On June 29, 2009, Nexient Learning Inc. filed under the CCAA in Ontario. Nexient announced that it made arrangements with The Vengrowth Traditional Industries Fund Inc., one of its lenders, to provide debtor in possession (DIP) financing to support its ongoing operations. Nexient also announced that on July 8, 2009 it received approval from the Ontario Superior Court of Justice to conduct a sale process for the sale of its assets and that it had entered into a stalking horse asset purchase agreement. The sales process is expected to be completed by August 15, 2009.

The court overseeing the chapter 11 bankruptcy cases of Lehman Brothers Holdings Inc. and various subsidiaries (the “Debtors”), has entered an order establishing deadlines and procedures for filing claims against the Debtors. In terms of procedural requirements, the order places unusual burdens on parties whose claims are based on derivative contracts and guarantees.

Allarco Entertainment

On June 16, 2009, Allarco Entertainment Inc. and Allarco Entertainment 2008 Inc. filed under the CCAA in Alberta.

Allarco Entertainment owns Super Channel, an Edmonton-based TV network. According to Court documents, Super Channel has approximately 222,000 subscribers. Super Channel broadcasts feature films, original series, specials and mini-series in high definition.

Eddie Bauer

Set-off is a powerful and often under-appreciated insolvency remedy in Canada. A recent decision of the Alberta Court of Queen’s Bench highlighted the importance of the doctrine and examined the requirements for a claim of equitable set-off in the context of a corporate group.

The right to assert valid set-off claims is expressly preserved in Canadian insolvency legislation. The remedy applies such that creditors may set-off (or net-out) amounts owing to them by an insolvent party, against amounts otherwise payable by them to the insolvent party.

Unpaid suppliers are generally unsecured in liquidation proceedings. A supplier can elevate its unsecured claim by taking security from the debtor or modifying its supply contract by inserting an effective title retention clause. The supplier may also rely on the BIA unpaid supplier provision to assert a super-priority for the return of its goods.

In a series of cases in 2009 culminating in the decision of the Honourable Mr. Justice Morawetz in Re Indalex Limited (“Indalex”), the CCAA Courts have considered the appropriateness of approving the granting of a guarantee in connection with a cross-border DIP facility. This issue has been at the forefront – with varying results – in a number of recent CCAA cases in which DIP financing was dependent on the CCAA debtor providing a secured guarantee of the obligations of the parent or affiliate company’s DIP financing in its own Chapter 11 case.

From modest beginnings, the concept of Cross-Border Insolvency Protocols as a means of enhancing cooperation between administrations in international cases has become an established practice in major cases. From their origins in the International Bar Association’s Cross-Border Insolvency Concordat through the early Protocols in Maxwell Communication and Everfresh Beverages, Protocols have become a mainstay in international reorganizations and restructurings.

On May 26, Lehman Brothers Holdings Inc. (LBHI) filed a motion requesting the U.S. Bankruptcy Court for the Southern District of New York to establish August 24 as the deadline for filing proofs of claim against LBHI and its affiliates, and to establish a procedure for such filing, including a required form to be completed online relating to derivatives claims, and a new proof of claim form specific to this case.

On April 16, General Growth Properties, Inc. and certain of its affiliates (“GGP”) filed for Chapter 11 bankruptcy in the United States Bankruptcy Court for the Southern District of New York. GGP operates a national network of approximately 200 shopping centers. To the surprise of many, most of GGP’s property-specific SPE subsidiaries (“SPE Debtors”) also filed for bankruptcy.

A recent decision of the British Columbia Court of Appeal has rationalized the approach to be taken by Courts in considering appeals in CCAA cases.