The Ontario Court of Appeal has confirmed the asset backed commercial paper CCAA Plan of Arrangement (2008 CaswellOnt 4811 (C.A.)). The reasoning of the Ontario Superior Court approving the Plan of Arrangement was reviewed in previous editions of this Newsletter.

The insolvency of the borrower is a standard event of default in facility agreements. As well as covering the borrower's cash flow insolvency, these clauses also often cover other, earlier signs of distress. Two recent cases have seen lenders try to exploit these outer reaches of their insolvency event of default clauses. Hayley Çapani and Adam Pierce explain why these cases are significant for parties negotiating new deals, and for lenders considering their enforcement options on existing deals.

Negotiations with creditors for rescheduling

The Supreme Court recently considered the scope of the anti-deprivation principle, in Belmont Park Investments PTY Limited (respondent) v. BNY Corporate Trustee Services Limited and Lehman Brothers Special Financing Inc (appellant) [2011] UKSC 38 (Belmont). Understanding the scope of this principle is important for anyone entering a contract where the parties’ rights and obligations change if one of them enters an insolvency procedure. Robert Spedding explains how the courts applied the principle in Belmont and makes some practical suggestions for avoiding problems.

FSA has published guidance on cooperation between recognised bodies and insolvency practitioners. The guidance looks at how the exchanges and clearing houses can work with insolvency practitioners to manage member defaults. (Source: Cooperation Guidance on Member Defaults)

The United States Third Circuit Court of Appeals (the "Third Circuit") issued an opinion on February 16, 2011 in the American Home Mortgage chapter 11 proceeding that upheld a determination by the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") on the valuation of a creditor’s claim that in connection with the termination and acceleration of a mortgage loan repurchase agreement.1 The decision is significant because the Third Circuit affirmed the Bankruptcy Court’s decision that the post-acceleration market value of the mortgage loans was not a relevant m

Treasury has published the 12 responses it received to its consultation on a special administration regime for investment firms resolution and draft legislation that takes into account its views on the responses. One Order clarifies that the definition of “client assets” includes money, but not money held in respect of insurance mediation. The other sets out the new regime. Respondents broadly supported the proposals and favoured an approach that would require the return of all client money and assets, not just segregated ones.

I. Introduction

1117387 Ontario Inc., by court order in October 2003, was placed under receivership for defaulting on payment of a mortgage. In October 2008, the Court was asked to approve the receiver’s third report and the proposed sale of the mortgaged lands. A complicating factor was that the mortgaged lands were subject to environmental contamination as a result of a neighbouring oil and gas facility.

Treasury has made a new set of Financial Markets and Insolvency Regulations that change the insolvency regime that applies to RIEs and RCHs. The Regulations amend several existing pieces of legislation including Part VII Companies Act 1989 and the 1991 Regulations. The changes include:  

In Re Intertan Canada Ltd. (2009), WL 181688 (Ont. S.C.J. [Commercial]), 2009 CarswellOnt 324 [Re Intertan], Morawetz J denied the approval of an amended DIP financing agreement under CCAA proceedings which was granted under the Chapter 11 proceedings in the United States.