Over the last few weeks, the news has been dominated by stories of struggling businesses, including Target Canada Co. (“Target Canada”) and the impending mass termination of its employees. Many of these reports have focused on the (subjectively) small“severance packages” these employees are expected to receive.

It’s been almost two years since the Supreme Court of Canada (SCC) decision in Indalex Ltd., Re.1 Currently, Canada’s lower courts are being challenged to interpret the decision in a variety of different contexts. The purpose of this article is to review the Indalex decision within the broader context of pre- and post-Indalex case law and to briefly comment on its impact in the lending marketplace. 

It is no secret that the mining sector is facing tough times. In recent boom years, mining companies took on unprecedented amounts of debt. Now that commodity prices have dropped and sources of refinancing have dried up, debt obligations have become overwhelming for many companies, posing a serious risk to their survival.

Canada

This article has been contributed by Julien Morissette, associate in the Insolvency & Restructuring and Litigation groups of Osler, Hoskin & Harcourt LLP.

A creditor commences an action against a debtor and obtains a judgment after a trial. The debtor then appeals and loses. The creditor does its due diligence and tracks down land that the debtor owns. The creditor files a writ of seizure and sale and commences proceedings whereby the land is to be sold to pay the judgment debt. By this time, the judgment debt, including interest, is $200,000 and the costs that the creditor has incurred have ballooned to $110,000. Not to worry, the equity in the land is $320,000 and payday is coming.

In a trust claim, it has become commonplace to seek a request for a declaration that, if there is judgment for breach of trust, the judgment will survive the subsequent bankruptcy of the judgment debtor. Will that request for relief ever be granted? This question was answered, in part, in B2B Bank v. Batson, a 2014 Ontario Superior Court of Justice decision.

Background

36039 Dhillon v. Jaffer  (Law of professions – Barristers and solicitors – Breach of fiduciary duty – Damages)

One of the primary reasons why people declare bankruptcy is that upon being discharged, the bankrupt person is released from their obligation to repay most of the debts that had existed at the time they went bankrupt. I say most because there are certain exceptions to this rule, debts that the Bankruptcy and Insolvency Actitemizes as debts not released by an order of discharge.

In Gaumond v. The Queen, 2014 TCC 339, a shareholder forgave his loan to a company as part of the company’s proposal in bankruptcy, which proposal allowed the company to emerge from bankruptcy and continue its R&D activities.  The shareholder claimed a business investment loss (BIL) on the forgiven loan under s.

Applicants who seek ex parte relief under the Companies’ Creditors Arrangement Act (CCAA) have an obligation to make full and fair disclosure of all material facts to the court.