On March 3, 2021, the PROTECT Asbestos Victims Act, otherwise known as S.574, was introduced in the U.S. Senate by Senators Thom Tillis (R-NC), John Cornyn (R-TX), and Chuck Grassley (R-IA). This legislation attempts to reform the asbestos bankruptcy trust system by providing oversight of asbestos bankruptcy trusts, ensuring those harmed by asbestos receive fair and just compensation, and eliminating fraud and abuse within the trust system.

Many commercial landlords are increasingly alarmed that COVID-19 may cause a surge in tenant bankruptcies or restructurings. We outline below the major issues for landlords arising from tenant defaults and insolvencies and suggest best practices to minimize losses.

Many commercial landlords are increasingly alarmed that COVID-19 may cause a surge in tenant bankruptcies or restructurings. We outline below the major issues for landlords arising from tenant defaults and insolvencies and suggest best practices to minimize losses.

The Ontario Court of Appeal (the “Court of Appeal”) released its decision in 7636156 Canada Inc. (Re), 2020 ONCA 681 on October 28, 2020. The Court of Appeal clarified the law regarding a landlord’s entitlement to draw on a letter of credit where the underlying lease has been disclaimed by a trustee. Overturning the lower court decision, the Court of Appeal held the landlord was entitled draw down on the entire principal of the letter of credit pursuant to its terms and the terms of the disclaimed lease between the parties.

In its recent decision in Chandos Construction Ltd. v Deloitte Restructuring Inc., the Supreme Court of Canada (the “SCC”) affirmed the place of the ‘anti-deprivation rule’ in Canadian common law and provided guidance on its application.[1] This rule invalidates contractual terms that would remove value from a debtor’s estate and reduce the assets available for distribution amongst creditors.

In Séquestre de Média5 Corporation, 2020 QCCA 943 (« Media5 »), the Quebec Court of Appeal unanimously held that, in order bring a motion for the appointment of a receiver under s.243 of the Bankruptcy and Insolvency Act (the “BIA”), a secured creditor must not only have given the notice required under s.244 of the BIA, it must also have served the prior notice of the exercise of a hypothecary right required under the Civil code of Quebec (“CCQ”), and both notice periods must have expired.

U.S. District Court for the District of North Dakota

In Kotalik v. A.W. Chesterton Co., several defendants filed motions to enforce the plaintiffs’ compliance with disclosure requirements of North Dakota’s Asbestos Bankruptcy Trust Transparency Act. Counsel for the defendants as well as plaintiffs moved the court for a hearing on the issue. Lastly, plaintiffs’ counsel moved for a certification of a question to the North Dakota Supreme Court regarding the constitutionality of the Trust Transparency Act.

U.S. District Court for the Eastern District of Louisiana, May 13, 2020

Novel corona virus and the global COVID-19 pandemic have had devastating impacts on financial markets and the economy generally as well as everyday life. All Canadian businesses now face challenges that were unimaginable even a month ago. Canadian corporations that entered 2020 with weak balance sheets and tightening access to capital, however, may find themselves standing at the precipice of difficult decisions.

The global COVID-19 pandemic, coupled with an ill-timed crude oil price war between Saudi Arabia and Russia, has in a matter of mere weeks materially disrupted the global marketplace. While we are months or years away from understanding the full impact of the coronavirus pandemic on the economy at large, it is increasingly likely that we may be sliding into a recessionary period. We anticipate that businesses will need to restructure in one way or another to deal with immediate liquidity needs, or long-term financial health.