On March 11, 2020, the Court of Appeal for Ontario released its decision in Urbancorp Cumberland 2 GP Inc. (Re) 2020 ONCA 197 (“Urbancorp”), stating that a s.9(1) trust under Ontario’s Construction Act R.S.O. 1990, c. C.30 (“CA” or the “Act”) can be effective in insolvency proceedings under the federal Companies’ Creditors Arrangement Act R.S.C. 1085, c. C-36 (“CCAA”).

The current COVID-19 market environment presents unique circumstances to companies and investors who may, as a result of the tumultuous markets and the financial and personal effects of COVID-19, have opportunities to acquire distressed businesses at potentially depressed prices. Particularly in this market environment, though, one or more of the following scenarios may apply:

As the COVID scourge continues its march across the lives and livelihoods of Canadian individuals and businesses, the federal government has broken the glass and deployed into the economy a historically unprecedented amount of emergency funding in an effort to provide a financial bridge through the crisis to affected enterprises.

On April 15, 2020, the Finance Minister, Bill Morneau announced that the government will provide immediate, temporary relief to sponsors of federally regulated defined benefit (DB) pension plans. This relief will be in the form of a moratorium, through the remainder of 2020, on solvency payment requirements for federally regulated DB plans.

Réagissant au choc économique causé par les nombreuses mesures de santé publique mises en œuvre pour contrôler la propagation de la COVID-19, le gouvernement provincial a annoncé, le 19 mars 2020, la création d’un programme d’aide aux entreprises québécoises totalisant 2,5 milliards de dollars.

Jamais dans l’histoire les entreprises de toutes tailles et de pratiquement toutes les industries n’ont affronté une crise résultant à la fois d’un tarissement des sources d’approvisionnement et de la demande de façon simultanée. La crise de liquidités qui en découle engendre une insécurité omniprésente au sein des gestionnaires des entreprises et de l’ensemble des parties intéressées de celles-ci, incluant leurs employés, actionnaires, clients, fournisseurs, créanciers et les communautés dans lesquelles les entreprises opèrent.

In such turbulent times, financial institutions and their customers or borrowers may be facing significant challenges and stresses. There are signs suggesting that clients are facing financial distress and would benefit from assessing restructuring options, or that it would be time to consult with your intervention or special loans group.

Never before in history have businesses of all sizes and of all or almost all industries faced a crisis resulting from a simultaneous decline of supply and demand. The resulting liquidity crisis is creating pervasive insecurity among the managers of businesses and the stakeholders of those businesses, including their employees, shareholders, customers, suppliers, creditors and the communities in which the businesses operate.

In response to the COVID-19 virus, Canada’s federal government has restricted non-essential travel and closed the US border. Canada’s provincial governments have enacted highly restrictive measures including mandating the closure of facilities providing recreational programs (i.e. gyms), libraries, public and private schools, licensed childcare centres, bars and restaurants, theaters, cinemas and concert venues, and the list goes on. Some provinces have also banned gatherings of more than 5 people and prohibited all non-essential businesses.

Having ensured, to the extent possible, the safety of their workplace and workforce, many companies are turning their mind to the economic impact of the COVID-19 pandemic. All businesses are impacted, and in many cases, the impact will be adverse, whether caused by travel restrictions, office or workforce disruptions or decreased demand.