Having enforceable security over all of a borrower’s assets is obviously of primary importance to a lender. However, where a borrower occupies leased premises, ensuring the lender has quick and reliable access to the collateral is equally important, especially if the landlord proves to be unco-operative after a borrower’s default. Although court-ordered access to a borrower’s leased premises can be sought after a borrower’s loan default, a landlord waiver obtained prior to an initial advance of a loan can bring some added certainty to the realization process outside of a bankrup
Generally speaking, the policy of the Bankruptcy and Insolvency Act (“BIA”) is not to interfere with secured creditors, leaving them free to realize upon their security. While this makes sense in the abstract, the question that is most often posed by secured creditors is “what does this mean in a practical sense? What exactly do I need to do to retrieve my secured asset?”
The Indalex decision, released by the Ontario Court of Appeal earlier this year, gave priority to pension plan members over other secured creditors that had advanced funds to keep Indalex from bankruptcy. This case came as a surprise to many practitioners and may have far-reaching implications for pension plan administrators and creditors alike.&nbs
A number of commentators have written articles about Part IV of the Companies’ Creditors Arrangement Act (CCAA), which deals with recognizing and enforcing foreign insolvency proceedings, however little has been written about the treatment of corporate groups in this context. Part IV of the CCAA deals with entities on an individual basis, and how to deal with corporate groups is not well addressed in international insolvency legislation.
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In Canada legislative authority is divided between the federal and provincial governments by subject matter. "Bankruptcy and insolvency" is a matter of federal jurisdiction, while "property and civil rights" is generally within the jurisdiction of the provinces.
Unremitted source deductions are subject to a deemed trust in favour of the Crown under Section 227 of the Income Tax Act (the “ITA”), Section 86 of theEmployment Insurance Act (the “EIA”) and Section 23 of the Canada Pension Plan (the “CPP”). Subsection 227(4) of the ITA creates the trust for income tax deductions and Subsection 227(4.1) creates a super-priority lien in favour of the Crown, in the amount of the trust, over all the debtor’s assets.
When a company winds up, begins restructuring proceedings or goes bankrupt, a debtor or creditor may be able to cancel out the amount payable to the other party by using the remedy of “set‐off”. Set‐off involves the cancelling of crossliabilities between two parties who owe each other money. It is a valuable tool that can increase a creditor’s percentage of recovery and decrease the debt burden of a debtor.
Types of Set‐off: Contractual, Legal or Equitable
The Supreme Court of Canada decision in Century Services Inc. v. Canada (Attorney General), which arose from the restructuring proceedings of Ted LeRoy Trucking Ltd. and was released on December 6, 2010, is a landmark decision in Canadian insolvency law.
As most are aware by now, the Ontario Court of Appeal (the “OCA”) recently caused alarm by finding that claims of pension plan beneficiaries ranked higher than the super-priority debtor-in-possession financing charge (the “DIP Charge”) created by the amended initial order (the “CCAA Order”) in the Companies’ Creditors Arrangement Act (the “CCAA”) proceedings of the Indalex group of Canadian companies (collectively, “Indalex”).