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Chrysler Chapter 11 proceedings update

As widely reported, on April 30, 2009, (the Petition Date), Chrysler LLC and its 24 domestic and indirect subsidiaries (the Debtors) filed voluntary petitions under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (the Court).

USA, Insolvency & Restructuring, Faegre Drinker Biddle & Reath LLP, Interim order, Limited liability company, Line of credit, US Department of the Treasury, Chrysler, United States bankruptcy court
Rights of trustees in bankruptcy and secured creditors to licenses held by a debtor

The Supreme Court of Canada recently released its decision in Saulnier v. Royal Bank of Canada1 ("Saulnier"), an important case involving fishing licences in the context of a secured lending transaction and an assignment in bankruptcy. This case contains what we believe is significant commentary on classifying certain governmental licences as "property" under the Bankruptcy and Insolvency Act (Canada) (the "BIA") and "personal property" under the Personal Property Security Act (Nova Scotia) (the "Nova Scotia PPSA").

Canada, Insolvency & Restructuring, Litigation, Borden Ladner Gervais LLP, Bankruptcy, Debtor, Interest, Consideration, Personal property, Secured creditor, Tangible property, Royal Bank of Canada, Bankruptcy and Insolvency Act 1985 (Canada), Trustee, Supreme Court of Canada
Court denies request for a sealing order for transcript of Section 163(1) examination under the Bankruptcy and Insolvency Act

In the recent decision of Re Rieger Printing Ink Co., Justice Pepall of the Ontario Superior Court of Justice (Commercial List) considered the right to protection against selfincrimination in a Section 163 examination conducted under the Bankruptcy and Insolvency Act (the "BIA").

Canada, Ontario, Insolvency & Restructuring, Litigation, Borden Ladner Gervais LLP, Bankruptcy, Discovery, Constitutionality, Bankruptcy and Insolvency Act 1985 (Canada), Canadian Charter of Rights and Freedoms, Trustee, Chief financial officer, Supreme Court of Canada
Third Circuit predicts New Jersey courts would recognize "deepening insolvency” damages

In Thabalt v Chait (Nov. 2008), the U.S. Court of Appeals for the Third Circuit upheld an award of damages against PriceWaterhouseCoopers LLP (PWC) based on PWC’s alleged negligent audit of the Ambassador Insurance Company. Plaintiff, the Vermont Insurance

USA, New Jersey, Insolvency & Restructuring, Faegre Drinker Biddle & Reath LLP, Audit, Interest, Debt, Liability (financial accounting), Negligence, Liquidation, Remand (court procedure), KPMG, Supreme Court of the United States, Third Circuit, New Jersey Supreme Court
Licenses and Parliament’s lexicon

The Supreme Court of Canada released its decision in Saulnier v. Royal Bank of Canada on October 24, 2008. The decision provides welcome clarification concerning the nature of government licenses and confirms that at least certain kinds of licenses constitute property for the purposes of the Bankruptcy and Insolvency Act (the “BIA”) and for the purposes of Canadian personal property security legislation. The decision is also important because it takes a purposive and commercial approach to the interpretation of bankruptcy and personal property security legislation.

Canada, Banking, Insolvency & Restructuring, Litigation, Borden Ladner Gervais LLP, Bankruptcy, Interest, Personal property, Common law, Secured creditor, Easement, Tangible property, Bénéfice, Royal Bank of Canada, Bankruptcy and Insolvency Act 1985 (Canada), Personal Property Security Act 1990 (Canada), Supreme Court of Canada
Restructuring without a plan

On 15 August 2008, the British Columbia Court of Appeal released its reasons for judgment in Cliffs Over Maple Bay Investments Ltd. v. Fisgard Capital Corp. (CA036261). Tysoe J.A., for the court, said that a CCAA stay of proceedings “should not be granted or continued if the debtor company does not intend to propose a compromise or arrangement to its creditors.” CCAA filings designed to permit a debtor company to carry on business and to run a sales process for the sale of all or a substantial portion of the debtor company’s business is relatively common.

Canada, British Columbia, Insolvency & Restructuring, Litigation, Borden Ladner Gervais LLP, Debtor, Mortgage loan, Standard of review, Stakeholder (corporate), Refinancing, Companies' Creditors Arrangement Act 1933 (Canada), Court of Appeal for Ontario
Guidance for directors of financially troubled companies from Delaware Bankruptcy Court

The United States Bankruptcy Court for the District of Delaware on May 30, 2008, issued a memorandum opinion in which it refused to dismiss claims of breach of fiduciary duty against directors and officers of a company who approved the sale of the company’s assets on the eve of its filing for bankruptcy protection. In issuing its opinion inIn re Bridgeport Holdings Inc., the court provided some guidelines for directors and officers, particularly during challenging economic times.

USA, Delaware, Company & Commercial, Insolvency & Restructuring, Litigation, Faegre Drinker Biddle & Reath LLP, Bankruptcy, Breach of contract, Fiduciary, Market liquidity, Liquidation, Good faith, Duty of care, Business judgement rule, Line of credit, Valuation (finance), Leverage (finance), Memorandum opinion, Chief executive officer, United States bankruptcy court, US District Court for District of Delaware
The chronicles of property of the bankrupt: trustees, interim receivers and the law of trusts

In Re Norame Inc. (2008), 90 O.R. (3d) 303(Ont. C.A.), the Ontario Court of Appeal was again called upon to consider various issues of importance to insolvency practitioners. In a decision released on April 28, 2008, Mr. Justice LaForme delivered the judgment for the Court of Appeal and in so doing dismissed the appeal of Paddon + Yorke Inc., in its capacity as trustee in bankruptcy of Norame Inc. (the "Trustee").

Canada, Ontario, Insolvency & Restructuring, Litigation, Borden Ladner Gervais LLP, Bankruptcy, Involuntary dismissal, Common law, Ally Financial, Bankruptcy and Insolvency Act 1985 (Canada), Trustee, Court of Appeal of England & Wales, Court of Appeal for Ontario, Ontario Superior Court of Justice
Secured claims in proposal proceedings

In the recent decision of Re WorkGroup Designs Inc.,1 the Ontario Court of Appeal considered the provisions of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (the "BIA") which relate to valuing and determining the claims of secured creditors in proposal proceedings under the BIA.

Background

Canada, Ontario, Insolvency & Restructuring, Litigation, Borden Ladner Gervais LLP, Bankruptcy, Unsecured debt, Statutory interpretation, Liquidation, Secured creditor, Royal Bank of Canada, Canada Revenue Agency, Bankruptcy and Insolvency Act 1985 (Canada), Trustee, Court of Appeal for Ontario, Ontario Superior Court of Justice, Court of Appeal of Singapore
The pension implications of the Wage Earner Protection Program

On July 7, 2008, the Wage Earner Protection Program Act (the "WEPPA") was proclaimed into force, along with complementary amendments to the Bankruptcy and Insolvency Act (the "BIA") and other related statutes. The new program protects a limited amount of the unpaid wages of employees when an employer becomes bankrupt or is placed into receivership, and the amendments to the BIA provide for the priority of some un-remitted pension contributions.

The Wage Earner Protection Program (the "WEPP")

Canada, Employment & Labor, Insolvency & Restructuring, Borden Ladner Gervais LLP, Wage, Bankruptcy, Income tax, Retirement, Remand (court procedure), Preferred stock, Severance package, Bankruptcy and Insolvency Act 1985 (Canada)