On June 29, 2009, Nexient Learning Inc. filed under the CCAA in Ontario. Nexient announced that it made arrangements with The Vengrowth Traditional Industries Fund Inc., one of its lenders, to provide debtor in possession (DIP) financing to support its ongoing operations. Nexient also announced that on July 8, 2009 it received approval from the Ontario Superior Court of Justice to conduct a sale process for the sale of its assets and that it had entered into a stalking horse asset purchase agreement. The sales process is expected to be completed by August 15, 2009.

In a series of cases in 2009 culminating in the decision of the Honourable Mr. Justice Morawetz in Re Indalex Limited (“Indalex”), the CCAA Courts have considered the appropriateness of approving the granting of a guarantee in connection with a cross-border DIP facility. This issue has been at the forefront – with varying results – in a number of recent CCAA cases in which DIP financing was dependent on the CCAA debtor providing a secured guarantee of the obligations of the parent or affiliate company’s DIP financing in its own Chapter 11 case.

Allarco Entertainment

On June 16, 2009, Allarco Entertainment Inc. and Allarco Entertainment 2008 Inc. filed under the CCAA in Alberta.

Allarco Entertainment owns Super Channel, an Edmonton-based TV network. According to Court documents, Super Channel has approximately 222,000 subscribers. Super Channel broadcasts feature films, original series, specials and mini-series in high definition.

Eddie Bauer

Set-off is a powerful and often under-appreciated insolvency remedy in Canada. A recent decision of the Alberta Court of Queen’s Bench highlighted the importance of the doctrine and examined the requirements for a claim of equitable set-off in the context of a corporate group.

The right to assert valid set-off claims is expressly preserved in Canadian insolvency legislation. The remedy applies such that creditors may set-off (or net-out) amounts owing to them by an insolvent party, against amounts otherwise payable by them to the insolvent party.

Unpaid suppliers are generally unsecured in liquidation proceedings. A supplier can elevate its unsecured claim by taking security from the debtor or modifying its supply contract by inserting an effective title retention clause. The supplier may also rely on the BIA unpaid supplier provision to assert a super-priority for the return of its goods.

A recent decision of the British Columbia Court of Appeal has rationalized the approach to be taken by Courts in considering appeals in CCAA cases.

The Alberta Court of Queen's Bench recently permitted a debtor to establish a "hardship" fund to pay obligations incurred prior to the debtor's CCAA filing to local suppliers operating in the debtor’s community.

Canadian Superior

AbitibiBowater

On January 14, 2009, Nortel Networks Corporation obtained protection from its creditors under theCompanies' Creditors Arrangement Act. From a historical perspective, it represents a Canadian icon's fall from grace. It was once an industry heavyweight - at its height its market cap was $250 billion and accounted for two thirds of the total value of the Toronto Stock Exchange. As North America's largest maker of telephone equipment (and now into its 113th year), its problems were compounded by the global financial crisis and North American recession as well as by global competition.