Virgin gets some good news! The Federal Court in the first significant legal case arising out of the Virgin collapse has again highlighted the need for flexibility in the application of insolvency laws during the COVID-19 crisis
One of the first tasks required of an administrator appointed to a company is to facilitate communications with creditors and conduct creditors’ meetings.
The below decision considers these tasks against the backdrop of public health orders designed to reduce the spread of COVID-19, and the Court’s continued broad application of section 447A of the Corporation Act 2001(Cth) (Act) and section 90-15 of the Insolvency Practice Schedule (Corporations)(Schedule).
Good evening.
Following are this week’s summaries of the civil decisions of the Court of Appeal for Ontario.
Summary
A recent Alberta appellate decision establishes that a trustee in bankruptcy may sell a franchise agreement to a third party, in spite of objections by the franchisor, under the Bankruptcy and Insolvency Act (BIA). The Alberta Court of Appeal’s decision in Ford Motor Company of Canada Ltd v Welcome Ford Sales Ltd contains three important messages for franchisors:
On November 8, 2016, Judge Kevin Gross of the Delaware Bankruptcy Court issued an opinion (the “Opinion”) that affects nine different bankruptcy cases. The Opinion was issued in response to the request of Honeywell and Ford for access to asbestos claimants’ Rule 2019 exhibits. A copy of the Opinion is available here.
On July 13, 2010, the U.S. Court of Appeals for the Third Circuit held, in a landmark decision, that a plan sponsor which had the right to unilaterally terminate retiree benefits outside of bankruptcy could not exercise that same right during a bankruptcy proceeding. The case, IUE-CWA v. Visteon Corp. (In re Visteon Corp.), marks the first time that a Circuit Court of Appeals ruled against a bankrupt employer in its attempt to unilaterally terminate non-vested retiree welfare benefits.
In re Visteon Corp., No. 10-1944-cv, 2010 WL 2735715 (3d Cir. July 13, 2010), the Third Circuit held that Visteon Corporation (Visteon) could not terminate unvested retiree health and life insurance benefits during a Chapter 11 bankruptcy without seeking court approval pursuant to Bankruptcy Code § 1114, 11 U.S.C. § 1114. The Third Circuit’s decision departs from the rulings of many other federal courts, and is in tension, if not outright conflict, with the Second Circuit’s decision in LTV Steel Co. v. United Mine Workers (In re Chateaugay Corp.), 945 F.2d 1205 (2d Cir.
Once a company files a Chapter 11 bankruptcy petition (to sell its assets, reorganize or liquidate), Bankruptcy Code § 1114 sets forth a detailed procedure for the employer to follow to modify or terminate certain retiree benefits. Among other things, § 1114 imposes on the employer the burden of showing that the elimination or modification of benefits is necessary to permit reorganization.