Coronavirus (COVID-19) has sent shock waves through global markets, businesses and supply chains. Boards of directors and senior management of businesses are likely asking themselves some tough questions. For instance:
1. What should we be doing to protect our employees and operations?
2. Can boards be responsible if employees get sick from COVID-19?
3. Do we really understand the risks to our business operations from COVID-19?
4. What happens if our supply chain vendors fail to perform their contracts with us?
A recent English case has considered for the first time whether and if so to what extent the general duties of a director survive a company’s entry into an insolvency process.
Canada and Brazil share a long and significant common history of business and investment. Over a century ago, Canadian companies were heavily involved in building electrical and other infrastructure in São Paulo and Rio de Janeiro. Today, over 50 public companies listed on the TSX and TSX-V have substantial assets and operations in Brazil. In 2018, direct investment between the two countries exceeded $14 billion in each direction.
In Meadowside Building Developments Ltd (in liquidation) –v- 12-18 Hill Street Management Company Ltd [2019] EWHC 2651 (TCC), the Court found that in certain circumstances, it is possible for companies in liquidation to legitimately engage in adjudication proceedings.
Background
Historically, there has been some doubt as to whether or not an Adjudicator has jurisdiction to make a decision if the referring party was insolvent. This was due to the fundamental incompatibility between the adjudication process and the insolvency regime.
The Act of Parliament that implemented the 2019 federal budget also included significant changes to Canada's principal corporate and restructuring statutes. These included changes to the Canada Business Corporations Act ("CBCA"), the Bankruptcy and Insolvency Act ("BIA") and the Companies Creditors' Arrangements Act ("CCAA").1 One of the reasons for the changes is to make insolvency proceedings more fair, transparent and accessible for workers and pensioners.2 The changes are now in effect and will have a significant impact on Canadian insolvency law and practice.
In a recent split decision, the Alberta Court of Appeal held that super-priority charges granted in a Companies’ Creditor Arrangement Act (“CCAA”) proceeding may take priority over statutory deemed trusts claims advanced by the Crown.
A Manitoba Court recently offered guidance on how to approach an appeal from a notice of disallowance or determination of a claim under section 135(4) of the Bankruptcy and Insolvency Act, RSC 1985, c B-3 ("BIA"). Existing jurisprudence provided conflicting positions on whether to treat such appeals as true appeals or a hearing de novo. True appeals generally restrict the evidentiary record before the court to the evidence that was before the trustee. In a de novo hearing, the appeal court considers fresh evidence as a matter of course.
A Manitoba Court recently offered guidance on how to approach an appeal from a notice of disallowance or determination of a claim under section 135(4) of the Bankruptcy and Insolvency Act, RSC 1985, c B-3 (“BIA”). Existing jurisprudence provided conflicting positions on whether to treat such appeals as true appeals or a hearing de novo. True appeals generally restrict the evidentiary record before the court to the evidence that was before the trustee. In a de novo hearing, the appeal court considers fresh evidence as a matter of course.
Following a recent government consultation, new draft legislation is expected this summer which will render HMRC as a “secondary preferential creditor” in insolvencies that commence on or after 6 April 2020. The government’s objective is to ensure that more tax which is collected on behalf of HMRC (circa £1.9bn) is actually paid to HMRC and used to fund public services, and is not distributed to pay other creditors.
Section 127 of the Insolvency Act renders void any disposition of property by a company made in the period between presentation of the winding up petition and the making of a winding up order on that petition unless the court orders otherwise. Guidance on applications for validation orders is given in the Insolvency Practice Direction (“PD”).