On Friday, February 1, 2008, Plastech Engineered Products, Inc. and certain of its affiliated companies (collectively, “Plastech”) filed for protection under Chapter 11 of the Bankruptcy Code in Detroit, Michigan. None of Plastech's foreign incorporated affiliates are included in this bankruptcy petition and as such, any transaction with such affiliates should continue in the normal course.
In order to get the information necessary to seize a debtor's assets or garnish his income, Rule 60.18 of the Rules of Court permit a creditor to require a debtor to attend an examination under oath before a court reporter and be questioned in relation to:
(a) the reason for non-payment or non-performance of the judgment;
(b) the debtor's income and property;
(c) the debts owed to and by the debtor;
(d) the disposal the debtor has made of any property either before or after the making of the order;
An employee of a car care business accused the co-owner's business partner of sexually harassing her. Incredibly (and as an example of what not to do about a sexual harassment claim), the co-owner told her to stop flirting with his partner and asked her to sign a memo that "anything that happened was of a consensual nature." The employee was told she would be fired if she did not sign the memo. She refused to sign and did not return to work.
Courts will only rarely and sparingly interfere with contractual rights that parties freely negotiate and agree upon.
However, in Protiva Biotherapeutics Inc. v. Inex Pharmaceuticals Corp., the British Columbia Court of Appeal recently determined that it could adjust contractual rights in order to achieve a workable plan of arrangement proposed by a company under the British Columbia Business Corporations Act (“Act”).
Should Lenders be Concerned?
In the United States, claims for “deepening insolvency” have been advanced against lenders and investment bankers to insolvent companies as well as against the officers and directors of insolvent companies. Experience suggests that developments in U.S. commercial laws tend to be imported north of the border.1 Accordingly, lenders should be aware of the existence of the theory of deepening insolvency and the risk of creditors attempting to use it in Canada.
What is Deepening Insolvency?
On Friday, March 3, 2006, Dana Corporation and certain of its affiliated companies (collectively, “Dana") filed for protection under Chapter 11 of the Bankruptcy Code in New York. None of Dana's foreign incorporated affiliates are included in this bankruptcy petition and as such, any transaction with such affiliates should continue in the normal course. However, as a result of the bankruptcy filing, an automatic stay is in effect prohibiting creditors from seeking to take action to collect any amounts due to them from Dana which arose prior to the filing of the bankruptcy petition.