A Toronto-based clothing retailer that operates more than 100 locations in shopping malls across Canada has received court protection to support its restructuring and eventual sale.

Clothing for Modern Times Ltd. (“CMT”) designs and markets men's and women's clothing and accessories through its Urban Behaviour (“UB”), Costa Blanca (“CB”) and Costa Blanca X (“CBX”) branded stores.

Generic Legal Advice Memorandum AM 2011-003 (August 18, 2011)

Overview

The Renin Group of companies has been granted protection under the Companies' Creditors Arrangement Act, "to preserve the company as a viable operation and preserve 300 jobs" Ontario Superior Court Justice Mesbur noted in her endorsement of its application for “immediate relief.”

The Renin Group is the parent corporation of Renin Corp., Renin Corp. US and Kingstar Products (Western Inc.) based in Brampton, Ontario. All three companies are named in the court’s order.

Oilsands Quest Inc. (AMEX: BQI) has been granted protection under the Companies’ Creditors Arrangement Act until December 21,2011, allowing the insolvent company to continue operating normally as it attempts to reorganize its financial affairs.

“We made the difficult decision to seek creditor protection because we believe this step to be in the best interest of all our stakeholders,” Garth Wong, Chief Executive Officer of Oilsands Quest, said in a news release.

Call it a sign of the times: the past decade has produced the ten largest bankruptcies in the United States.

Based on disclosed assets in its recent bankruptcy filing, MF Global has taken the spot just ahead of Chrysler as the eighth-largest United States bankruptcy (as ranked by New Generation Research on the basis of pre-petition assets).

The Top Ten list¹ is presented below, with a brief commentary on the circumstances of bankruptcies, each of which has significantly impacted the United States and global economies.

Norgate Metals, a Québec-based company specializing in the engineering, manufacturing and installation of steel-based metal products, has received court protection under the Companies’ Creditors Arrangement Act to continue operations and develop a restructuring plan.

What happens when Canadian entities are part of a corporate group with international operations that seeks to restructure? A recent decision of the Ontario Superior Court of Justice in Re Massachusetts Elephant & Castle Group, Inc. provides guidance on how Canadian courts will consider recognition of foreign restructuring proceedings.

The Canadian Investor Protection Fund, the investment industry’s customer compensation agency, has obtained a bankruptcy order in the Ontario Superior Court against MF Global Canada, the Canadian subsidiary of MF Global Holdings which sought Chapter 11 protection in New York last week. KPMG Inc. has been appointed as trustee in bankruptcy for MF Global Canada.

The Investment Industry Regulatory Organization of Canada, whose dealer members support the CIPF, had previously obtained an order requiring MF Global Canada to cease dealings with the public.

The Second Circuit Court of Appeals has now weighed in on the Bankruptcy Code’s safe harbor provisions. In Enron Creditors Recovery Corp. v. Alfa, S.A.B. de C.V., Docket Nos. 09–5122, 09–5142, 2011 WL 2536101 (2d Cir. June 28, 2011), the Second Circuit Court of Appeals faced an issue of first impression—whether Section 546(e) of the Bankruptcy Code, which shields certain payments from avoidance actions in bankruptcy, extends to an issuer’s payment to redeem its commercial paper made before maturity.

In Lehman Brothers Special Financing, Inc. v. Ballyrock ABS CDO 2007-1 Limited (In re Lehman Brothers Holdings, Inc.), Adv. P. No. 09-01032 (JMP) (Bankr. S.D.N.Y. May 12, 2011) [hereinafter “Ballyrock”], the United States Bankruptcy Court for the Southern District of New York held that a contractual provision that subordinates the priority of a termination payment owing under a credit default swap (CDS) to a debtor in bankruptcy, and which caps the amount of the termination payment, may be an unenforceable ipso facto clause under section 541(c)(1)(B).