Introduction

Introduction – the framework

Historically, an assignment of claims pursuant to s. 38 of Bankruptcy and Insolvency Act (the “BIA”)[1] has only been used in the context of an assignment in bankruptcy. For instance, the use of s.

The Corporate Insolvency and Governance Act 2020 (“CIGA“) ushered in a flexible restructuring compromise or arrangement for companies in financial difficulty (the “Restructuring Plan“). The legislation governing the Restructuring Plan sits alongside that for schemes of arrangement and is included in a new Part 26A to the Companies Act 2006.

The Restructuring Plan does not apply to companies that are solvent with no risk of insolvency; rather it only applies to companies where two conditions have been satisfied:

On July 27, 2020, the Newfoundland and Labrador Supreme Court (the “Court”) released its decision in Great North Data Ltd., (Re),[1] where Justice Handrigan outlined principles for courts to consider when exercising their power under section 69.4 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c.

A recent decision of the Ontario Superior Court of Justice (Commercial List) (the “Court”) in the receivership proceedings of The Clover on Yonge Inc.[1] (the “Clover Project”) has addressed the question of whether a debtor in receivership can avoid a sales process by redeeming its outstanding debt.

The Corporate Insolvency and Governance Act 2020 is far-reaching with its implications extending to pension schemes. Pension scheme employers and trustees should ensure that they are familiar with the provisions of the Act, and the potential impact that they could have on schemes, employers and savers.

Introduction

The Act received royal assent on Thursday 25 June. The Act passed through Parliament very quickly, so that its provisions can be used by companies experiencing financial difficulty as a result of the COVID-19 pandemic. The Act contains:

On 25 June 2020, the Corporate Insolvency and Governance Bill (the “Bill”) received Royal Assent and on 26 June 2020 CIGA came into force. The restructuring team in Mayer Brown’s London office has previously commented on the different elements of the Bill in a series of blog posts and podcasts.

As Canadian businesses continue to grapple with decreased cash flow as a result of COVID-19, many are looking for ways to generate cash and remain viable. One such way is to sell non-core assets or divisions through a pre-packaged sale transaction.

Pre-Packaged Sale Overview

The Corporate Insolvency and Governance Bill 2020 (the “Bill“) introduces a flexible restructuring compromise or arrangement for companies in financial difficulty (the “Restructuring Plan“). It is proposed that the legislation governing the Restructuring Plan will sit alongside the schemes of arrangement and be included in a new Part 26A to the Companies Act 2006.

The Restructuring Plan will not apply to companies that are solvent with no risk of insolvency; rather it will only apply where two conditions are satisfied: