In Rieger Printing Ink Co, 2009 WL 477541 (Ont S.C.J. [Commercial]), the Ontario Superior Court of Justice dealt with a party's right to protection against selfincrimination in relation to an examination held under section 163 of the Bankruptcy and Insolvency Act, R.S.C., 1985 c. B-3 ("BIA").

Jameson House Properties Ltd. and Jameson House Ventures Ltd. (the Jameson Companies) were incorporated to develop a 37-storey mixed-use building in downtown Vancouver called Jameson House. By 2008, after many years of planning and development, the Jameson House project was well underway.

With many companies going through financial trouble, there is a fear among licensees that they will lose their right to use licensed intellectual property ("IP") if the licensor becomes insolvent and wants to restructure. Up until now there has been much uncertainty in the common law as to whether an insolvent debtor may disclaim an IP licence agreement in a restructuring.

As we previously wrote about (Volume 1, Issue 3, December 2008), the Wage Earner Protection Program Act (“WEPPA”) came into force on July 7, 2008 as part of a comprehensive reform package to the Bankruptcy & Insolvency Act (“BIA”). WEPPA was designed to protect the wages of employees terminated as a result of a bankruptcy or receivership. Employees could now claim up to $3,000 worth of wages earned in the six months immediately preceding the bankruptcy or receivership, as well as a $2,000 super priority claim on all current assets of their employer.

After years of waiting, significant amendments to the Canadian regime of bankruptcy and insolvency law were declared in force as of September 18, 2009 (Amendments).

On October 30, 2009, the Supreme Court of Canada released its long-anticipated decision in Quebec (Revenue) v. Caisse populaire Desjardins de Montmagny. At issue in this case (and two companion cases) was the legal characterization of Crown rights with respect to collected but unremitted GST and Quebec sales tax (QST) in the hands of a trustee in bankruptcy. The Supreme Court confirmed that the Crown is an ordinary unsecured creditor with respect to such amounts, subject to the rights of prior ranking security holders.

Summary of Facts

introduction

This document provides a brief overview of insolvency proceedings in Canada. It outlines the Canadian legislative framework and briefly describes the receivership process, the bankruptcy regime and the formal restructuring alternatives available to debtors.

legislative framework

The Supreme Court of Canada ruled that bankruptcy trustees, receivers and secured creditors can continue to collect the full amount of accounts receivable of a bankrupt supplier, including the Goods and Services Tax (GST) component, even if an amount remains owing by the supplier to the Canada Revenue Agency (CRA).

At long last, amendments to the Bankruptcy and Insolvency Act (BIA) and theCompanies’ Creditors Arrangement Act (CCAA) have come into force, providing licensees of intellectual property (IP) with some additional level of protection.

Amendments to the Bankruptcy and Insolvency Act (BIA) and the Companies’ Creditors Arrangement Act (CCAA) have recently come into force that purportedly protect licensees of intellectual property (IP) if their licensors become insolvent or bankrupt. There are, however, a number of uncertainties surrounding the scope of protection afforded by these amendments. Until these uncertainties are resolved, licensees may wish to consider augmenting their statutory rights by contractual and other legal mechanisms. A Bankruptcy Remote Entity (BRE) is one potential mechanism.