As a result of the current situation, we are advising clients who find themselves operating in the shadow of potential bankruptcies along the supply chain, in their customer base and their trading partners globally. Based on deep workout experience after past world crises, we can help clients to find and employ business strategies to minimize business disruption, salvage relationships and restructure financial facilities and business structures to facilitate ongoing trading .

Issues arising:

Three recent court decisions address the scope and limits of bankruptcy injunctions barring future asbestos claims. The decisions – from the Second Circuit Court of Appeals, a Maryland bankruptcy court, and the Montana Supreme Court – underscore that (i) broad notice of proposed injunctions is critical and (ii) channeling injunctions under § 524(g) of the Bankruptcy Code apply only to liabilities that are derivative of the debtor’s liabilities, not to a company’s own liabilities.

In these unprecedented times, the U.K. government is seeking to preserve U.K. businesses and has already introduced significant measures to achieve that aim, including:

On March 6, 2020, the Ontario Court of Appeal (the “OCA”) released its decision in Royal Bank of Canada v. Bodanis (“Bodanis”),¹ holding that two debtors, each having an estate exceeding $10,000 in value, had appeals of their bankruptcy orders as of right under section 193 of the Bankruptcy and Insolvency Act²(the “BIA”) and thus did not need to seek leave to appeal.

Section 193 reads as follows:

On December 30, 2019, the Supreme Court of Newfoundland and Labrador (the “NLSC”) released its decision in Re Norcon Marine Services Ltd.¹ (“Norcon Marine”), dismissing both an application by a debtor for continuance of its Bankruptcy and Insolvency Act² (“BIA”) proposal proceedings under the Companies’ Creditors Arrangement Act³ (“CCAA”) and a competing application by a secured creditor for the appointment of a receiver.

On October 10, 2019, the Supreme Court of British Columbia (the “BCSC” or the “Court”) released its decision in 8640025 Canada Inc. (Re)¹ (“8640025 Canada”), denying an application to replace the monitor (the “Monitor”) in a Companies’ Creditors Arrangement Act² (the "CCAA") proceeding because the applicant was not a creditor and therefore had no standing to bring such an application.

On January 29, 2020, the Alberta Court of Appeal (the “Alberta CA”) released its decision in PricewaterhouseCoopers Inc. v Perpetual Energy Inc.¹ (“Perpetual Energy”), granting applications requiring a trustee in bankruptcy (the “Trustee”) to post security for costs on appeals brought by the Trustee.

The Quebec Court of Appeal’s unanimous decision in Gestion Éric Savard¹ reaffirms the super-priority ranking of CCAA² DIP financing³ over regular unpaid post-filing obligations, absent steps being taken to reverse this usual order of priorities.

In 7636156 Canada Inc. v. OMERS Realty Corporation¹ (“7636156 v. OMERS”), the Ontario Superior Court of Justice (Commercial List) (the “Court”) held that a bankrupt’s landlord was only entitled to have drawn down on a letter of credit by an amount equal to the landlord’s priority claim for three months’ accelerated rent, rather than by the full amount of the letter of credit, and ordered that the landlord pay over the excess to the bankrupt’s trustee.

States across the country have enacted so-called “reviver” statutes allowing otherwise time-barred claims for childhood sexual abuse to proceed. The statutes vary by jurisdiction, but generally do one of three things: (1) eliminate the statute of limitations for such claims; (2) extend the statute of limitations for such claims; or (3) create a window (e.g., a period of a few years) in which otherwise time-barred claims can be filed.