Canada’s insolvency and restructuring regime consists primarily of two separate statutes that have been substantially amended in recent years to align their restructuring provisions. Despite some similarities with its U.S. counterpart, the amended Canadian regime remains distinct.

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In Re EarthFirst Canada Inc., Justice Romaine had to consider establishing a “hardship fund” that would be used to allow EarthFirst Canada Inc. (“EarthFirst”) to pay pre-filing obligations owing to certain suppliers and contractors operating in a remote community where EarthFirst is developing a wind farm project.

Triangular (or cross-affiliate) set-off has been at issue recently in the Companies' Creditors Arrangements Act (Canada) (CCAA) proceedings with respect to SemCAMS ULC (SemCAMS) (and certain other of its Canadian affiliates). In one application, SemCAMS successfully challenged Nexen Marketing's (Nexen) attempts to effect triangular set-off where Nexen lacked a contractual right to do so.

Nexen Marketing was a party to a number of agreements with SemCAMS and certain of its affiliates:

In Seeley (Trustee of) v. Canadian Imperial Bank of Commerce (2008), the Bankruptcy Court determined that the Superintendent’s Levy was payable on the amount paid to a secured creditor by a Trustee in bankruptcy.The bankrupt made an assignment into bankruptcy. He owned a cabin which was mortgaged to the Bank.

The Trustee sent the Bank three notices requiring it to file proof of its security. The Bank did not respond.The cabin was sold and subsequently the Bank filed a Proof of Claim in the bankruptcy.

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.

Section 147 of the Bankruptcy and Insolvency Act (“BIA”) provides that the Superintendent’s Levy is applied to defray the supervisory expenses of the Superintendent, will be charged on dividend payments made by the trustee.

Banks have a recognized right to set off amounts owing by the bank to its customer (i.e. a credit balance in the customer’s bank account) against the customer’s debt to the bank. However, banks frequently wish to have the additional comfort of obtaining a security interest in the customer’s credit balance in a designated bank account. Banks frequently refer to this security as a pledge of cash collateral.

Distressed preferred shares are an important weapon in the arsenal of a restructuring lawyer. They allow distressed companies to reduce their borrowing costs by restructuring their debt in a way that gives a taxable Canadian resident corporate lender a tax-free return. This means that the lender can accept a dividend rate that is less than the interest rate on the debt it holds and receive the same economic return without losing the priority that came with holding secured debt.

In the early nineties, Quebec adopted new personal property legislation under the reform of the Civil Code of Quebec (the "CCQ"). However, the CCQ incorporated language and legislation from Quebec's former personal property regime. This combination of old and new legislation has, in some cases, left remnants of formalism surrounding the creation of certain types of hypothecs (security interests). In Positron Technologies Inc.