On July 31, 2024, the Supreme Court of Canada released its decision in Poonian v. British Columbia (Securities Commission), on whether financial sanctions imposed by securities regulators are dischargeable through bankruptcy. The decision resolves a conflict between Alberta and B.C. jurisprudence and will have a significant impact on the treatment of all administrative orders in bankruptcy proceedings.

The facts

On June 27, the U.S. Supreme Court announced a 5-4 decision rejecting the nonconsensual releases of the Sackler family in the Purdue Pharma bankruptcy case. The split is an interesting alignment of Justices: Gorsuch writing the majority opinion, joined by Thomas, Alito, Barrett and Jackson; Kavanaugh for the dissent, joined by Roberts, Sotomayor and Kagan.

Chapter 11 bankruptcy has long been thought of as anathema to commercial real estate (CRE) lenders. This is due to the debtor-friendly bankruptcy forum, particularly with respect to (i) the up to 18 month exclusivity period during which only the debtor could propose a plan of reorganization and (ii) threats of a "cram-down" plan used to lever concessions from lenders. These provisions can be, and often were, abused by debtors with no real rehabilitative intent using bankruptcy only as a leverage tool.

In an unprecedented turn of events, two recent proceedings in the Grand Court of the Cayman Islands considered the same complex legal issues just one week apart.

A Cayman Islands scheme of arrangement is a court approved compromise or arrangement between a company and its creditors or shareholders (or classes thereof). A scheme of arrangement is frequently used to implement a financial restructuring by varying or cramming in the rights of the relevant creditors and/or shareholders of a company but may also be used to complete corporate transactions such as a group restructuring or reorganisation, acquisitions, mergers and take-private transactions.

The Grand Court of the Cayman Islands recently confirmed expressly for the first time that it has jurisdiction to wind up a segregated portfolio company ("SPC") on the insolvency of one or more, but not all, of its segregated portfolios, and to appoint restructuring officers over those segregated portfolios. The judgment is In the matter of Holt Fund SPC

Background

Section 192 of the Canada Business Corporations Act (CBCA) provides a flexible tool that allows corporations to achieve important change and undertake various corporate transactions, subject to court approval and oversight. This article aims to provide an update on the Québec courts’ acceptance of virtual securityholder meetings and approach to the solvency requirement.

Overview of the arrangement process

A Members Voluntary Liquidation ("MVL") is a process undertaken by a solvent company to wind up its affairs in an orderly manner when the company has concluded its activities and the shareholders wish to distribute the remaining assets amongst themselves.

To avail of a MVL, the company must be solvent i.e. the directors must be able to execute a statutory declaration that they are of the opinion that the company will be able to pay its debts in full within 12 months of the commencement of the winding up.

The steps involved

Executive Summary

In a radical departure from settled case law, the English High Court has eroded the protections of English law creditors guaranteed by the Rule in Gibbs¹ .

Executive Summary

Investors in LMA-based intercreditor agreements¹ (ICA) should be reassured by the commercial approach recently taken by the High Court in construing the "Distressed Disposal" provisions (DD Provisions).