On July 2, 2024, the Court of Appeal for British Columbia (the “Court”) released its highly anticipated decision in British Columbia v. Peakhill Capital Inc., 2024 BCCA 246 (“Peakhill”) concerning the use of reverse vesting orders (“RVOs”) to effect sale transactions structured to avoid provincial property transfer taxes for the benefit of creditors.

Many litigators and corporate lawyers view the practice of representing a large shareholder and the company in which it is invested as common practice. In many instances, no conflict of interest will ever materialize such that the shareholder and the company require separate representation. However, in a recent opinion rendered by the United States Bankruptcy Court, Eastern District of Virginia (the “Court”), a large international law firm (the “Firm”) was disqualified from representing Enviva Inc.

2275518 Ontario Inc. v. The Toronto-Dominion Bank, 2024 ONCA 343

On May 6, 2024, the Ontario Court of Appeal upheld a summary judgment motion decision in favour of The Toronto-Dominion Bank (“TD Bank”) in 2275518 Ontario Inc. v. The Toronto-Dominion Bank, 2024 ONCA 343.^[1]

While gaining recognition of Canadian insolvency proceedings south of the border used to be wishful thinking for an insolvent Canadian entity having involvement in the cannabis industry, such proceedings are now seemingly becoming a potential option. The United States Bankruptcy Court Central District of California Los Angeles Division (the “Court”) recently dismissed the United States Trustee’s (the “Trustee”) second motion to dismiss in The Hacienda Company, LLC’s (“THC”) bankruptcy proceedings.

Introduction

A few weeks ago, real estate practitioners, investors, speculators, lenders and aspiring homeowners were all surprised to learn that The One, a monster development at 1 Bloor St. West in Toronto, was being placed into receivership. The project undertaken by Sam Mizrahi and his company, Mizrahi Inc., is slated to be an 85-storey mixed-use residential tower in the heart of the city, comprising retail stores, a restaurant, a hotel and luxury residential suites. It would be an iconic addition to Toronto’s growing skyline…

The Eighth Circuit held that “avoidance actions [e.g., preferences, fraudulent transfers] can be sold as property of the [Chapter 7 debtor’s] estate.” In re Simply Essentials, LLC, 2023 WL 5341506, *1 (8th Cir. Aug. 21, 2023). On a direct appeal from the bankruptcy court, the court affirmed the bankruptcy court’s granting of the trustee’s motions to compromise and sell property under Bankruptcy Code §363(f). A creditor had objected, arguing unsuccessfully that “avoidance actions… are not part of the bankruptcy estate ….” Id.

A recent Canadian insolvency filing could provide insight into how U.S. courts will approach Chapter 15 applications from foreign cannabis-related entities.

A Case Comment on AssessNet Inc. v. Ferro Estate, 2023 ONCA 577

On July 28, 2023, Judge Michael Kaplan of the Bankruptcy Court for the District of New Jersey issued an opinion granting motions to dismiss LTL Management LLC’s second chapter 11 case, finding that it was filed in bad faith due to a lack of imminent and immediate financial distress. See In re LTL Mgmt., LLC, No. 23-12825 (MBK), 2023 WL 4851759 (Bankr. D.N.J. July 28, 2023). Judge Kaplan’s decision follows the U.S. Court of Appeals for the Third Circuit’s dismissal of LTL’s first chapter 11 bankruptcy case in January 2023.

Over the past year, digital asset investors have become acutely aware of asset custody and counterparty credit risks due to the high-profile bankruptcies of Voyager, Celsius, BlockFi, and FTX. These investors have found that, at times, their assets may be stuck in a bankruptcy proceeding for years. However, these investors—now bankruptcy claim holders—have options for more immediate liquidity.