In Stomp Pork Farm Ltd., Re, (“Stomp Park Farm”) the Saskatchewan Court of Appeal partially overturned orders granted from the Saskatchewan Court of Queen’s Bench which approved debtor in possession financing (“DIP Financing”).

In this case, the debtor owed its first lender $20.5 million, secured against the debtor’s current assets. The lender had priority over the current assets to the extent of $18 million and thereafter shared priority with the debtor’s second lender.

The Humber Valley Resort Corporation and related companies (collectively, “Humber Valley”) applied for, and was granted, an Initial Order from the Newfoundland and Labrador Supreme Court (Trial Division) staying proceedings against it for one month under the CCAA. On this same date, the Court authorized a DIP lending facility of up to $600,000.00, with a first priority charge over various of Humber Valley’s assets. At the end of the initial stay period, Humber Valley brought two further applications.

In Re Farmpure Seeds Inc. (2008 CarswellSask. 639) the Saskatchewan Court of Queen’s Bench considered the proposal of a debtor which was conditional upon the Court approving DIP financing and a super priority charge.

The debtor company had an active business, however became insolvent as a result of rapid expansion and some improvident contracts. The debtor could not meet its immediate obligations such as payroll, and the need to pay its suppliers upon receipt of their seed product. As a result, the debtor could not maintain its business without immediate interim financing.

The British Columbia Provincial government recently passed the Economic Incentive and Stabilization Statutes Amendment Act, 2008 (the “Act”). The Act was aimed at protecting RRSPs to afford self-employed individuals the same protection from creditors as those individuals who have planned for their retirement through a registered pension plan.

To achieve this purpose, the Act amends a number of statutes in British Columbia.

In Kerr Interior Systems Ltd., the Court of Queen’s Bench of Alberta discussed a number of issues which arose as a result of two creditors registering builders liens against a third party’s property in Saskatchewan.

On July 7th, the Wage Earner Protection Program (hereinafter the "WEPP") came into force, as instituted by the Wage Earner Protection Program Act[1].

The WEPP applies to workers whose employers have been declared bankrupt or were placed under receivership as of July 7, 2008.

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.

In Ultra Information Systems Canada Inc. v. Pushor Mitchell LLP (2008 Carswell BC 1537 (B.C.S.C.)), one of the corporate Defendants had become bankrupt. There was an issue as to whether some of the bankrupt Defendant’s production documents were privileged. The Court considered whether the Trustee in Bankruptcy could waive the previously claimed solicitor and client privilege and therefore produce the documents.

Prudent lenders should monitor their corporate debtors’ pension plan liabilities and pension plan deficits because they may have a significant impact on the priority of the lender’s security and on the amount the lender will recover if the lender enforces its security.

Priority with respect to Lender’s Security

In Warren v. Warren the British Columbia Supreme Court recently appointed an equitable receiver over the assets of a judgment to debtor, notwithstanding that the Plaintiff did not have any security.