The recent Ontario Court of Appeal decision in Murphy v Sally Creek Environs Corporation, 2010 ONCA 312 (“Sally Creek”) is a cautionary tale for Trustees in bankruptcy (“Trustees”) and the counsel who represent them.1 In that case, the Trustee’s fees and those of its legal counsel were drastically reduced on a taxation, a cost award was made against the Trustee personally and the Trustee’s conduct was impugned in a detailed decision of the Bankruptcy Registrar and the Court of Appeal.

Ontario Court Stays Retaliatory Action brought against Bank

Financial institutions seeking to enforce a debt or guarantee through bankruptcy or other court proceedings are sometimes faced with meritless retaliatory court actions brought by debtors attempting to frustrate or further delay payment. In general, Ontario courts will not compel parties to litigate the same dispute on multiple fronts. Instead, one proceeding will be temporarily stayed pending resolution of the other where the same core issues are raised in both.

One more province has joined the ranks of extending creditor protection to registered savings plans. Alberta’s Civil Enforcement Amendment Act came into force on October 1, 2009 (the “Act”). It applies to registered retirement savings plans (RRSPs), registered retirement income funds (RRIFs), deferred profit sharing plans (DPSPs) and registered disability savings plans (RDSPs).

Fair Treatment

If you intend to enforce a judgement in Canada, you should know that the question of the US Court’s jurisdiction will likely be determined by the Canadian Court enforcing the judgement using its own test. The grounds on which the US Court took jurisdiction will carry little weight in the eyes of the Canadian enforcing Court.

In dealing with collateral provided by a third party to support the obligations of the prime debtor, lenders and their counsel need to remember the impact of the federal Bankruptcy and Insolvency Act.

Ontario’s Personal Property Security Act (PPSA) was amended to broaden the definition of the word “debtor.” However, the Bankruptcy and Insolvency Act’s (BIA) definition of a “secured creditor” is still restricted to a person holding a charge or a lien “as security for debt due or accruing to the person (lender) holding the debt.”

Significant insolvency law amendments were declared in force as of September 18, 2009 (the “Amendments”). The Amendments were contained in Bill C-55 which received Royal Assent on November 25, 2005 and in Bill C-12 which received Royal assent on December 14, 2007, but the Amendments were not proclaimed into force until September 18, 2009.

introduction

This document provides a brief overview of insolvency proceedings in Canada. It outlines the Canadian legislative framework and briefly describes the receivership process, the bankruptcy regime and the formal restructuring alternatives available to debtors.

legislative framework

On October 30, 2009, the Supreme Court of Canada issued its much awaited decision regarding Revenue Quebec's creative "owenership" claim over the tax portions of a bankrupt's accounts recievable.

As we previously wrote about (Volume 1, Issue 3, December 2008), the Wage Earner Protection Program Act (“WEPPA”) came into force on July 7, 2008 as part of a comprehensive reform package to the Bankruptcy & Insolvency Act (“BIA”). WEPPA was designed to protect the wages of employees terminated as a result of a bankruptcy or receivership. Employees could now claim up to $3,000 worth of wages earned in the six months immediately preceding the bankruptcy or receivership, as well as a $2,000 super priority claim on all current assets of their employer.

After years of waiting, significant amendments to the Canadian regime of bankruptcy and insolvency law were declared in force as of September 18, 2009 (Amendments).