The common law has long recognized a secured creditor’s duty to provide reasonable notice to borrowers before enforcing its security and appointing a receiver. The practical importance of this has become less significant since the codification of the principle of reasonable notice in section 244 of theBankruptcy and Insolvency Act (“BIA”). However, in the recent case of Bank of Montreal v.

The Ontario Superior Court of Justice (Commercial List) has confirmed that historical environmental remediation obligations will not automatically take priority over the claims of other creditors in an insolvency, even where those obligations are framed in the form of regulatory orders.

Whether a lease is a “true” or “finance” lease has been debated in Canadian courts for decades in many different contexts. The consequences of the categorization of a lease can have a material impact on the recovery that a lessor may have in an insolvency of its lessee. The Alberta Court of Queen’s Bench recently released its decision in the matter of Royal Bank of Canada v. Cow Harbour Ltd. and 1134252 Alberta Ltd. (“Cow Harbour”) on January 23, 2012.

In a recent edition of Fully Secured (September 29, 2011 – Volume 2, No. 3), the decision of the Ontario Court of Appeal in Re Indalex Limited was discussed, in which the Ontario Court of Appeal held that a statutory deemed trust claim arising out of a pension plan wind-up deficiency ranked in priority to debtor in possession (“DIP”) financing.

There have been several recent developments with respect to this decision since the date of that publication.

Lenders should be cognizant that the granting of security by a debtor may be subject to challenge as a fraudulent preference in the event the debtor subsequently files for liquidation or proposal proceedings under the Bankruptcy and Insolvency Act (Canada) (the “BIA”) or restructuring proceedings under the Companies’ Creditors Arrangement Act (Canada) (the “CCAA”). Such risk arises if the debtor is insolvent the time the security was granted.

In my recent blog posting, I discussed the factors that courts will consider before setting aside an elected condominium board of directors to impose a court-appointed administrator.

Below are some examples where the courts have intervened and appointed an administrator. They include situations where:

Part IV of the Companies' Creditors Arrangement Act and Chapter 15 of the U.S. Bankruptcy Code have adopted the UNCITRAL Model Law with certain modifications.

Co-authored by Pamela L.J. Huff, Blake, Cassels & Graydon LLP.

A recent decision by the Third Circuit in the Nortel Group bankruptcy reinforces the worldwide reach of the automatic stay and the narrow scope of the police power exception under section 362(b)(4) of the Bankruptcy Code.  In Nortel Networks, Inc. v. Trustee of Nortel Networks U.K. Pension Plan, No. 11-1895 (3d Cir. Dec. 29, 2011), the Third Circuit held that the automatic stay barred U.K. pension claimants from participating in U.K. proceedings meant to determine the debtors’ liability for their affiliate’s pension funding shortfalls.

In the recently released Judgment in Bank of Montreal v. Peri Formwork Systems Inc.¹, the British Columbia Court of Appeal was called upon to decide whether a Monitor, under the Companies’ Creditors Arrangement Act (“CCAA”)², or a Receiver, under the Builders Lien Act ³, could borrow monies to complete a development project in priority to claims of builder’s liens registered against the project.

Catalyst Paper Corporation (TSX:CTL) has taken the unusual step of publicly announcing that, although it is not in bankruptcy, the company is seeking court protection under Chapter 15 of the US Bankruptcy Code.

The Richmond, BC-based company reported earlier that it had received an initial court order under the Canada Business Corporations Act (CBCA) to begin a consensual restructuring process with its noteholders. It made the new announcement to correct allegations of bankruptcy that appeared in some media reports following its initial statement.