's own insolvency regimes have application internationally.
Key takeaways
In brief
With the courts about to consider a significant and long standing controversy in the law of unfair preferences, suppliers to financially distressed companies, and liquidators, should be aware that there have been recent significant shifts in the law about getting paid in hard times.
Le 1er avril 2021, la Cour suprême du Canada a rejeté la demande d’autorisation d’appel de la décision de la Cour d’appel du Québec dans l’affaire Séquestre de Media5 Corporation, 2020 QCCA 943. Par conséquent, les tribunaux du Québec ont maintenant confirmation de la marche à suivre pour la nomination de séquestres nationaux à la demande des créanciers garantis.
Le 20 juillet 2020, la Cour d’appel du Québec annulait la décision rendue par la Cour supérieure et confirmait les principes suivants :
On April 1st, 2021, the Supreme Court of Canada dismissed the application for leave to appeal the decision of the Court of Appeal of Québec in Séquestre de Media5 Corporation, 2020 QCCA 943. As a result, Quebec courts now have clarity regarding their ability to appoint national receivers for secured creditors.
On July 20, 2020, the Court of Appeal overturned the lower court’s decision and confirmed the following principles:
In brief
In brief
Creditors commonly find that their applications to wind up a company are suddenly deferred at the last minute by the appointment of a voluntary administrator. Now, in the early days of the small business restructuring (Part 5.3B) process, the courts are already grappling with those circumstances in the context of that new regime. At the time of writing1, only four restructuring appointments under Part 5.3B have been notified to ASIC. Two of them have been the subject of court proceedings.
The resulting decisions reveal:
Since the beginning of the COVID-19 pandemic, insolvent companies have sought court intervention relating to the payment of rent during lockdown periods. In the most recent decision on this issue, the Quebec Superior Court (Court) ruled that a debtor undergoing a restructuring under the Companies’ Creditors Arrangement Act (Canada) (CCAA) should not be relieved of its obligation to pay post-filing rent, even in circumstances where its ability to use the leased premises is constrained by governmental orders.