To the extent authorized by a State, Chapter 9 of the Bankruptcy Code allows municipalities (defined as a “political subdivision or public agency or instrumentality”) of that State – including public hospitals – to reorganize their debts in the face of insolvency. Municipalities achieve this goal through implementation of a court-approved plan of adjustment. Although the standards for confirming (approving) a Chapter 9 plan resemble the well-established standards for confirming a Chapter 11 plan, differences exist.

The media have been paying considerable attention to the current financial distress of the energy industry in Alberta, focusing primarily on the impact a company’s financial condition can have on its stakeholders, including its employees, shareholders and creditors. But there is another group that is also being affected: counterparties to commercial arrangements with insolvent companies. Increasingly, financially strong companies are having to deal with insolvent joint venture partners, financially distressed operators, and bankrupt lessees.

Working with distressed businesses always presents a wide array of challenges. Solving a distressed company’s problems, or your problems with it, rarely is limited to a single legal discipline, set of laws or state or federal policy. When a distressed enterprise is involved, all kinds of interests and policies can and do clash.

In a proceeding under the Companies’ Creditors Arrangement Act (“CCAA”), a judge has discretionary powers to, among other things, order debtor companies into bankruptcy and thereby resolve priority disputes. What should be the standard of review of such discretionary decisions? Historically, the standard has been high.

Be careful what you’ve promised your customers…or what has been promised about data you buy!

Following the Supreme Court of Canada decision in Sun Indalex Finance, LLC v. United Steelworkers, [2013] 1 S.C.R. 271 (Indalex), creditors and their advisors have been closely following jurisprudence which considers the scope of the decision.

On May 4, 2015, Vice Chancellor Travis Laster of the Delaware Court of Chancery issued a decision in Quadrant Structured Products Co., Ltd. v. Vertin,¹ analyzing creditors’ standing to bring derivative claims against directors and officers of Delaware corporations. Building on the Delaware Supreme Court’s jurisprudence regarding fiduciary duties owed to creditors,²Vice Chancellor Laster’s opinion has two primary holdings.

This article was originally published by LatinFinance on November 25, 2014.

A rise of cross-border insolvencies in recent years has generated substantial litigation. In some cases, US bondholders, perceiving their treatment under a foreign reorganization plan to be inequitable, have sought a second chance by opposing the plan in the US on the grounds that its enforcement would be contrary to domestic public policy.

In his November 20, 2014 decision in CanaSea PetroGas Group Holdings Limited (Re), Sharpe J.A. of the Ontario Court of Appeal did not accept the respondents’ submissions that he should decline to hear an application for leave to appeal a CCAA decision because only a three-judge panel should hear such an application.

This article first appeared in the American Bankruptcy Institute, November, 2014.