On 27 July 2012, Justice Morawetz of the Ontario Superior Court of Justice (Commercial List) released reasons for decision in the Sino-Forest CCAA case concerning the scope and effect of the 2009 amendments to the CCAA that subordinate “equity claims” to all other claims and provide that under a CCAA plan, no payment can be made in respect of equity claims until all other claims are paid in full.

In a major victory for secured creditors, the United States Supreme Court, on May 29, 2012, unanimously held that a chapter 11 plan involving a sale of secured property must afford the secured creditor the right to credit bid for the property under section 363(k) of title 11 of the United States Code (the “Bankruptcy Code”).¹ In so holding, the Supreme Court resolved the split that had emerged among the United States Circuit Courts of Appeals, as illustrated by the Seventh Circuit’s decision below,² which contrasted with recent decisions from the Third and Fifth Circui

On April 6, 2011, the Ontario Superior Court of Justice released its decision in the priority disputes between the lessors and aviation authorities resulting from the Skyservice receivership. The Court, in interpreting and applying the decisions in Canada 3000 and Zoom, raised the bar for lessors to defeat the seizure and detention rights of the aviation authorities in Canada.

In October 2009, the court overseeing the TOUSA, Inc. bankruptcy cases in the Southern District of Florida (Bankruptcy Court) set off considerable alarm bells throughout the lending community when it unraveled a refinancing transaction as a fraudulent conveyance based upon, in primary part, the fact that certain subsidiaries of TOUSA, Inc. pledged their assets as collateral for a new loan that was used to repay prior debt on which the subsidiaries were not liable, and that was not secured by those subsidiaries’ assets.

Introduction

Yes, on the facts in the Chapter 11 proceedings involving Borders, the insolvent bookseller.

Jefferies & Company, an investment bank, was retained by Borders to pursue reorganisation strategies, including a possible sale of the company’s assets as a going concern. The bank made considerable efforts in flogging the assets, which resulted in an offer from an interested party, but an actual sale of assets did not happen. Jefferies nevertheless claimed the liquidation fee under its agreement with Borders. The company’s creditors opposed this: no sale, no success fee.

In January and February of 2012, Justice Morawetz of the Ontario Superior Court of Justice (Commercial List) released two decisions¹ in which he authorized a debtor-in-possession (“DIP”) financing charge, an administration charge, and a directors and officers (“D&O”) charge ranking ahead of, among other claims, possible pension deemed trusts over the objection of the debtor companies’ unions and on notice to the members of the companies’ pension administration committees.

In the recent decision of the Supreme Court of Canada in Toronto-Dominion Bank and Her Majesty the Queen (2012 SCC 1), the Supreme Court succinctly agreed with the reasons of Justice Noël of the Federal Court of Appeal.

In the decision of Justice Morawetz of the Ontario Superior Court of Justice (Commercial List) (the “Court”) in In the Matter of Aero Inventory (UK) Limited and Aero Inventory PLC, the Court held that proceeds of a fraudulent preference action recovered by a trustee in bankruptcy under section 95 of the Bankruptcy and Insolvency Act (“BIA”) may be subject to the rights of secured creditors, to the extent secured creditors had rights in the collateral in question at the time of the impugned transaction.

In the recently released Judgment in Bank of Montreal v. Peri Formwork Systems Inc.¹, the British Columbia Court of Appeal was called upon to decide whether a Monitor, under the Companies’ Creditors Arrangement Act (“CCAA”)², or a Receiver, under the Builders Lien Act ³, could borrow monies to complete a development project in priority to claims of builder’s liens registered against the project.