The Companies’ Creditors Arrangement Act (“CCAA“) proceedings involving Carillion Canada and related entities (collectively, “Carillion Canada”) have been an ongoing area of interest for the construction industry since proceedings began in early 2018.

In Chandos Construction v Deloitte Restructuring, the Supreme Court clarified one aspect of bankruptcy law – the scope and application of the anti-deprivation rule – while leaving an unsettled area of contract law – the penalty doctrine – to be resolved for another day. Here, we consider the implications of the newly-clarified anti-deprivation rule as it applies to the construction industry.

Background

The governmental restrictions and social customs implemented to combat the spread of COVID-19 have led to significant fallout throughout the economy. Many companies, particularly those with significant retail, hospitality, and personal services operations, may become insolvent and may have to consider their options for avoiding bankruptcy. Creditors looking to recover from insolvent companies may find their claims subject to a debtor’s reorganization proceedings under the Companies’ Creditors Arrangement Act, RSC 1985, c-36 (“CCAA“).

In Coosemans Miami v. Arthur (In re Arthur), the Bankruptcy Court for the Southern District of Florida held last week that individuals in control of a PACA trust may still receive a bankruptcy discharge of debts arising from their breach of such PACA trust. A link to the opinion is here.

The Fifth Circuit recently issued an opinion that federal bankruptcy law does not prohibit a bona fide shareholder from exercising its right to vote against a bankruptcy filing notwithstanding that such shareholder was also an unsecured creditor. This represents the latest successful attempt to preclude bankruptcy through golden shares or bankruptcy blocking provisions in corporate authority documents.

On June 14, 2018, the United States Court of Appeals for the Fifth Circuit issued a revised opinion that held that Federal law does not prevent a bona fide shareholder from exercising its right to vote against a bankruptcy petition just because it is also an unsecured creditor. In re Franchise Servs. of N. Am., Inc., 891 F.3d 198, 203 (5th Cir. 2018), as revised (June 14, 2018).

Weird things happen in bankruptcy court. All you high-falutin Chapter 11 jokers out there, cruise down to the bankruptcy motions calendar one day.

Bankruptcy courts have authority to hold in civil contempt one who refuses to comply with a bankruptcy court order, including incarceration and/or daily fines until the offender complies.[1] But when does civil contempt[2] cross into criminal contempt, which is punitive and outside

Subcontractors may find themselves in a difficult position if an owner or general contractor fails to pay for labour and materials provided to a project. This failure to pay may occur for any number of reasons, but is often a result of a dispute or insolvency. One of the most commonly used methods to mitigate the risk of non-payment by an owner or general contractor is the use of labour and material payment bonds.

The recent decision from the United States Supreme Court in Lamar, Archer & Cofrin, LLP v. Appling (“Lamar”), further restricts a creditor’s ability to pursue future recovery on its debt through a nondischargeability action in a debtor’s bankruptcy. On June 4, 2018, the Court ruled in Lamar that a debtor’s false statement about a single asset must be in writing before the creditor’s debt can be excepted as nondischargeable in bankruptcy.