The Supreme Court of Canada, in a decision that has implications for borrowers and lenders alike, particularly where pension funds are involved, has raised some new hurdles for the country’s banks and their business customers and, at the same time, has bolstered protection for lenders of last resort who finance insolvent companies.
The court’s decision in Sun Indalex Finance, LLC v. United Steelworkers, issued earlier this year, addresses critical questions in insolvency law regarding pension funds and DIP financing.
The Court of Appeal for Ontario's (the "OCA") decision in Re Indalex Ltd.1 was decried by professionals in pension, banking and insolvency practices. On February 1, 2013, the Supreme Court of Canada (the "SCC" or the "Court") overturned the OCA's decision.
INTRODUCTION
In theory, when liquidating a succession, publication formalities must be observed so that the various creditors can present themselves and claim their due. This formality also gives the successors an overall view of the assets and liabilities of the succession before deciding whether or not to accept it.
The Supreme Court of Canada’s decision inSun Indalex Finance, LLC v United Steelworkers, 2013 SCC 6, has a number of implications for employers, pension plan administrators, as well as both secured and unsecured creditors.
Following a recent ruling of the Ontario Court of Appeal, parties may need to proceed cautiously in enforcing contractual rights and remedies in circumstances where there is a risk of the counterparty subsequently becoming insolvent.
The common law has long recognized that a contractual provision which is explicitly and directly triggered by a party’s insolvency (and which thereby causes subsequent prejudice to the rights of the insolvent party’s creditors) may be unenforceable as a matter of public policy.
Justice Morawetz of the Ontario Superior Court (also a celebrity among lawyers for being the Morawetz in the trio of Houlden, Morawetz, & Sarra, authors of the Annotated Bankruptcy and Insolvency Act) announced last week (on 8 March) that the next step in the long-running Nortel insolvency proceedings would be a cross-border joint trial to carve up the rump of Nortel’s liquidated assets (app
On February 1, 2013, the Supreme Court of Canada (SCC) released its much-awaited decision in theIndalex case.1 While the central issue in Indalex was the priority of wind-up deficiencies in defined benefit pension plans versus court-ordered debtor-in-possession (DIP) financing charges under the Companies’ Creditors Arrangement Act (Canada) (CCAA), the SCC also considered whether claims for wind-up deficiencies are covered by deemed trusts under the Ontario Pension Benefits Act (PBA).
In 2011-0427101C6 (released this week), the CRA was asked whether a creditor’s acquisition of an interest in a debtor-partnership could qualify as a “seizure” of the debtor-partnership’s property for purposes of s. 79.1. Section 79.1 contains rules (often favorable) for a creditor where the creditor has “seized” property of a debtor as a result of a foreclosure, conditional sale repossession, or similar transaction.