On July 20, 2020, the Quebec Court of Appeal (Court of Appeal) released its decision in Séquestre de Media5 Corporation, overturning the lower court’s decision and authorizing the appointment of a receiver pursuant to section 243(1) of the Bankruptcy and Insolvency Act (BIA).

As the lockdown restrictions ease and employers slowly return to more normal ways of working, it is unfortunately inevitable that the impact of the coronavirus means some businesses will have to implement restructures and redundancies in order to survive.

This article looks at the key employment law provisions in restructuring/redundancy situations and offers practical guidance for managing these challenging processes.

Restructures and reorganisations

Background

Bresco Electrical Services Ltd (In Liquidation) -v- Michael J Lonsdale (Electrical) Ltd [2020] UKSC 25

Section 82 of the Coronavirus Act 2020 prevents landlords from forfeiting ‘relevant business tenancies’ until 30 June, and possibly longer. Regulations have also been made restricting the use of commercial rent arrears recovery (CRAR) during the same period, and emergency legislation is promised preventing landlords from serving statutory demands and instituting insolvency proceedings. But tenants should think twice before withholding rent and other lease payments, and landlords do not necessarily have to take a passive role.

The (the Bill) was given its first reading on Wednesday 20 May 2020. Parliament will not be considering the next stages of the Bill until 3 June 2020 so there is still some time, and possibly further amendments, before this is approved and given Royal Assent. More detailed notes will be provided once this Bill has been given Royal Assent, but the headline points of the current draft are:

Statutory demands

Le 8 mai 2020, suite à une décision unanime rendue séance tenante le 23 janvier 2020, la Cour suprême du Canada (la « Cour suprême ») a publié ses motifs dans le cadre des procédures d’insolvabilité de Bluberi Gaming Technologies Inc., désormais 9354‑9186 Québec inc., et al.

On May 8, 2020, the Supreme Court of Canada (Supreme Court) issued its reasons in the restructuring proceedings of Bluberi Gaming Technologies Inc., now 9354‑9186 Québec Inc., et al.

Due to the current economic downturn, many corporations (Borrowers) may find themselves in financial difficulty and need to refinance their existing debt obligations with creditors (Lenders). Such Borrowers may be able to reduce their financing costs through the issuance of “distress preferred shares” (DPS). This method of refinancing generally does not adversely affect the Lenders, as they can receive equal or better after-tax returns on their investments without jeopardizing their security and priority.

The tragically unforeseen current novel coronavirus (COVID-19) global pandemic has brought unprecedented challenges to all aspects of Hong Kong society including the health of its citizens, the economy and the business community.