Often, when the parties to a financing are discussing priorities or intercreditor arrangements, there tends to be a simplistic view taken of these agreements. Once the competing creditors have sorted out their respective priorities over the various pools or types of collateral, they tend to think that the terms of the agreement are essentially settled and simply need to be put into writing.

This is the third instalment in a series examining large retail insolvencies in Canada from the perspective of various stakeholders. This article discusses insolvencies from the perspective of corporate parents of distressed Canadian retailers.

2017 saw a number of interesting and important developments in Canadian insolvency and restructuring matters. Some of the highlights (which, in certain instances, will continue as issues in 2018 and beyond) are set forth below:

1) Trends: Fewer CCAA Filings and Retail Insolvencies in the News

The Owners, Strata Plan VR 1966[1] marks the first time the BC Supreme Court has rejected an application to wind-up a strata corporation pursuant to Bill 40 under the Strata Property Act

In a previous post we discussed how the Court of Queen’s Bench of Alberta recently authorized a sale transaction after being satisfied with the appropriateness of a sales process that was undertaken prior to the issuance of the receivership order.

The Court will closely examine the relevant transactions involving the accounts and form a view – which may be an impressionistic one – as to the likely extent of the interest of each client (or each client group) in those accounts.

Summary

By now, most accountants are likely to have heard about, and perhaps have some familiarity with, the new “safe harbour” laws. But for those accountants who still feel unsure about their knowledge of these new provisions, the following article will help you get your head around what safe harbour means for your accounting practice.

How safe harbour fits into the existing law

In the recent decision of Jones (liquidator) v Matrix Partners Pty Ltd, re Killarnee Civil & Concrete Contractors Pty Ltd (in liq) [2018] FCAFC 40 (Killarnee), the three member bench comprised Allsop CJ, and Siopis and Farrell JJ. Their Honours of the Full Court wrote three separate judgments, with the Chief Justice writing the lead.

The Victorian Court of Appeal decides that the Corporations Act priority regime does apply to trading trusts.

The law is now clear. Or is it?

For the last two years and six days, insolvency practitioners and other stakeholders involved in the liquidation of trading trusts have been frustrated by what should be a very straightforward question.

If the company in liquidation carries on business through a trust structure, as many do, what is the order of priorities that the liquidator must apply when making distributions to creditors?