Introduction
On 29 June 2017 the High Court made an order for costs against the three former directors of Custom House Capital (the “Company”) having already disqualified them from acting as directors for periods in excess of ten years. The judgment was unusual because the order for costs was not just in relation to the legal costs but also for the very significant investigative costs of the Official Liquidator.
Background
On June 22, Sears Canada Inc. ("Sears Canada") and certain affiliates1 (collectively, the "Sears Canada Group") sought and obtained insolvency protection under the Companies' Creditors Arrangement Act (CCAA) from the Ontario Superior Court of Justice (Commercial List) (the "Court"), which in turn appointed FTI Consulting Canada Inc. (FTI or the "Monitor") as monitor.
In the recent decision of Re JD (a debtor), the High Court upheld a debtor’s challenge to a lender’s decision to reject a Personal Insolvency Agreement (“PIA”) proposal.
Section 115A of the Personal Insolvency Acts 2012- 2015 (“the Acts”) provides a new mechanism by which a debtor may seek the Court’s approval of a PIA notwithstanding its rejection by creditors.
This case is particularly significant as:
Introduction
With the commencement of the Companies Accounting Act 2017 (“2017 Act”) on 9 June 2017, the priority of charges in liquidations has been dramatically altered.
Judicial Development
For many litigants, the decision whether to prosecute or defend a lawsuit vigorously boils down to a rather basic calculus: What are my chances of success? What is the potential recovery or loss? Is this a "bet the company" litigation? And, how much will I have to pay the lawyers? In many respects, it is not all that different from a poker player eyeing his chip stack and deciding whether the pot odds and implied odds warrant the call of a big bet.
The recent judgment in MB Refrigeration and Air-conditioning Limited (in liquidation) –v- Allied Irish Bank Plc [2016] has clarified what constitutes “notice” of the liquidation of a company for creditors and banks alike.
For many litigants, the decision whether to prosecute or defend a lawsuit vigorously boils down to a rather basic calculus: What are my chances of success? What is the potential recovery or loss? Is this a “bet the company” litigation? And, how much will I have to pay the lawyers? In many respects, it is not all that different from a poker player eyeing his chip stack and deciding whether the pot odds and implied odds warrant the call of a big bet.
On January 17, the US Court of Appeals for the Second Circuit rendered a much anticipated decision in Marblegate Asset Management, LLC v. Education Management Corp., No. 15-2124-cv(L), 15-2141-cv(CON), reversing the Southern District of New York's holding that only a non-consensual amendment to an indenture's core payment terms violates Section 316(b) of the Trust Indenture Act (TIA).
On November 17, 2016, the US Court of Appeals for the Third Circuit in Delaware Trust Co. v. Energy Future Intermediate Holding Co. LLC, No. 16-1351 (3d Cir. Nov. 17, 2016) clarified the often-muddy interplay between indenture acceleration provisions and "make-whole" redemption provisions, holding that Energy Future Intermediate Holding Co. LLC and EFIH Finance Inc. (collectively, "EFIH") were unable to avoid paying lenders approximately $800 million in expected interest by voluntarily filing for bankruptcy.