In its recent decision in Century Services Inc v Canada,1 the Supreme Court of Canada (the “SCC”) held that, in the context of a Companies’Creditors Arrangement Act2 (the “CCAA”) proceeding, the Crown does not have a superpriority claim over the property of a debtor for unremitted goods and services tax (“GST”) amounts. The decision of the SCC majority rejected existing appellate-level case law, and brought the priority of Crown claims in-line with what they are in bankruptcy proceedings.

The case of Canrock Ventures LLC v. Ambercore Software Inc. et al is a cautionary tale for a Receiver and its counsel alike. In this case, the Ontario Superior Court of Justice rejected a Receiver’s application for the approval of an asset purchase agreement because of a failure to take the requisite steps when conducting a sale process and, in the Court’s view, failing to remain a neutral officer of the Court.

Toward the end of 2009 the Republic of Ireland’s then government passed legislation which would lead to the creation of the National Assets Management Agency (NAMA). The role of NAMA was a simple one: to remove toxic debt from the books of the Irish banks to assist in attempts to revive the national economy. The security would be acquired at a discount and purchased with Government backed bonds. In the first phase of NAMA (focusing on mortgages and other secured facilities with a minimum value of £20m) over £80bn in toxic debts were acquired.

A CVA was introduced as one of the rescue arrangements under the Insolvency Act 1986. It allows a company to settle unsecured debts by paying only a proportion of the amount owed, or to vary the terms on which it pays its unsecured creditors. Whilst a CVA only requires approval of a 75% majority of the creditors by value, it binds every unsecured creditor of the company, including any that voted against it or did not vote at all.

In Rubin v Coote [2011] EWCA Civ 106 (09 February 2011) the Court of Appeal has upheld the decision of a liquidator to settle litigation against a former director of a company notwithstanding the opposition of the company’s creditors.

It is an age old problem for creditors who are faced with debtors who ask for more time to pay their debts. The Civil Procedural Rules (CPR) 14.9 and 14.10 allow for a debtor, following the admission of their debt, to request time to pay. It is open for a claimant to choose whether or not to accept a defendant’s proposals; if the claimant does not accept the defendant’s proposals, it is for the court to determine the time and rate of payment. The court’s discretion conferred by CPR 14.10 to extend time for payment has not, until now, been examined.

In a previous Financial Services Flash, we brought to your attention the decision of the United States Bankruptcy Court for the Southern District of Florida (the “Bankruptcy Court”) in the case ofIn re Tousa. In a decision that raised serious concerns for lenders in the United States, Justice Olson held that the first and second ranking secured lenders of Tousa Inc. (“Tousa”) did not act in good faith and were grossly negligent in providing Tousa with a secured loan less than six months before Tousa filed for bankruptcy.

In what circumstances might an individual administrator be liable for discrimination against employees of companies in administration? This was the question the Employment Tribunal asked itself in the case of Spencer v Lehman Brothers (in administration) and others.

Corporate Debt Restructuring through a Company Voluntary Agreement

In the current economic climate most businesses will experience temporary or longer term cash flow pressure resulting in stressful trading and creditor pressure.

Since the Transfer of Undertakings (Protection of Employment) Regulations 2006 were made in order to implement the European Union’s Council Directive 80/987/EEC, there has been an ongoing debate on how regulation 8 (7) (the bankruptcy proceedings exception) should be interpreted. Fortunately, a recent decision by the Employment Appeals Tribunal has gone some way towards clarifying the issue.