Some legal commentators have lamented the extent to which lenders have been able to use debtor in possession (“DIP”) financing arrangements to gain control over an entire Chapter 11 case.

Bankruptcy lawyers who are regularly involved in distressed m&a deals have been wondering for the past few months about the potential fallout from Philadelphia Newspapers.

The chapter 11 case of DBSD North America, Inc. (“DBSD”), f/k/a ICO North America, has been marked by aggressive tactics and extreme positions from its commencement. DBSD, a non-operating satellite communications company, and its second lien noteholders made clear their intent to cram down a plan of reorganization (the “Plan”) on DBSD’s first lien lenders.

Typically under the Companies’ Creditors Arrangement Act (“CCAA”) when a debtor brings an application to extend the stay period, the court will grant the extension, so long as the applicant debtor is acting in good faith and with due diligence. In the vast majority of such extension applications the debtor has the support of the court appointed Monitor. The recent Ontario Superior Court of Justice case Re Dura Automotive Systems (Canada) Ltd.