It has long been standard practice for Court-appointed receivers, monitors and trustees in bankruptcy to include comprehensive disclaimer language in the reports they submit to Court in connection with insolvency proceedings. The reason is simple – these reports are relied on by the Court and other parties to the proceedings, and are often prepared using unaudited and unverified information obtained from management of the debtor company.

On April 2, 2013, Justice Mesbur of the Ontario Superior Court of Justice (Commercial List) granted an application brought by Business Development Bank of Canada (“BDC”) for the appointment of a receiver over the assets, undertakings and properties of Pine Tree Resort Inc. and 1212360 Ontario Limited, operating as the Delawana Inn in Honey Harbour, Ontario (together, “Delawana”).

On February 1, 2013, the Supreme Court of Canada (the “SCC”) released its long-awaited decision in Sun Indalex Finance, LLC v. United Steel Workers1 (“Indalex”). By a five to two majority, the SCC allowed the appeal from the 2011 decision of the Ontario Court of Appeal (the “OCA”) which had created so much uncertainty about the relative priorities of debtor-in-possession (“DIP”) lending charges and pension claims in Companies’ Creditors Arrangement Act (the “CCAA”) proceedings.

The Companies’ Creditors Arrangement Act¹ (the “CCAA”) is by far the most flexible Canadian law under which a corporation can restructure its business. When compared against theBankruptcy and Insolvency Act² (the “BIA”), the CCAA looks like a blank canvass and lends itself well to invention and mutual compromise.

On February 1, the Supreme Court of Canada (the “SCC”) released its long-awaited decision in Sun Indalex Finance, LLC v. United Steel Workers. By a five to two majority, the SCC allowed the appeal from the 2011 decision of the Ontario Court of Appeal (the “OCA”) which had created so much uncertainty about the priority of pension claims in Companies’ Creditors Arrangement Act (the “CCAA”) proceedings.

The Sixth Circuit Court of Appeals recently affirmed the decisions of the courts below and held in an unpublished opinion that a secured lender’s credit bid at a Michigan foreclosure sale extinguished all of the Chapter 13 debtor’s indebtedness to the lender, thereby precluding the lender from executing on a prepetition foreclosure judgment obtained against the debtor in Wisconsin. State Bank of Florence v. Miller (In re Miller), 2013 WL 425342 (6th Cir. Feb. 5, 2013).

In October 2012, The Futura Loyalty Group Inc. (“Futura”) commenced proceedings under the Companies’ Creditors Arrangement Act (the “CCAA”). On November 13, 2012, Justice Brown of the Ontario Superior Court of Justice (Commercial List) (the “Court”) considered Futura’s request to permit pre-filing, prepayment obligations to its key customers.

In a previous Alert that we published in July 2012 entitled “Michigan Court Authorizes Receiver Sale of Real Property Free and Clear of Redemption Rights,” we reported on a decision of a Michigan trial court in Ottawa County, Michigan permitting a state-court receiver to sell real property free and clear of a mortgagor’s redemption rights.

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