In May of 2010, we reported on the decision of the British Columbia Court of Appeal in Ted Leroy Trucking v. Century Services Inc. In that decision, the Court of Appeal upheld a decision of the B.C.

Last month, I appeared before the federal government’s Standing Committee on Industry, Science and Technology to convey our concerns regarding Bill C-501,An Act to amend the Bankruptcy and Insolvency Act and other Acts (pension protection), which if passed will alter the status of

Section 38 of the Ontario Personal Property Security Act (the "Act") contains an exception to the general priority scheme of the Act. It provides that a secured creditor may, in the relevant security agreement or otherwise, subordinate its security interest to any other security interest, and that such subordination will be effective according to its terms. No distinction is drawn between perfected and unperfected security interests.

On March 22, 2010, the Superior Court of Quebec approved a plan of arrangement under the Canada Business Corporations Act (the CBCA) that allowed a corporation, MEGA Brands Inc., to achieve a worldwide restructuring of its business under a corporate statute, rather than a more typical insolvency and restructuring statute like the Companies Creditors’ Arrangement Act.

Welcome to the latest issue of the Section 337 Update. This newsletter is designed to provide you with practical updates and developments on Section 337 proceedings before the US International Trade Commission.

The Collision of Section 337 and the US Bankruptcy Laws

With a number of Canadian companies seeking bankruptcy protection over the past few months, it has become apparent that the defined benefit pension plans sponsored by many of these companies are underfunded. As retirees and former employees protest their shrinking pensions, many are left asking how this all happened.

On September 18, 2009, the Federal Government proclaimed into force the remaining amendments to the Bankruptcy and Insolvency Act (BIA) and theCompanies’ Creditors Arrangement Act (CCAA). (A few provisions which are rendered moot, presumably deemed unnecessary or are amendments intended to coordinate the inter-governmental flow of information have not been proclaimed into force.) Some of the key changes to the BIA and the CCAA which we anticipate will considerably impact current Canadian insolvency practice are discussed below.

Canada’s insolvency and restructuring regime consists primarily of two separate statutes that have been substantially amended in recent years to align their restructuring provisions. Despite some similarities with its U.S. counterpart, the amended Canadian regime remains distinct.

Currently, neither the Bankruptcy and Insolvency Act nor the Companies’ Creditors Arrangement Act defines “director.” However, pending legislative amendments to the Bankruptcy and Insolvency Act (BIA) and Companies’ Creditors Arrangement Act (CCAA) will include an expansive definition of “director” that includes any person “occupying the position of director,” regardless of his or her formal title.

Distressed preferred shares are an important weapon in the arsenal of a restructuring lawyer. They allow distressed companies to reduce their borrowing costs by restructuring their debt in a way that gives a taxable Canadian resident corporate lender a tax-free return. This means that the lender can accept a dividend rate that is less than the interest rate on the debt it holds and receive the same economic return without losing the priority that came with holding secured debt.