A. The Restructuring Candidate

In Father & Son Investments Inc. v. Maverick Brewing Corp. (2007), 2007 CarswellAlta 1452 (Alta. Q.B.), Maverick Brewing Corporation (“Maverick”) operated a brewery in Edmonton in space leased from Five Oaks Inc. (“Five Oaks”). The two major creditors of Maverick were Father & Son Investments Inc. (“Father & Son”) and Five Oaks. Pursuant to a postponement and subordination of security interest document, Five Oaks had priority over Father & Son to the assets of Maverick.

LEGEND

What follows are blackline documents outlining amendments to the BIA, CCAA and WEPP which have been passed by the government, but not yet proclaimed in force. It is hoped that these comparisons will serve as a useful tool in providing a comprehensive understanding of what the legislation will ultimately look like, when the proposed amendments are proclaimed in force.

In Meunerie B.L. inc., Re (2007), EYB 2007-126274, 2007 QCCA 1601 (Que. C.A.) affirming (2006), EYB 2006-109274, 2006 QCCS 4914 (Que. S.C.) Meunerie B.L. Inc. (“Meunerie”) made an assignment in accordance with the Bankruptcy and Insolvency Act (“BIA”). At the time of bankruptcy Meunerie was a mill which processed corn purchased from corn producers. Corn that was delivered to Meunerie was stored on site in silos

All businesses know that one key to profitability is risk management. Particularly in such industries as oil and natural gas, eligible financial contracts have emerged as an invaluable tool to hedge the risk associated with volatile foreign currency exchange, interest rates and commodity prices. Indeed, a large business has developed proffering over-the-counter derivatives (or ‘swaps’) and standardized exchange-traded derivatives (or ‘futures’) to do just that.

Courts will only rarely and sparingly interfere with contractual rights that parties freely negotiate and agree upon.

However, in Protiva Biotherapeutics Inc. v. Inex Pharmaceuticals Corp., the British Columbia Court of Appeal recently determined that it could adjust contractual rights in order to achieve a workable plan of arrangement proposed by a company under the British Columbia Business Corporations Act (“Act”).

Second and third time personal bankruptcies are uncommon, but fourth time bankruptcies are so rare they deserve recognition. The Supreme Court of British Columbia was recently presented with one such instance when Mr. Douglas Kusch applied for a discharge from his fourth bankruptcy.

Ontario has introduced a series of significant amendments to the Personal Property Security Act (Ontario) (the PPSA). The last major amendments to the PPSA occurred in 1989. This Osler Update highlights amendments to the PPSA that are of particular interest to court officers of insolvent enterprises and others taking or enforcing security.

On March 29, 2007 the Federal Government introduced Bill C-52: An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007 (Bill C-52). Bill C-52 amends the Bankruptcy and Insolvency Act (the BIA), the Companies’ Creditors Arrangement Act (the CCAA), the Winding-Up and Restructuring Act, the Canada Deposit Insurance Corporation Act (the CDICA) and the Payment Clearing and Settlement Act with respect to eligible financial contracts (EFCs).

Should Lenders be Concerned?

In the United States, claims for “deepening insolvency” have been advanced against lenders and investment bankers to insolvent companies as well as against the officers and directors of insolvent companies. Experience suggests that developments in U.S. commercial laws tend to be imported north of the border.1 Accordingly, lenders should be aware of the existence of the theory of deepening insolvency and the risk of creditors attempting to use it in Canada.

What is Deepening Insolvency?