On January 27, 2012, Justice Newbould of the Ontario Superior Court of Justice (Commercial List) (the “Court”) released his decision in Temple (Re),1 holding that the Ontario Limitations Act, 20022 (the “Act”) does not apply to a bankruptcy application and does not operate to extinguish a debt owing to a creditor.

The Ontario Limitations Act, 2002

Introduction

Does the dissolution of a corporation that is in receivership terminate the receivership? Until the recent decision of Meta Energy Inc. v. Algatec Solarwerke Brandenberg GMBH, 2012 ONSC 175, 2012 ONSC 4873, there was no previous court decision directly on point. The answer to the question is “no.”

Background

A recent case illustrates the importance of clarity in the contractual arrangements associated with the disposition of a debtor’s assets. In the case, the Court appointed receiver was given Court approval for an auction services agreement. Under that agreement, the auctioneer was to conduct an auction sale of the debtor’s assets and was entitled to charge and collect a buyer’s premium equal to a minimum of 12% of the sales price.

The Second Circuit has summarily affirmed a district court’s denial of a petition to vacate an arbitration award, and granted the cross-petition to confirm. We noted in our December 15, 2010 post that the Southern District of New York confirmed the award to Bayou Funds, a group of bankrupt entities which had been run as a massive Ponzi scheme. The district court ruled that the arbitrator did not manifestly disregard the law, even though he did not explicate the reasons for his ruling.

Concerned about the use of separate accounts to fund products with general account guarantees, the NAIC continues to examine these products and to consider how these products and the underlying assets should be regulated and treated for insolvency purposes.

The common law has long recognized a secured creditor’s duty to provide reasonable notice to borrowers before enforcing its security and appointing a receiver. The practical importance of this has become less significant since the codification of the principle of reasonable notice in section 244 of theBankruptcy and Insolvency Act (“BIA”). However, in the recent case of Bank of Montreal v.

A court affirmed the denial of W.R. Grace & Co.’s asbestos insurance claims against the liquidation estate of Grace’s insolvent excess-of-loss insurer, on the ground that Grace failed to submit timely “absolute” claims under New Jersey’s version of the Uniform Insurers Liquidation Act. Grace, which has been undergoing bankruptcy restructuring, had established a plan with a creditor’s committee to create a trust to pay asbestos claims.

Reliance Insurance Company in Liquidation (the “Liquidator”) petitioned a Pennsylvania state court for a declaratory judgment holding that Aramark Corporation must reimburse certain state guaranty associations (“GAs”) for claims allegedly improperly paid to Aramark and subsequently presented to the Reliance Estate by the GAs for payment. The Liquidator also sought a declaration that Aramark’s claims against the Estate should be given low priority.

In the midst of the ongoing restructurings of Nortel and AbitibiBowater, the New Democrats introduced Bill C-501 in the spring of 2010 to amend the Bankruptcy and Insolvency Act (the “BIA”) and the Companies’ Creditors Arrangement Act (the “CCAA”) with the goal of better protecting employees’ interests in the context of formal insolvency proceedings, including pension interests. However, Bill C-501 did not become law.

Introduction

In “True Lease v. Security Lease – Is the Distinction Still Relevant?” which appeared in the June 2008 issue of Collateral Matters, Jill Fraser discussed a 2007 amendment to the Personal Property Security Act (Ontario) (the “PPSA”) and whether or not the distinction between a true lease and a security lease was still relevant in light of that amendment.