On January 31, 2019, the Supreme Court of Canada released its landmark decision in Orphan Well Association v Grant Thornton Ltd, 2019 SCC 5 ("Redwater").

On January 31, 2019, the Supreme Court of Canada released its decision in Orphan Well Association v. Grant Thornton Ltd., popularly known as Redwater. In a 5-2 split decision, a majority of the Supreme Court allowed the appeal and held that the Alberta Energy Regulator’s (AER/Regulator) assertion of its statutory enforcement powers over an insolvent licensee’s assets does not create a conflict with the federal Bankruptcy and Insolvency Act (BIA) as to trigger the constitutional doctrine of federal paramountcy.

Today, the Supreme Court of Canada released its decision in Orphan Well Association v. Grant Thornton Ltd., known as Redwater.

What Is the "Rule in Gibbs"?

The rule in Gibbs is a long-established common law principle in which the Court of Appeal determined that a debt governed by English law cannot be discharged or compromised by a foreign insolvency proceeding(Anthony Gibbs and Sons v La Société Industrielle et Commerciale des Métaux (1890) 25 QBD 399). The rule in Gibbs remains a fundamental tenet of English insolvency law.

Why Does the Rule in Gibbs Matter?

Aralez Pharmaceuticals Inc. ("AP Inc.") and Aralez Pharmaceuticals Canada Inc. ("APC Inc.") (collectively, the "Applicants") brought an application to the Ontario Superior Court under the CCAA concurrently with a United States Chapter 11 proceeding brought by affiliated entities. the Applicants. desired a managed liquidation process.

The Applicants entered into three stalking horse agreements for approximately $240 million. This compared to the secured claim of $275 million of the major secured creditors of the Applicants.

In a brief but significant opinion, the United States District Court for the District of Delaware reversed a decision by the United States Bankruptcy Court for the District of Delaware and allowed more than $30 million in unsecured, post-petition fees incurred by an indenture trustee ("Indenture Trustee").1 In reversing, the District Court relied upon a uniform body of Court of Appeals opinions issued on the subject.

On November 8, 2018, in a decision delivered unanimously from the bench, the Supreme Court of Canada confirmed that the Crown’s superpriority over unremitted Goods and Services Tax/Harmonized Sales Tax (GST/HST) is ineffective against a secured creditor who received, prior to a tax debtor’s bankruptcy, proceeds from that taxpayer’s assets.1

One of the most delicate balancing acts that the Courts are asked to perform in Canada is balancing all of the disparate and competing interests in an insolvency process. The Ontario Court of Appeal was asked to review one iteration of this balancing act in Reciprocal Opportunities Incorporated v.

​The Québec Superior Court recently rendered a judgment (Francis v. Adobe 2018 QCCS 2547) confirming that a bankrupt's debt may be declared non-releasable by a discharge order pursuant to section 178 of the Bankruptcy and Insolvency Act (the "Act"), even when said discharge order has not yet been rendered or when the bankrupt's discharge has been suspended or granted conditionally pursuant to section 173 of the Act.

In 2002 the Supreme Court of Canada, in Bank of Montreal v Dynex Petroleum Ltd, 2002 SCC 7 (Dynex) affirmed that gross overriding royalty interests (GOR) could constitute interest in land provided the parties so intended and that intention was sufficiently evidenced in an agreement.