Bankruptcy & restructuring

The economies of the United States (U.S.) and Canada are closely intertwined. As operations expand across the border, so too do the complexities associated with carrying on business — particularly the insolvency of a company spanning both jurisdictions. As such, understanding how to navigate the complexities of Canadian insolvency regimes is essential to successfully doing business in the country.

1. Legislation and court system

APPLICATIONS FOR LEAVE TO APPEAL DISMISSED

37656

Norris Barens v. Her Majesty the Queen (B.C.)

Canadian Charter of Rights and Freedoms – Constitutional law – Mobility rights

The applicant was convicted of driving without a licence contrary to s. 24(1) of the Motor Vehicle Act, R.S.B.C. 1996, c. 318.

In a recent decision[1], the British Columbia Supreme Court (the “Court”) determined that purported secured loans made by a shareholder were properly characterized as equity contributions to the subject company and therefore subordinate to the claims of the company’s creditors.

On 1 October 2017, the Pre-Action Protocol for Debt Claims (Protocol) will come into force. It will apply to all debt claims where:

• the creditor is a business (including sole traders and public bodies)
• the debtor is an individual (including sole traders), and
• no other specialised Protocol applies.

Why is this new Protocol being introduced?

The express purpose of the new Protocol is to:

Breyer Group Plc v RBK Engineering Ltd

The High Court's recent judgment in Breyer Group Plc v RBK Engineering Limited [2017] EWHC 1206 provides a timely reminder for parties to construction contracts of the appropriate (and inappropriate) uses of winding-up petitions.

The case concerned a successful application made by Breyer Group PLC (Breyer) for an order preventing RBK Engineering Limited (RBK) from continuing with a petition to wind up Breyer on the basis of a disputed debt.

How did the dispute arise?

In summary:

Gowling WLG's finance litigation experts bring you the latest on the cases and issues affecting the lending industry.

Single signature bank mandate binding on partnership

The High Court has recently considered whether a one signature bank mandate was sufficient to bind a partnership to various loan agreements.

The Court of Appeal has confirmed that a term could not be implied into a conditional fee agreement between a liquidator and solicitors, and that the solicitors would only be paid out of recoveries made. However, the liquidator was not liable for the fees because of a common understanding between the parties. We cover this, and other issues affecting the insolvency and fraud industry, in our regular update:

In Randhawa and Randhawa v Turpin and Hardy [2017] the Court of Appeal considered the comparatively simple question of whether the sole director of a company with articles that required two directors for a board meeting to be quorate, could validly appoint administrators under paragraph 22(2) of Schedule B1 to the Insolvency Act 1986 (paragraph 22(2)). The complicating feature was that, whilst 75% of the shares in the company were held by the sole director, the remaining 25% were registered in the name of a long-dissolved Manx company.

Background

We recently reported on the first judgment handed down in relation to the Third Parties (Rights against Insurers) Act 2010 (the TP Act 2010). Hot on the heels of that decision another judgment has been delivered, this one providing guidance on the transitional provisions of the Act.

This month we consider the court's refusal to imply an obligation into a loan agreement that a lender should take steps in foreign proceedings to preserve security; the court's view on the failure to heed alarm bells in relation to potential undue influence; and more cases and issues affecting the industry.

No implied term in a loan agreement that creditor should take steps in foreign proceedings to preserve security