Both of Canada’s primary insolvency statutes, the Bankruptcy and Insolvency Act (“BIA”) and the Companies’ Creditors Arrangement Act (“CCAA”) provide for an automatic stay of all legal proceedings when an insolvent debtor files for or seeks insolvency protection. The purpose of the stay is to provide breathing space to a debtor attempting to restructure its business so as to avoid “death by a thousand cuts” and also to ensure similarly situated creditors are treated equally.

The Ontario Court of Appeal in Meridian Credit Union Limited v Baig¹ made it clear that misinforming a receiver during the purchase of a property, even by omission, will not be tolerated. Purchasers in the context of a receivership have an obligation to ensure that the receiver is aware of all of the facts. The court also took the opportunity to remind corporate directors that they will be held personally responsible for their tortious conduct, even if that conduct was directed in a bona fide manner to the best interests of the company.

The Victorian Court of Appeal recently allowed an appeal against an order staying a proceeding brought by companies in liquidation against their former directors for knowingly assisting breaches of trust allegedly committed by the companies. The Court discussed the principles that operate in such circumstances.

Nicholson Street Pty Ltd (receivers and managers appointed) (in liq) v Letten [2016] VSCA 157

History

On 1 May 2014, the Creditor commenced proceedings against the Debtor for a sequestration order against his estate in respect of unpaid legal costs awarded by the Magistrates Court of Western Australia.

Various preliminary issues protracted the case, including:

In the recent decision in Taylor v Official Assignee, the Court of Appeal overturned the High Court's dismissal of Mrs Taylor's appeal against the Official Assignee's decisions to set aside dispositions by Mrs Taylor to her family trust prior to her bankruptcy.

Mr and Mrs Taylor settled the family trust in October 2000.  The dispositions in question occurred between December 2000 and January 2007.  Mrs Taylor was adjudicated bankrupt in November 2006.

Mr Petricevic is the former director of Bridgecorp and currently faces criminal charges of fraud that carry with them the possibility of a maximum of 49 years in prison.

This FYI outlines the things you need to know about the Insolvency Practitioners Bill in its latest form. You can follow this link to access the Bill on the New Zealand legislation website. The Bill is new legislation that seeks to improve the regulation of administrators, liquidators, and receivers. It proposes amendments to the Companies Act 1993 and the Receiverships Act 1993.

Where a plaintiff sought to claw-back payments made to the defendant on the basis that they amounted to an unfair preference, or a transaction at an undervalue, or had been made with intent to defraud, held that such a claim could not be arbitrated but had to be dealt with in court proceedings:

In Petroprod Ltd (in official liquidation in the Cayman Islands and in compulsory liquidation in Singapore) v Larsen Oil and Gas Pte Ltd [2010] SGHC 186 the Singapore High Court considered whether an action brought to avoid transactions that allegedly violated insolvency laws should be stayed in favour of arbitration.

The Singapore High Court has considered for the first time whether an action brought to avoid transactions that allegedly violated insolvency laws should be stayed in favour of arbitration. The court held that such disputes are not suitable for arbitration due to the public interest involved.