The recent decision inErnst & Young Inc. v. Aquino, the Ontario Court of Appeal (OCA) analyzed the criteria for establishing voidable transfers at undervalue under section 96 of theBankruptcy and Insolvency Act RSC 1985, c B-3 (BIA), with a particular focus on the application of “corporate attribution” in the context of insolvency.
As Canada prepares to emerge from the COVID-19 pandemic, factors such as the elimination of government pandemic support and rising interest rates may significantly affect lenders’ decisions in 2022. Many expect that withdrawal of government funding will create a wave of insolvency filings in Canada. Although there remains significant uncertainty, secured lenders may be comforted by recent court decisions across Canada that have affirmed lenders’ rights and remedies in cases of default. This article summarizes these recent decisions and offers implications for lenders going forward.
Does a claim for a balance of sale of shares, originally owed by one of the two entities that amalgamated to become the debtor, constitute an equity claim pursuant to section 2(1) of the Bankruptcy and Insolvency Act1 (hereafter the BIA) in the context of a proposal of that same debtor?
If so, what are the consequences for the Seller?
Background
Questions en litige
Est ce qu’une créance relative à un solde de prix de vente d’actions, initialement due par une des deux entités ayant fusionné pour devenir la débitrice, constitue une réclamation relative à des capitaux propres au sens de l’article 2 (1) de la Loi sur la faillite et l’insolvabilité1 (ci après la « LFI ») dans le cadre de la proposition de cette même débitrice?
Le cas échéant, quelles sont les conséquences pour le Vendeur?
Trame factuelle
In Her Majesty the Queen v. Canada North Group Inc., the Supreme Court of Canada (the Court) held that lower courts can permit the grant of court ordered charges under the Companies’ Creditors Arrangement Act, RSC 1985, c C-36 (the CCAA), including the interim lender’s charge, in priority to the Minister of National Revenue’s (the Minister) statutory deemed trust claims under the Income Tax Act, RSC 1985 c 1 (the ITA).
With Hertz emerging from a bankruptcy with a positive result for shareholders, we are reminded of the interplay between the equity markets and the bankruptcy alternative.
Some firms facing financial challenges during the pandemic were able to avoid a bankruptcy filing altogether because of their ability to raise the necessary funds through an equity offering. Hertz provides an example of a situation where the bankruptcy filing instead of wiping out the equity enhanced value.
On June 17, 2021, the Alberta Court of Appeal (ABCA) dismissed two companion appeals in the receivership proceedings of Accel Canada Holdings Limited (Holdings) and Accel Energy Canada Limited (Energy and together with Holdings, Accel).
On March 30, 2021, the Supreme Court of British Columbia (the Court) made an initial order under the Companies Creditors Arrangement Act (the CCAA) in respect of EncoreFX Inc. (EncoreFX) one year after the commencement of its bankruptcy proceedings. The decision is unusual in that the applicant for the CCAA initial order was EncoreFX’s trustee in bankruptcy (the Trustee), who also sought to be appointed as monitor of EncoreFX (with enhanced powers). On April 22, 2021, the Court released the reasons for its decision.1
Over the past year, the Covid-19 pandemic upended many industries. While the construction industry has largely been able to operate throughout the pandemic, albeit with increased and ever-changing restrictions on jobsites, one consequence of these disruptions may be an increase in construction-related bankruptcy filings. Already in 2021, there have been over 70 construction-related bankruptcy filings across the country. For many property owners and real estate developers, these filings create a nightmare scenario where work may slow or even stop entirely.
Since our last update in October 2019, there have been many interesting developments in the area of environmental law. The COVID-19 pandemic, reconciliation with Indigenous peoples, and climate change were key topics that shaped judicial, legislative, and policy changes in British Columbia and across Canada. With respect to judicial developments, disputes over natural resource projects, contaminated sites, environmental prosecutions, as well as judicial review or appeal decisions arising from environmental regulatory bodies, brought many changes to the landscape of environmental law.