Section 8 of the Interest Act (Canada) (the Act) was considered by the Ontario Superior Court of Justice in Grant Forest Products Inc. (Re) in the context of an inter-creditor dispute.

You are probably aware of the useful restructuring and creditor protection process available to insolvent entities in the United States under Chapter 11 of the United States Bankruptcy Code. In Canada, more than one insolvency regime is available in respect of debtor companies in financial difficulty and those interested in acquiring such companies or their assets. However, because of its flexibility, the most commonly used Canadian regime for larger debtor companies or complicated restructurings is the Companies’ Creditors Arrangement Act (Canada) (the "CCAA").

The Supreme Court of Canada has recently granted leave to appeal from the judgment of the British Columbia Court of Appeal in Edward Sumio Nishi v. Rascal Trucking Ltd. This appeal focuses on the test for a resulting trust in the commercial context.

When a contractor pays money into court to discharge a lien of a sub-contractor, can that money only be used to discharge that lien holder’s claim?  Or is it available to pay the liens of all eventual lien holders?  In Canadian Western Bank v.

On February 2 and 9, 2012, the Ontario Superior Court released two decisions in the ongoing proceedings of Timminco Limited and Bécancour Silicon Inc. (together, the Timminco Entities) under the Companies’ Creditors Arrangement Act (CCAA) that further develop the law regarding pension claim priorities in insolvency proceedings.

In Re Indalex Limited, the OCA surprised insolvency, pension and financial services professionals by ruling that pension plan deficiency claims can have priority over the claims of DIP lenders in the context of Companies’ Creditors Arrangement Act proceedings.

On Thursday, December 1, 2011, a three-judge panel of the Supreme Court of Canada granted leave to appeal from the decision of the Court of Appeal for Ontario in Re Indalex.

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

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