On March 3, 2012, the Ontario Superior Court of Justice released its decision in Dodd v. Prime Restaurants of Canada Inc. (2012 ONSC 1578). The decision acts as a caution to franchisors to ensure their franchisees are fully informed and properly advised prior to entering into settlement agreements. Without such steps, franchisors may find releases rendered ineffective against subsequent statutory claims by the application of section 11 of the Arthur Wishart Act (the Act).

Background

In two recent decisions,² the United States Bankruptcy Court for the Southern District of New York denied motions by large chapter 11 debtors to approve executive bonus plans designated as key employee incentive plans ("KEIP"), finding that the proposed KEIPs actually were disguised and impermissible retention or "pay to stay" bonus plans for insiders. These are the first opinions to reject so-called KEIPs following a recent line of cases that have approved KEIPs for insiders.

The law in Canada concerning priorities between the statutory deemed trusts relating to pension plan contributions and certain pension fund shortfalls on the one hand, and court ordered charges in favour of DIP lenders on the other hand has been in a state of flux ever since the decision of the Ontario Court of Appeal (the “OCA”) in Re Indalex.

In Re LightSquared LP, the Ontario Court of Superior Justice [Commercial List] (the “Canadian Court”) refined the test for determining the location of a debtor’s center of main interest (“COMI”) under Part IV of the Companies’ Creditors Arrangement Act (the “CCAA”), which is the Canadian equivalent of Chapter 15 of the U.S. Bankruptcy Code.

In Ontario, a debtor-in-possession (“DIP”) lender is usually granted a charge by the Ontario Superior Court of Justice (Commercial List) (the “Court”) over the assets of the debtor which is under the protection of the Companies’ Creditors Arrangement Act (the “CCAA”) to secure the repayment of the DIP loan.  The priority of the charge is set out in the order granting the charge.  Most such orders provide that prior to exercising its rights and remedies against the debtor after an event of default, the DIP lender must appl

On July 2, 2012, the Illinois Department of Insurance (IDOI) entered an Agreed Order of Rehabilitation against Lumbermens Mutual Casualty Company and American Manufacturers Mutual Insurance Company, which is the part of the Lumbermens Mutual Group formerly known as Kemper (collectively, “Lumbermens”). Under the order, IDOI’s Director will serve as Lumbermens’ Rehabilitator with powers to restructure Lumbermens’ insurance business. From this point forward, Lumbermens will no longer take on any new insurance obligations, issue any new policies, or renew any existing policies.

In a recent decision¹ involving Global Aviation Holdings, Inc.

In Re Crystallex, 2012 ONCA 404, the Ontario Court of Appeal unanimously upheld unusually broad DIP financing arrangements granted pursuant to section 11.2 of the Canadian Companies' Creditors Arrangement Act (CCAA) despite the vociferous objections of substantially all of Crystallex’s creditors.  By dismissing the appeal, the Court endorsed the supervising CCAA judge’s approval of:

On Tuesday, June 5, 2012 the Supreme Court of Canada heard an appeal of the Ontario Court of Appeal’s decision in Re IndalexLimited (“Indalex”). The Indalex decision concerned, among other things, the priority of a deemed trust for certain unpaid pension amounts over the super-priority charge granted in favour of a DIP Lender.

In Re Crystallex, the Ontario Court of Appeal (“Court of Appeal”) unanimously upheld three orders of the Ontario Superior Court of Justice (“OSCJ”) that (1) authorized bridge financing, (2) authorized interim financing