On February 1, 2013, the Supreme Court of Canada (the “SCC”) released its long-awaited decision in Sun Indalex Finance, LLC v. United Steel Workers1 (“Indalex”). By a five to two majority, the SCC allowed the appeal from the 2011 decision of the Ontario Court of Appeal (the “OCA”) which had created so much uncertainty about the relative priorities of debtor-in-possession (“DIP”) lending charges and pension claims in Companies’ Creditors Arrangement Act (the “CCAA”) proceedings.

The Companies’ Creditors Arrangement Act¹ (the “CCAA”) is by far the most flexible Canadian law under which a corporation can restructure its business. When compared against theBankruptcy and Insolvency Act² (the “BIA”), the CCAA looks like a blank canvass and lends itself well to invention and mutual compromise.

On April 2, 2013, Justice Mesbur of the Ontario Superior Court of Justice (Commercial List) granted an application brought by Business Development Bank of Canada (“BDC”) for the appointment of a receiver over the assets, undertakings and properties of Pine Tree Resort Inc. and 1212360 Ontario Limited, operating as the Delawana Inn in Honey Harbour, Ontario (together, “Delawana”).

In Kasten Energy Inc. v. Shamrock Oil & Gas Ltd., 2013 ABQB 63, the Alberta Court of Queen’s Bench considered the application of Kasten Energy Inc. (“Kasten”) to appoint a receiver over all of the assets and undertakings of Shamrock Oil & Gas Ltd. (“Shamrock”). The decision in this case presents a useful and concise summary of the applicable test for the appointment of a receiver.  

The Supreme Court of Canada, in a decision that has implications for borrowers and lenders alike, particularly where pension funds are involved, has raised some new hurdles for the country’s banks and their business customers and, at the same time, has bolstered protection for lenders of last resort who finance insolvent companies.

The court’s decision in Sun Indalex Finance, LLC v. United Steelworkers, issued earlier this year, addresses critical questions in insolvency law regarding pension funds and DIP financing. 

The Court of Appeal for Ontario's (the "OCA") decision in Re Indalex Ltd.¹ was decried by professionals in pension, banking and insolvency practices. On February 1, 2013, the Supreme Court of Canada (the "SCC" or the "Court") overturned the OCA's decision.

INTRODUCTION 

In theory, when liquidating a succession, publication formalities must be observed so that the various creditors can present themselves and claim their due. This formality also gives the successors an overall view of the assets and liabilities of the succession before deciding whether or not to accept it.

Introduction
Summary
Facts
Supreme Court decision
Comment

Introduction

The Supreme Court of Canada’s decision inSun Indalex Finance, LLC v United Steelworkers, 2013 SCC 6, has a number of implications for employers, pension plan administrators, as well as both secured and unsecured creditors.

Following a recent ruling of the Ontario Court of Appeal, parties may need to proceed cautiously in enforcing contractual rights and remedies in circumstances where there is a risk of the counterparty subsequently becoming insolvent.

The common law has long recognized that a contractual provision which is explicitly and directly triggered by a party’s insolvency (and which thereby causes subsequent prejudice to the rights of the insolvent party’s creditors) may be unenforceable as a matter of public policy.