​When a commercial tenant goes bankrupt, the respective rights of landlords and trustees can be complex to sort out. Yet, as illustrated by recent Ontario Superior Court decision 7636156 Canada Inc. v. OMERS Realty Corporation, 2019 ONSC 6106, this determination can have important ramifications on the assets available for distribution to creditors.

​On November 1, 2019, amendments to the Bankruptcy and Insolvency Act,R.S.C. 1985, c. B-3 (BIA) and the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36 (CCAA) came into force. Among other changes described in our previous publication, these amendments expand the protection offered to intellectual property (IP) licensees in the event that the licensor enters insolvency.

FT ENE Canada Inc. (“FECI”) was in the nanofibre business, and was a wholly owned subsidiary of Finetex ENE Inc. (“Finetex”). As a result of insolvency difficulties separate and apart from the Canadian business, Finetex was engaged in bankruptcy proceedings in Korea (its home jurisdiction). There was animosity between Finetex and the director of FECI.

Effective November 1, 2019, amendments to the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (the BIA) and the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36 (the CCAA) will, among other things, impose a requirement of good faith on all parties to proceedings (BIA and CCAA), impose an additional form of director liability (BIA), and limit the scope of relief on initial orders (CCAA).

In most trading relationships, suppliers enter into deferred payment agreements, such as instalment sales, with their retailers in order to allow retailers to stock their inventory and to manage cash flow between the delivery of goods and the resale to the customer. The possibility of default on payments or often the insolvency of a trade customer/retailer exposes the supplier to considerable risk without control of its goods and without payment. As an unsecured creditor, the supplier then stands in an unfortunate position and may never recover its goods or receive payment.

On 26 June 2019 the Official Journal of the European Union published Directive (EU) 2019/1023 of the European Parliament and of the Council of 20 June 2019 on preventive restructuring frameworks, on discharge of debt and disqualifications, and on measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt, and amending Directive (EU) 2017/1132 (the "Directive").

On August 30, 2019, the Ontario Superior Court of Justice handed down its decision in Doyle Salewski Inc. v Scott 2019 ONSC 5108.

Although this lengthy decision covers many topics, one of interest relates to the "appropriate means" part of the discoverability analysis when a Trustee in Bankruptcy brings a claim for unjust enrichment.

Background

On July 31, 2019, the Ontario Court of Appeal rendered its decision in Ridel v. Goldberg, clarifying the interplay of the various provisions of the Limitations Act, 2002 at play in circumstances where judgment creditors are allowed to take proceedings in their own name pursuant to an order under the Bankruptcy and Insolvency Act.

The Facts

Insolvency is a common issue in the construction industry. While newspaper headlines frequently focus on the top ten to 15 large contractor insolvencies, this is not reflective of how insolvency impacts the industry as a whole.

In all construction projects, there is a long tail of smaller contractors that are adversely impacted by an insolvency event that occurs further up the chain. As a result, when parts of the supply chain fall apart, the tremors can be felt by large sections of the industry.

The European Parliament's proposal of 28 March 2019 for a Directive of the European Parliament on preventive restructuring frameworks, second chance and measures to increase the efficiency of restructuring, insolvency and restructuring proceedings (hereinafter, the "Directive") aims at developing national preventive restructuring frameworks.