On September 17, 2009 our firm published a summary of recent amendments (the "Amendments") to Canada’s Bankruptcy and Insolvency Act ("BIA") and Companies’ Creditors Arrangement Act ("CCAA"). This summary provided a detailed review of the significant legislative changes that were brought into force on September 18, 2009.

The U.S. Bankruptcy Court for the District of Delaware approved debtor Magna Entertainment Corp.’s proposed bidding procedures for the sale of Maryland’s Pimlico Race Course, home to the Preakness Stakes, and Laurel Park race course over the objections from former owners and state authorities. The former owners, together with Baltimore’s mayor and city council and the state of Maryland, objected to the expedited time frame, arguing that the debtor failed to provide parties in interest with sufficient time to respond to the proposed procedures.

The U.S. Bankruptcy Court for the Southern District of New York has granted debtors Lehman Brothers Holdings Inc.’s request to pursue a plan for developer SunCal Co., which is subject to a pending bankruptcy case in the Central District of California. Prior to LBHI’s bankruptcy filing, the debtors had provided SunCal with funding in an amount of approximately $2.2 billion. In January, SunCal commenced an adversary proceeding in its own bankruptcy case seeking to have LBHI’s claims subordinated. SunCal opposes LBHI’s filing a plan and has put forth its own plan in the case.

On October 2, the official committee of unsecured creditors in the chapter 11 cases of Lyondell Chemical Co. filed a motion for the appointment of an examiner in the U.S. Bankruptcy Court for the Southern District of New York. The committee asserts that an examiner is needed to investigate allegations of a conflicted rights offering sponsor, the debtors’ refusal to refinance the debtor-in-possession credit facility, and the debtors’ refusal to formulate a plan of reorganization with an appropriate reserve for unsecured creditors pending resolution of the committee’s adversary proceeding.

latest Distressed Assets Opportunities lists prepared by our colleagues in the Business Reorganization and Bankruptcy Group and the Real Estate Group. The lists can be accessed by clicking the hyperlinks.

Introduction

The dearth of credit available for companies in financial distress means an asset sale may be the only way to save the business and jobs. It also presents unusually attractive investment opportunities for public and private companies, private equity and hedge funds, and other investors with capital and an ability to move expeditiously.

Although the Companies’ Creditors Arrangement Act (“CCAA”) provides scant guidance, it is a well established procedure in a CCAA proceeding for the Court to order a claims process and to delegate powers to review creditors claims to a CCAA Monitor. Recognizing the gaps in the legislation, the Nova Scotia Supreme Court recently reviewed and clarified the basis of a Monitor’s authority to conduct a claims bar process in the CCAA restructuring of ScoZinc Ltd.

On July 27, 2009, Arclin Canada Ltd. and related Canadian entities filed under the CCAA in Ontario and related U.S. entities filed under Chapter 11 of the U.S. Bankruptcy Code in Delaware. Arclin announced that it had reached agreement with certain of its key senior lenders to reduce its debt from US $234 million to US $60 million and that it would receive a US $25 million debtor in possession (DIP) financing facility.

As we warned in our earlier articles, “Wage Earner Protection Program Act Comes Into Force - Secured Creditors Be Wary” and “Extension of the WEPPA – Further Protection for Employees”, the Wage Earner Protection Program Act (the “WEPPA”) took eff

The Nortel restructuring continues to be what many observers consider the most interesting Canadian restructuring in recent memory. Most recently, it was an international battle for certain of the once Canadian icon's valued assets.