Introduction

When a company is in financial distress, its directors will face difficult choices. Should they trade on to trade out of the company's financial difficulties or should they file for insolvency? If they delay filing and the company goes into administration or liquidation, will the directors be at risk from a wrongful trading claim by the subsequently appointed liquidator? Once in liquidation, will they be held to have separately breached their duties as directors and face a misfeasance claim? If they file precipitously, will creditors complain they did not do enough to save the business?

The general rule is that claims of the bankruptcy estate against third parties (e.g., preference claims and tort claims) can be sold to third parties in a § 363 sale.[Fn. 1]

However, a recent opinion from the U.S. Fifth Circuit Court of Appeals discusses whether a state’s champerty law impairs a § 363 sale.[Fn. 2] 

When the COVID-19 Pandemic incepted, and issues arose as to whether affected policyholders could seek Business Income and Civil Authority coverage from the presence or suspected presence of SARS-CoV-2 and consequent orders of Civil Authority, I thought that the easiest question to answer was whether such policyholders had suffered physical loss or damage (“PLOD”) to their property.

The Majority PLOD Rule Prior to COVID-19

BACKGROUND

In a recent decision of the Supreme Court of Canada in Poonian v. British Columbia (Securities Commission), the Court determined that while disgorgement orders made by the British Columbia Securities Commission (the “Commission”) survive bankruptcy under the Bankruptcy and Insolvency Act (the “BIA”), administrative penalties may not.

Dissolution is the process of de-registering a company from the company registry at the Department of Business Development (“DBD”). When considering the life cycle of a business operation, the voluntary dissolution by the shareholders appears to be the usual way to end the company’s operations. There are several circumstances that will lead companies to the dissolution and subsequently, the liquidation process. Under Sections 1236 and 1237 of the CCC, a limited company may be dissolved by the following causes:

. . . In such circumstances, sealing the indictment “would undermine the purpose of having a statute of limitations at all.”

Introduction

L’un des principaux avantages pour un débiteur de se placer sous la protection de la Loi sur les arrangements avec les créanciers des compagnies (« LACC ») ou de la Loi sur la faillite et l’insolvabilité (« LFI ») consiste en la suspension des procédures pouvant être intentées par un créancier faisant face à un défaut de paiement. Cette suspension des procédures permet notamment à la débitrice de se réorganiser ou de disposer de certains ou de l’ensemble de ses actifs sous la supervision du tribunal. Or, certaines exceptions existent.

Executive Summary: