On January 31, 2019, the Supreme Court of Canada (SCC) released its decision in Orphan Well Association, et. al. v. Grant Thornton Limited, et. al. – a case commonly known as Redwater.

The Personal Properties Securities Register (PPSR) will be seven years old on 30 January 2019; accordingly, security interests with seven year registration periods will, unless renewed, expire from 30 January 2019.

The seven year security interest is the most common registration period and is the maximum period of registration for goods with a serial number (such as motor vehicles). According to the Australian Financial Security Authority, an estimated 115,239 registrations will expire in January 2019.

In 2018, several insolvency cases were litigated that will be of interest to commercial lenders in restructuring and insolvency proceedings. This article summarizes the core issues of importance to lenders in each of these cases. Status updates on the cases reported in our 2017 roundup of key developments in Canadian insolvency case law are included at the end of this article.

May 25, 2018

PRIORITY OF HST DEEMED TRUSTS

Canada v.Toronto-Dominion Bank

The recent restructuring proceedings of Concordia International Corp. (Concordia) demonstrate that the arrangement provisions of the Canada Business Corporations Act (CBCA) remain as a powerful tool for balance sheet restructurings in Canada. These provisions allow a company to submit a plan of arrangement for creditor and court approval in order to affect a balance sheet restructuring in a timely and efficient manner.

Retail Insolvencies in Canada Series, #4: Lender Perspectives

By Linc Rogers and Aryo Shalviri

This is the fourth and final instalment in a series examining large retail insolvencies in Canada from the perspective of various stakeholders. This article discusses retail insolvencies from the perspective of lenders to distressed Canadian retailers.

This article trails the successful emergence of Toys "R" Us Canada from Companies' Creditors Arrangement Act (Canada) (CCAA) protection following the acquisition of its shares by Fairfax Financial Holdings Limited.

In the recent court decision of Trenfield v HAG Import Corporation (Australia) Pty Ltd [2018] QDC 107, the liquidators recovered unfair preferences from a retention of title creditor who argued it was a secured creditor.

The issues

In the recent decision of Heavy Plant Leasing [2018] NSWSC 707, a creditor successfully defended an unfair preference claim by establishing it did not have reasonable grounds to suspect the insolvency of the debtor company, who was a subcontractor in the earth moving business.

The most common way of defending a liquidator’s unfair preferences claim is to rely upon section 588FG(2) of the Corporations Act 2001(Cth); commonly called the ‘good faith defence’.

Commonly, a creditor being sued by a liquidator to refund an alleged unfair preference is owed money by the company in liquidation.

Liquidators argue that under section 553(c)(1) of the Corporations Act 2001 (Act) a creditor is not able to set-off the outstanding indebtedness owed by the company to the creditor to reduce any liability of the creditor to refund any unfair preference. Similar arguments are made by liquidators in relation to insolvent trading claims.

A snapshot of the court decisions

Justice R. Graesser of the Court of Queen’s Bench of Alberta (Court) recently released his decision in Royal Bank of Canada v.Reid-Built Homes Ltd. (Decision), where he held that the Court has the discretion, but not the obligation, to grant a super priority for receivers’ fees and disbursements ahead of the claims of secured creditors.

This is the third instalment in a series examining large retail insolvencies in Canada from the perspective of various stakeholders. This article discusses insolvencies from the perspective of corporate parents of distressed Canadian retailers.