Fairbanx Corp v Royal Bank of Canada, 2010 ONCA 385 (Ont CA), on appeal from 2009 CanLII 55376 (Ont SC)

Fairbanx factored accounts for the debtor, Friction Tecnology Consultants Inc. Fairbanx made its Ontario PPSA registration misspelling the name as Technology, with an “H”. Two years later, the debtor obtained a line of credit from the Bank, which correctly named the debtor in its Ontario PPSA registration.

Caines, Re, 2010 NLTD 72

The bankrupt was the holder of a commercial fishing licence. He was discharged from his bankruptcy before the Supreme Court of Canada released its decision inRoyal Bank of Canada v. Saulnier (2008), 298 D.L.R. (4th) 193, in which that Court concluded that a fishing licence was “property” for purposes of the PPSA and BIA.

Able Automotive Ltd v Cameron-Okolita Inc, 2010 SKQB 34

Able brought a motion to appeal the bankruptcy Registrar’s decision that Able was a secured creditor for a certain amount, but disallowing its claim for certain costs, including insurance, a new engine for the vehicle, and storage charges, legal fees and costs.

The recent Ontario Court of Appeal decision in Murphy v Sally Creek Environs Corporation, 2010 ONCA 312 (“Sally Creek”) is a cautionary tale for Trustees in bankruptcy (“Trustees”) and the counsel who represent them.1 In that case, the Trustee’s fees and those of its legal counsel were drastically reduced on a taxation, a cost award was made against the Trustee personally and the Trustee’s conduct was impugned in a detailed decision of the Bankruptcy Registrar and the Court of Appeal.

In a decision filed on July 7th, the United States Court of Appeals for the Third Circuit affirmed a district court decision upholding a bankruptcy court order granting summary judgment to American Home Mortgage Investment Corp. (American Home) in connection with a repurchase transaction entered into in 2007 under which American Home sold certain certificates to Bear Stearns International Ltd. (Bear Stearns) for $19,534,000 and agreed to re-purchase the certificates at a later date for $19,636,879.07. In re American Home Mortgage Holdings, Inc., 2010 WL 2676383 (3d Cir.

One more province has joined the ranks of extending creditor protection to registered savings plans. Alberta’s Civil Enforcement Amendment Act came into force on October 1, 2009 (the “Act”). It applies to registered retirement savings plans (RRSPs), registered retirement income funds (RRIFs), deferred profit sharing plans (DPSPs) and registered disability savings plans (RDSPs).

Fair Treatment

On May 11, the Board of Directors of the FDIC approved a Notice of Proposed Rulemaking (the “NPR”) proposing a rule which would govern the treatment by the FDIC, as conservator or receiver of a failed insured depository institution (a “Bank”), of financial assets previously transferred by such Bank in a securitization or participation transaction. The proposed rule would create a safe harbor to confirm legal isolation of these financial assets if certain conditions are satisfied.

On May 5th, the United States Bankruptcy Court for the Southern District of New York issued a decision declaring that a party's right to setoff in an International Swaps and Derivatives Association, Inc. ("ISDA") Master Agreement is unenforceable in bankruptcy unless "strict mutuality" exists.

On May 5, 2010, the United States Bankruptcy Court for the Southern District of New York issued a decision declaring that a party’s right to setoff in an ISDA Master Agreement is unenforceable in bankruptcy unless strict mutuality exists. (Decision and Order).

In dealing with collateral provided by a third party to support the obligations of the prime debtor, lenders and their counsel need to remember the impact of the federal Bankruptcy and Insolvency Act.

Ontario’s Personal Property Security Act (PPSA) was amended to broaden the definition of the word “debtor.” However, the Bankruptcy and Insolvency Act’s (BIA) definition of a “secured creditor” is still restricted to a person holding a charge or a lien “as security for debt due or accruing to the person (lender) holding the debt.”