On July 7, 2008 specific provisions of the Insolvency Reform Act, 2005 and the Insolvency Reform Act, 2007 were proclaimed into force by Order in Council. As a result, the Wage Earner Protection Program Act (the “WEPPA”) and certain related amendments to the Bankruptcy and Insolvency Act (“BIA”) have come into immediate effect.

Certain of those amendments are intended to protect current and former employees of insolvent companies and will affect lenders to insolvent businesses.

In Mendlowitz & Associates Inc. v. Chiang, an Order was granted in 2006 compelling the bankrupt and others to attend for an examination by the trustee under section 163(1) of the Bankruptcy and Insolvency Act (Canada). In 2008, the trustee applied under the same section to examine the bankrupt and others again.

Section 163(1) of the BIA provides:

The Ontario Court of Appeal recently held that Royal Bank of Canada ("RBC") was unperfected as against a trustee in bankruptcy (the "Trustee"), because RBC failed to comply with section 48(3) of the Personal Property Security Act (Ontario) (the "PPSA") by failing to file a financing change statement to reflect a change of the debtor’s name after assets of the debtor were sold by a court appointed interim receiver.

In anticipation of the coming into force of amendments to current Canadian insolvency legislation, the Toronto Insolvency and Workout Group has created a comprehensive tool to help identify the changes.

We have created blackline versions of the Bankruptcy and Insolvency Act (Canada), the Companies' Creditors Arrangement Act (Canada) and the Wage Earner Protection Program Act (Canada) which show what the statutes will look like when the amendments are proclaimed in force and which specifically illustrate the changes that have been made.

Imagine that a critical part of your business is dependent on a software program that you license from a software supplier. This scenario is not that hard to imagine, because in fact most businesses and other organizations are indeed reliant on licensed software – it is simply a fact of life in the computer age.

In Royal Bank v. 2021847 Ontario Ltd. et al. (2007), Carswell Ont. 8283, the plaintiff Royal Bank sought summary judgment against the guarantors of a credit facility it granted to 2021847 Ontario Ltd. (“2021847”). The amount the plaintiff sought against the guarantors was the deficiency remaining after the plaintiff had appointed a receiver over the assets of the debtor company. The proceeds from the realization of the receivership were insufficient to payout 2021847’s credit facility.

Ontario Courts are routinely faced with requests for Approval and Vesting Orders in connection with asset acquisitions made in the context of receivership proceedings or proceedings under the Companies’ Creditors Arrangement Act ("CCAA"). Purchasers’ counsel who routinely seek these Orders for their clients seek to insulate their clients from claims made by third parties arising from the purchasers’ acquisition of the assets through the insolvency proceedings.

“Bankruptcy” is commonly used to describe a number of legal situations involving a tenant’s financial distress. But with the rights and obligations of landlords and tenants determined by the true course of action taken, it pays for both sides to get the facts.

In the recent case of Re I. Waxman & Sons Limited (“Waxman”), the Ontario Superior Court of Justice reviewed the treatment in Canada of the doctrine of equitable subordination. Developed in American jurisprudence, the doctrine permits the claims of one creditor to be subordinated to the claims of another or other creditors of equal rank if circumstances warrant, on the basis of the equitable jurisdiction of the court.

On December 23, 2007, the Pan-Canadian Investors Committee for Third-Party Structured Asset-Backed Commercial Paper (ABCP) announced that an ‘agreement in principle’ had been reached for a restructuring of $33 billion of approximately $35 billion of Canadian ABCP. The repayment of this debt had been frozen pursuant to a standstill created by the ‘Montreal Accord’ as of August 16, 2007.