From 1 January 2011 the Insolvency Service has put the following changes into effect:

The Official Receiver (OR), as trustee of the bankruptcy estate, will no longer dispose of a bankrupt’s interest in a family home until two years and three months after the bankruptcy order is made, except if an offer is received which is in the creditors’ interests to accept.

At two years and three months a review will begin. In cases where the bankrupt’s interest in the property is valued at less than £1,000, steps will be taken to revest the property interest in the bankrupt.

There are various routes by which a company may enter administration. The most common is an appointment by the directors. Alternatively, the holders of a qualifying floating charge may appoint or an application may be made to the court by one or more creditors.

On December 16, 2010, the Supreme Court of Canada determined that in Companies’ Creditors Arrangement Act (“CCAA”) reorganization proceedings, the Crown enjoys no super-priority status in relation to its claims for unremitted sales taxes arising under the Goods and Services Tax (the “GST”) or similar provincial sales taxes.

The aggregate costs associated with a formal court-supervised insolvency proceeding can be substantial. In Canada, the obligation to pay these restructuring costs are typically secured by court-ordered charges over all of the property of the debtor and can rank in priority to the liens of secured creditors in the same collateral. As a result, these costs can have a material impact on the ultimate net recovery received by creditors. But how is the burden of these costs shared among secured creditors?

In the recent decision in Re Xerium Technologies Inc.1, the Ontario Superior Court of Justice recognized an order made by the U.S. Bankruptcy Court for the District of Delaware that confirmed the debtor’s pre-packaged Chapter 11 plan of reorganization. The decision provides useful guidance on how the Ontario Court may consider similar applications in the future. Many will take comfort from the fact that the decision revisits a number of relevant factors established in case law that pre-dates the current formulation of the cross-border provisions that make up Part IV of the CCA A.

The Limitation Act 1980 prescribes various periods of time in which a claim must be brought. In the event that this is not undertaken within the specified period, the cause of action will be statute barred and as such unenforceable.

In the case of a simple contract, the period is six years and in general begins to run from the date on which the cause of action accrued. In order to 'stop the clock', proceedings (a claim) will have to be brought.

Cow Harbour Construction Ltd1

introduction

The 2009 amendments to the Companies’ Creditors Arrangement Act (Canada) (the “CCAA”) and the Bankruptcy and Insolvency Act (Canada) codified with some modifications judge made law giving a court authority to grant super-priority priming liens to secure interim financing (or debtorin- possession financing).

An increasing number of restructuring cases involve several creditors with security over varied assets or asset classes. In such cases there is often a dispute over allocation of the costs of the reorganization. This is particularly true in failed restructurings where costs are high and realizations are low.

The appointment of an administrator over the Connaught Group is expected any day. Many housing associations will have employed Connaught to carry out maintenance services under the JCT measured term contract or similar. These contracts contain specific provisions for the steps to follow if an administrator is appointed over the contractor (or some other form of insolvency).

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.