A company has outstanding debts and it seems they are struggling financially. What can you do to try and get your debts settled? Is applying to have the company wound up the answer? Here, we take a look at what you will need to consider before a decision is made and we take a look at the key steps in the process.

What is winding up?

Winding up is also known as compulsory liquidation. It is action taken by creditors of the company which (if successful) will result in the company ceasing to trade and being closed down.

Public consultations on enhancing retirement security led by the Ministry of Innovation, Science and Economic Development Canada closed in late 2018. Given the importance and complexity of the subject matter, the one-month consultation period offered by the government was curiously short. Given that 2019 is an election year, the quick completion of the process could suggest that the federal government anticipated the direction in which it would proceed with any legislation.

On January 31, 2019, the Supreme Court of Canada released its decision in Orphan Well Association, Alberta Energy Regulator v. Grant Thornton Limited and ATB Financial.[1] This important decision may have profound implications, potentially limiting the ability of oil and gas producers to secure credit and impairing the effectiveness of the insolvency system where debtors have significant regulatory obligations.

In our update this month we take a look at some recent decisions that will be of interest to those involved in insolvency litigation. These include:

In Callidus Capital Corporation v. Her Majesty the Queen,[1] the Supreme Court of Canada overturned a troubling 2017 decision of the Federal Court of Appeal. The Supreme Court held unanimously that the bankruptcy of a debtor extinguishes the deemed trust for unremitted GST and HST created in favour of the Crown (“CRA”) by section 222 of the Excise Tax Act (“ETA”).

Mortgage servicers are plagued by their nebulous relationships with the borrowers who discharge their personal liability in bankruptcy. Issues arise when the borrower whose debt has been discharged continues to engage with the mortgage servicer. These activities include making monthly payments and requesting and participating in loss mitigation. There are few, if any, bright line rules regarding this common scenario.

APPLICATIONS FOR LEAVE TO APPEAL DISMISSED

38144 Ronald Baldovi v. Her Majesty the Queen 

(Man.)

Courts – Judges – Reasonable apprehension of bias

On December 22, 2018, the federal funding for certain agencies lapsed, and the United States government entered into a partial shutdown. The U.S. Department of Justice (DOJ), including the United States Trustee Program (USTP), was one of the agencies that shut down. United States Trustees (“UST”) representing the USTP appear and litigate in a multitude of bankruptcy proceedings. USTs also actively participate in out-of-court settlement discussions, plan negotiations, and the like.

2018 was the "year of the CVA", slashing rents and forcing landlords to get to grips with long-winded CVA proposal documents in an attempt to allow struggling tenants to manage their debts, turn around their businesses and avoid terminal insolvency situations.

The unfortunate reality is that even if they are approved by landlords and other creditors, not all these CVAs will be successful and many tenants are likely to end up in administration.

Creditor not obliged to take steps in foreign proceedings to preserve security