The Act of Parliament that implemented the 2019 federal budget also included significant changes to Canada's principal corporate and restructuring statutes. These included changes to the Canada Business Corporations Act ("CBCA"), the Bankruptcy and Insolvency Act ("BIA") and the Companies Creditors' Arrangements Act ("CCAA").1 One of the reasons for the changes is to make insolvency proceedings more fair, transparent and accessible for workers and pensioners.2 The changes are now in effect and will have a significant impact on Canadian insolvency law and practice.
On November 14, 2019, the Alberta Court of Appeal (the “ABCA”) released its decision in PricewaterhouseCoopers Inc. v. 1905393 Alberta Ltd. (“1905393 Alberta”),1 dismissing an appeal of an approval and vesting order made in the context of a receivership proceeding.
On November 1, 2019, several amendments to the Bankruptcy and Insolvency Act (the BIA) and the Companies Creditors’ Arrangement Act (the CCAA) will take effect. Previously, our colleagues reported on the amendments codifying and clarifying IP rights during an insolvency proceeding and granting broader protection to IP licence-holders introduced in Bill C-86.
This article was updated on Jan. 9, 2020.
In most trading relationships, suppliers enter into deferred payment agreements, such as instalment sales, with their retailers in order to allow retailers to stock their inventory and to manage cash flow between the delivery of goods and the resale to the customer. The possibility of default on payments or often the insolvency of a trade customer/retailer exposes the supplier to considerable risk without control of its goods and without payment. As an unsecured creditor, the supplier then stands in an unfortunate position and may never recover its goods or receive payment.
Effective November 1, 2019, amendments to the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (the BIA) and the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36 (the CCAA) will, among other things, impose a requirement of good faith on all parties to proceedings (BIA and CCAA), impose an additional form of director liability (BIA), and limit the scope of relief on initial orders (CCAA).
On July 11, 2019, the Supreme Court of Canada (the SCC) granted leave to appeal from the Alberta Court of Appeal's decision in Capital Steel Inc v Chandos Construction Ltd, 2019 ABCA 32 [Chandos].
On August 27, 2019, Quebec's Court of Appeal overturned the Quebec Superior Court's decision to give post-filing claims priorities over secured creditors' claims, stating that section 11.01 of the CCAA does not give automatic priority to post-filing creditors.
Background
FT ENE Canada Inc. (“FECI”) was in the nanofibre business, and was a wholly owned subsidiary of Finetex ENE Inc. (“Finetex”). As a result of insolvency difficulties separate and apart from the Canadian business, Finetex was engaged in bankruptcy proceedings in Korea (its home jurisdiction). There was animosity between Finetex and the director of FECI.