This article explores the efficacy of the relatively new moratorium procedure introduced under the Corporate Insolvency and Governance Act 2020 and whether the existing domestic legislation already housed a more effective debtor-in-possession rehabilitative procedure in the form of the “light-touch” administration and if so, why it has thus far been largely overlooked.

Welcome to The Week That Was, a round-up of key events in the construction sector over the last seven days.

What's in a name?

A judge has found that insurers were liable to indemnify an insured despite its insurance policy specifying the incorrect name.

The case relates to 'The George in Rye' pub which was damaged by a fire in July 2019. While the named insured was “George on High Ltd t/a The George in Rye”, a separate company (George on Rye Ltd (GoR)) owned the restaurant and hotel business operating in the property.

The results of KPMG's Fraud Barometer showed a significant increase in fraud cases in 2021, confirming the general upward trend in this area. My colleagues recently prepared an update on the case of Hewlett Packard v Lynch, described as one of the most expensive and high profile fraud trials in recent history.

In Royal Bank of Canada v. A-1 Asphalt Maintenance Ltd. the Court was asked to determine the priority of claims in a bankruptcy between Royal Bank of Canada (the "Bank"), a secured creditor of the bankrupt, A-1 Asphalt Maintenance Ltd. ("A-1") and The Guarantee Company of North America (the "GCNA") a bond company that paid out 20 lien claims and was subrogated to those rights under the Construction Lien Act ("CLA").

Introduction

The Canadian Investor Protection Fund, the investment industry’s customer compensation agency, has obtained a bankruptcy order in the Ontario Superior Court against MF Global Canada, the Canadian subsidiary of MF Global Holdings which sought Chapter 11 protection in New York last week. KPMG Inc. has been appointed as trustee in bankruptcy for MF Global Canada.

The Investment Industry Regulatory Organization of Canada, whose dealer members support the CIPF, had previously obtained an order requiring MF Global Canada to cease dealings with the public.

A recent decision of the Alberta Queen’s Bench1 has raised some questions about purchase-money security interest (“PMSI”) proceeds and cross-collateralization of assets secured by these types of security interests. It has been suggested that this decision is unique and establishes that using a PMSI as collateral for other indebtedness of the debtor is dangerous. But is this decision really so radical?

Facts:

On July 14, 2009, the Ontario Superior Court of Justice released its decision in Canada (Attorney General) v. Reliance Insurance Company, an application regarding the allocation of surplus arising from the liquidation of the Canadian branch (Reliance Canada) of U.S.-based Reliance Insurance Company (Reliance U.S.), a property and casualty insurer that was itself in liquidation.

The insolvency proceedings of the Lehman Brothers' group of companies worldwide ("Group") are among the most complicated ones we have seen. A significant factor contributing to the complexity is that many Group entities hold segregated assets (principally securities and funds) for their clients, which may be individuals or entities within or outside the Group.

By order dated 20 January 2009, the Supreme Court, in the first case on examinership to come before it in over 10 years, allowed an appeal against the order of the High Court dated 13 January 2009 (McGovern J) which refused the petition of Gallium Limited (trading as the First Equity Group) (under the protection of the Court) for the appointment of an examiner and appointed Mr Kieran Wallace of KPMG as examiner of the Company. The Supreme Court delivered its reasoned judgment on 3 February 2009.