On December 14, 2007, Bill C-12 was given Royal Assent. The Bill involves a comprehensive reform of Canada’s insolvency system. A key component of these reforms was the creation of the Wage Earner Protection Program (WEPP). The WEPP provides statutory wage protection for workers when a) their employer becomes bankrupt or subject to a receivership, and b) their employment is terminated as a result.
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?
On June 22, 2007, the federal Budget Implementation Act, 2007 (formerly Bill C-52) received royal assent. Most of the Act came into force on that date, including nearly all of Part 9, which makes important amendments to the eligible financial contract provisions of the Bankruptcy and Insolvency Act (BIA), the Companies' Creditors Arrangement Act (CCAA), the Winding-up and Restructuring Act (WURA), the Canada Deposit Insurance Corporation Act (CDIC Act) and the Payment Clearing and Settlement Act (PCSA).
2007 BCSC 267 (B.C. Supreme Court, Feb. 28, 2007)
Trustee in bankruptcy must affirm swap contracts to take advantage of them but is not personally liable if the contracts end up being out of the money - While contract gave buyer a termination right on bankruptcy, it could choose not to exercise this option and leave it to the trustee to decide whether or not to affirm the swap and take the risk that the estate will end up out of the money
On July 31, 2024, the Supreme Court of Canada released its decision in Poonian v. British Columbia (Securities Commission), on whether financial sanctions imposed by securities regulators are dischargeable through bankruptcy. The decision resolves a conflict between Alberta and B.C. jurisprudence and will have a significant impact on the treatment of all administrative orders in bankruptcy proceedings.
The facts
Individuals undergo bankruptcy proceedings for many reasons, chief among them to seek relief from their debts and obtain a fresh financial start. However, the opportunity for a fresh start can be limited when the bankrupt’s debts arise from securities fraud. In the Supreme Court of Canada’s recent decision in Poonian v.
Court approval of a sale process in receivership or Bankruptcy and Insolvency Act (“BIA”) proposal proceedings is generally a procedural order and objectors do not have an appeal as of right; they must seek leave and meet a high test in order obtain it. However, in Peakhill Capital Inc. v.
On October 18, 2023, the Québec Court of Appeal confirmed the Superior Court’s authority to declare that court-ordered charges under the Bankruptcy and Insolvency Act (BIA) rank before deemed trusts in favour of the Crown for deductions at source.