Force majeure clauses and the doctrines of impossibility and/or impracticability remain among the most-discussed legal topics of the COVID-19 pandemic. Courts across the country, finally open, are grappling with those issues and giving some insight as to how these topics may play out in future cases.
In a decision released on March 11, 2020, the Ontario Court of Appeal provided reassurance for those in the construction industry of the effectiveness of section 9(1) of the Construction Act, RSO c C.30 (“CA”) in insolvency proceedings. This decision did not overturn the previous decision rendered in Re Veltri Metal Products Co (2005), 48 CLR (3d) 161 (Ont CA) (“Veltri”); rather, the Court of Appeal distinguished the two cases on the facts.
Whether or not the impact of the COVID-19 crisis on a party’s ability to perform its obligations will constitute a force majeure event enabling them to claim relief depends on the terms of the contract as applied to the precise circumstances. Where there is no force majeure clause, a party may in rare circumstances be able to invoke the doctrine of frustration.
Seyfarth Synopsis: In acquiring a company in bankruptcy, there is often a tendency to think this guarantees the purchaser will be “free and clear” of any liability (including so-called “successor liability”). This is not necessarily so with wage and hour liability, particularly if the purchaser merely continues to operate virtually the same business that was acquired.
The Corporate Insolvency and Governance Bill was first read to Parliament on 20 May 2020. It is set to be fast tracked into legislation and will likely be law by 10 June 2020.
APPEAL ALLOWED
9354-9186 Québec inc. v. Callidus Capital Corp., 2020 SCC 10
Bankruptcy and insolvency Discretionary authority of supervising judge in proceedings under Companies’ Creditors Arrangement Act Appellate review of decisions of supervising judge
Courts continue to address constitutional and statutory challenges to COVID-19-related legislation and governmental orders. Among them, courts are examining eligibility for PPP loans under the CARES Act, as well as the constitutionality of “stay at home” and similar orders restricting activities.
PPP loans under the CARES Act
The COVID-19 pandemic and the drastic measures taken in an effort to mitigate its adverse impact have sent shock waves throughout the US and global financial systems. COVID-19 and measures including travel bans, shelter-in-place orders and widespread business closures have caused precipitous changes in customer spending and demand, supply chain disruptions, sharp declines in revenue and other operational challenges across a wide range of economic sectors. Businesses worldwide now confront unprecedented and mounting challenges and distress.
We have previously reported on the developing area of adjudication by insolvent companies, now the subject of another key judgment. In Balfour Beatty Civil Engineering Limited and Astec Projects Limited (in liquidation) [2020] the Technology and Construction Court (TCC) has provided a further clear example of the type of strict conditions that will need to be satisfied to enable such adjudications to proceed.
As the economic crisis brought on by the novel coronavirus (COVID-19) pandemic deepens, commercial landlords would be wise to review the deposit language contained in their leases with their counsel. In particular, the wording of the rent deposit and security deposit provisions should be examined more closely and consideration given to who would be entitled to the deposit in the context of a tenant bankruptcy.