Tax-qualification requirements generally prohibit plan sponsors from eliminating optional methods of distribution under a retirement plan. This “anti-cutback” requirement is subject to only a limited number of exceptions. A recent modification to this rule adds a new exception for single-employer defined benefit plans maintained by employers in bankruptcy. Such employers may amend their plans to eliminate lump-sum distribution options if certain conditions are met.

The Anti-Cutback Rule

The central question in Rubin v Eurofinance SA, [2012] UKSC 46, was whether the English courts ought to recognise the order or judgment of a foreign court to set aside transactions determined to be preferential or to have been at an undervalue, in circumstances where the defendant in the foreign proceedings was not present in the foreign jurisdiction or had not voluntarily submitted to its courts.

The BLG Monthly Update is a digest of recent developments in the law which Neil Guthrie, our National Director of Research, thinks you will find interesting or relevant – or both.

In Newfoundland and Labrador v. AbitibiBowater Inc., 2012 SCC 67, the Supreme Court of Canada was called upon to consider whether orders issued by a regulatory body with respect to environmental remediation work are “provable claims” in a proceeding commenced under the Companies’ Creditors Arrangement Act, R.S.C. 1985, c.C-36 (the “CCAA”).

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.

Two significant changes were made to the Virginia recording tax statutes applicable to deeds of trusts during the 2012 session of the General Assembly. First, the exemption from recording taxes for deeds of trust whose purpose is to refinance an existing debt with the same lender was eliminated. Second, on deeds of trust securing debt in excess of the fair market value of the real estate, the recording tax now may be paid on the value of the property conveyed rather than the amount of the debt.

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.

Seventh Circuit reverses district court decision that discretionary beneficiary lacked standing to bring surcharge claim for $200 million in investment losses from investment concentration.

Forum selection clause in an investment management agreement is valid and enforceable.

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.