Before ingesting too much holiday cheer, we encourage you to consider a recent opinion from the United States Court of Appeals for the Second Circuit.
Weil Bankruptcy Blog connoisseurs will recall that, in May 2019, we wrote on the Southern District of New York’s decision in In re Tribune Co. Fraudulent Conveyance Litigation, Case No. 12-2652, 2019 WL 1771786 (S.D.N.Y. April 23, 2019) (Cote, J.) (“Tribune I”).
A three-judge panel of the U.S. Court of Appeals for the Fifth Circuit has voided its previous near explicit declaration that make-whole provisions are always unmatured interest, and therefore subject to disallowance under section 502(b) of the Bankruptcy Code in Ultra Petroleum.
When a commercial tenant goes bankrupt, the respective rights of landlords and trustees can be complex to sort out. Yet, as illustrated by recent Ontario Superior Court decision 7636156 Canada Inc. v. OMERS Realty Corporation, 2019 ONSC 6106, this determination can have important ramifications on the assets available for distribution to creditors.
On November 1, 2019, amendments to the Bankruptcy and Insolvency Act,R.S.C. 1985, c. B-3 (BIA) and the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36 (CCAA) came into force. Among other changes described in our previous publication, these amendments expand the protection offered to intellectual property (IP) licensees in the event that the licensor enters insolvency.
FT ENE Canada Inc. (“FECI”) was in the nanofibre business, and was a wholly owned subsidiary of Finetex ENE Inc. (“Finetex”). As a result of insolvency difficulties separate and apart from the Canadian business, Finetex was engaged in bankruptcy proceedings in Korea (its home jurisdiction). There was animosity between Finetex and the director of FECI.
Effective November 1, 2019, amendments to the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (the BIA) and the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36 (the CCAA) will, among other things, impose a requirement of good faith on all parties to proceedings (BIA and CCAA), impose an additional form of director liability (BIA), and limit the scope of relief on initial orders (CCAA).
In most trading relationships, suppliers enter into deferred payment agreements, such as instalment sales, with their retailers in order to allow retailers to stock their inventory and to manage cash flow between the delivery of goods and the resale to the customer. The possibility of default on payments or often the insolvency of a trade customer/retailer exposes the supplier to considerable risk without control of its goods and without payment. As an unsecured creditor, the supplier then stands in an unfortunate position and may never recover its goods or receive payment.
syncreon Group Holdings B.V. (the “Company” and together with its subsidiaries, “syncreon”) completed its landmark financial restructuring today. As has been widely reported, syncreon’s reorganization is perhaps the first-ever use of an English scheme to restructure debt issued by a U.S.-based global enterprise. This also appears to be the first time that CCAA recognition of an English scheme has been granted.
The Restructuring
On August 30, 2019, the Ontario Superior Court of Justice handed down its decision in Doyle Salewski Inc. v Scott 2019 ONSC 5108.
Although this lengthy decision covers many topics, one of interest relates to the "appropriate means" part of the discoverability analysis when a Trustee in Bankruptcy brings a claim for unjust enrichment.
Background
On July 31, 2019, the Ontario Court of Appeal rendered its decision in Ridel v. Goldberg, clarifying the interplay of the various provisions of the Limitations Act, 2002 at play in circumstances where judgment creditors are allowed to take proceedings in their own name pursuant to an order under the Bankruptcy and Insolvency Act.
The Facts