The Supreme Court has announced it will hear the appeal in the high profile Indalex Ltd., Re. The appeal is of great interest to the commercial litigation, insolvency and pension bar. Its outcome will be closely watched and may have dramatic impact on Canadian corporate reorganizations.
Background
A recent Court of Appeal case confirms that the Foreign Judgments (Reciprocal Enforcement) Act 1933 does apply to judgments in insolvency matters and that the Insolvency Act 1986 can be used to enforce a foreign judgment.
In New Cap Reinsurance Corporation Ltd & Anr v AE Grant & Ors [2011] EWCA Civ 971, the Court of Appeal upheld the first instance decision of the Companies Court that a judgment obtained in Australia could be enforced in England under section 426 of the Insolvency Act (the IA) and at common law.
NEW CAP RE: THE FACTS
Today, the Supreme Court of Canada agreed to hear an appeal of the unanimous decision rendered last April by the Ontario Court of Appeal (OCA) in Re Indalex Limited (Indalex). According to many commentators, the Indalex case turns accepted law on the priority of debtor in possession (DIP) and working capital security on its head and introduces new concerns for employers about how to properly discharge their sometimes conflicting duties under corporate law and under pension law.
What role does business common sense play in the interpretation of commercial contracts? This issue was recently addressed by the Supreme Court of the United Kingdom in Rainy Sky S.A. v. Kookmin Bank. The answer: “where a term of a contract is open to more than one interpretation, it is generally appropriate to adopt the interpretation which is most consistent with business common sense”. Since there is currently some uncertainty in Canada on the point, Rainy Sky is an important case to consider.
Decision
As we previously report here, Ambac Financial Group, Inc. (“AFG”), the holding company for the bond insurer, Ambac Assurance Corp. (“AAC”), filed for bankruptcy in November 2010 after it was unable to raise additional capital or come to terms with its debt holders.
Sunrise, sunset. Perhaps a matchmaker would have helped. The saga of the dispute between Ventas, Inc. and Health Care Property Investors, Inc. arose five years ago when Sunrise Senior Living Real Estate Investment Trust’s "board of trustees determined that a strategic sale process of its assets would be beneficial to its unitholders, thus effectively putting Sunrise ‘in play’ on the public markets" (per Blair J.A. for the Ontario Court of Appeal) in Ventas, Inc. v.
U.S. Bankruptcy Judge Martin Glenn of the Southern District of New York has approved a stipulation between bankrupt bookseller Borders Group Inc. ("Borders") and email marketer Next Jump Inc. ("Next Jump") that will require Next Jump, a former marketing partner of Borders, to stop emailing Borders' customers and remove Borders' trademarks from its website and email blasts.
In New Cap Reinsurance Corporation Ltd & Anr v AE Grant & Ors, the Court of Appeal has upheld a first instance decision that section 426 of the Insolvency Act (IA) can be used to enforce a foreign monetary judgment in insolvency proceedings. However, the Court acknowledged that where there exists a statutory framework for the enforcement of foreign judgments, in this case enforcement pursuant to the Foreign Judgments (Reciprocal Enforcement) Act 1933 (the 1933 Act), then enforcement under s.426 of the IA must follow the requirements of the 1933 Act.
The case concerned credit default swaps entered into between Lehman Brothers Special Financing Inc., and various parties, and the rights of the parties in respect of collateral held by a trustee.
The Supreme Court recently issued its opinion in Stern v. Marshall (Stern), Case No. 10-179, 2011 WL 2472792 (U.S. June 23, 2011), invalidating the relatively common assumption that so called “core” bankruptcy proceedings are all matters in which the bankruptcy courts are permitted to enter final judgment, and undoubtedly fostering heightened jurisdictional scrutiny in the future.