South African state-owned enterprises (SOEs) are coming under tremendous pressure to do something to extricate themselves from their financial woes. Any kind of bankruptcy event cannot be the answer: because of the obvious cross-default impact such a declaration will have on various debt and other instruments in the capital markets. It will also be catastrophic to the Government’s standing and rating in the financial markets.

Chapter 6 of the South African Companies Act, 2008, as a corporate restructuring regime, provides a formal restructuring tool for financially distressed (which exists when a company is unable to pay its debts as they fall due (cash-flow insolvency) or when a company’s liabilities exceed the value of its assets (balance-sheet insolvency) or when those events are likely to occur in 6 months (imminent insolvency) companies.

Today, amendments to the Bankruptcy and Insolvency Act (BIA)and the Companies’ Creditors Arrangement Act (CCAA), introduced to Parliament in April 2019 as Bill C-97, came into force. Certain of these amendments are likely to impact the usual flow of business among insolvency and restructuring professionals.

As Yeats said in his poem, The Second Coming: "mere anarchy is loosed upon the world". While perhaps not anarchy, certainly most insolvency practitioners expected the Alberta Court of Appeal decision in Redwater[1] to be upheld, preserving the priorities afforded to secured creditors and rendering the Provincial Government to be an unsecured Creditor.

On December 10, 2018, the Superior Court of Quebec (Court) released an important judgment concerning the assignment of contracts under the Companies' Creditors Arrangements Act (CCAA), in which the Court held that it was possible for an assignee to have contracts transferred to it without having to assume the monetary penalties arising from the assumed contracts for defaults by the assignor prior to the assignment.[1]

The recent decision in ITB Marine Group Ltd. v. Northern Transportation Company Limited, 2017 BCSC 2007 ["ITB"] confirms the priority of pension claims in the insolvency context. The decision will be of interest to practitioners involved in priority disputes between secured creditors and beneficiaries of statutory deemed trusts, particularly those arising out of pension legislation.

(Bankr. S.D. Ind. Dec. 4, 2017)

The bankruptcy court grants the motion to dismiss, finding the defendant’s security interest in the debtor’s assets, including its inventory, has priority over the plaintiff’s reclamation rights. The plaintiff sold goods to the debtor up to the petition date and sought either return of the goods delivered within the reclamation period or recovery of the proceeds from the sale of such goods. Pursuant to 11 U.S.C. § 546(c), the Court finds the reclamation rights are subordinate and the complaint should be dismissed. Opinion below.

(Bankr. E.D. Ky. Nov. 22, 2017)

(B.A.P. 6th Cir. Nov. 28, 2017)

The Sixth Circuit B.A.P. affirms the bankruptcy court’s dismissal of the Chapter 12 bankruptcy case. The court finds that the bankruptcy court failed to give the debtor proper notice and opportunity to be heard prior to the dismissal. However, the violation of due process was harmless error. The delay in filing a confirmable plan and continuing loss to the estate warranted the dismissal. Opinion below.

Judge: Preston

Attorney for Appellant: Heather McKeever

(6th Cir. Nov. 14, 2017)