Recently, in Re Eddie Bauer of Canada Inc., Justice Morawetz ordered a debtor was entitled to pay amounts owing for goods and services actually supplied prior to the filing date.

Courts have broad discretion to grant orders under s. 18.6 of the CCAA in cases where there is no formal Canadian bankruptcy filing.

Magna Entertainment Corp. (“MEC”) is a publicly-traded Delaware corporation with its head office in Ontario. On March 5, 2009, MEC and certain of its U.S. subsidiaries filed for Chapter 11 protection in the United States. Although MEC’s management is based in Canada and MEC has assets in Canada, MEC’s main interests and majority presence are in the U.S.

The highly publicized announcement by Nortel Networks Corporation (together with its subsidiaries and affiliates, “Nortel”) of its intention to sell certain of its businesses has provided an opportunity for the Ontario Superior Court of Justice to settle the state of the law in Ontario (and, hopefully, across Canada) on the sale of all or substantially all of an entity’s assets within a Companies’ Creditors Arrangement Act (“CCAA”) proceedings.

Lear Corporation, a Delaware corporation, its Canadian subsidiaries, and other affiliates, sought an Order under s. 18.6 of the Companies’ Creditors Arrangement Act (“CCAA”) for a declaration that Chapter 11 proceedings in the U.S. Bankruptcy Court (New York) constituted “foreign proceedings” and for a stay of proceedings. Introduced to the CCAA in 1997 to assist with the administration of the increasing number of cross-border insolvencies, s.18.6 is aimed at increasing cooperation, comity, and coordination between courts of different jurisdictions.

Debtor in Possession (“DIP”) financing is essentially new bridge financing that is provided to a corporation as it undergoes insolvency proceedings. The term exists because the corporation maintains possession of its assets during this process as opposed to having a bankruptcy trustee take possession. The concept derived from the United States of America where DIP financing is expressly provided for under c.11 of the Bankruptcy Code and allows a bankrupt corporation to incur new debt for the purposes of carrying on business operations.

On May 8, 2009, the Honourable Madam Justice Hoy of the Ontario Superior Court of Justice (Commercial List) granted an Initial Order under the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C36, as amended (the “CCAA”) in respect of Gandi Innovations Limited (“Gandi Canada”), Gandi Innovations Holdings LLC (“Gandi Holdings”) and Gandi Innovations LLC (“Gandi Texas”) (collectively, the “Gandi Group”).

Although the Companies’ Creditors Arrangement Act (“CCAA”) provides scant guidance, it is a well established procedure in a CCAA proceeding for the Court to order a claims process and to delegate powers to review creditors claims to a CCAA Monitor. Recognizing the gaps in the legislation, the Nova Scotia Supreme Court recently reviewed and clarified the basis of a Monitor’s authority to conduct a claims bar process in the CCAA restructuring of ScoZinc Ltd.

Over the last few years, debtor-in-possession (DIP) loans have become a fixture in Canadian insolvency proceedings. Initially, in Companies’ Creditors Arrangement Act (CCAA) proceedings, courts used inherent jurisdiction to authorize DIP facilities because the statute did not expressly permit them. (Pending legislative changes will put explicit DIP provisions in the CCAA and the Bankruptcy and Insolvency Act (BIA).)

Set-off is a powerful and often under-appreciated insolvency remedy in Canada. A recent decision of the Alberta Court of Queen’s Bench highlighted the importance of the doctrine and examined the requirements for a claim of equitable set-off in the context of a corporate group.

The right to assert valid set-off claims is expressly preserved in Canadian insolvency legislation. The remedy applies such that creditors may set-off (or net-out) amounts owing to them by an insolvent party, against amounts otherwise payable by them to the insolvent party.

Unpaid suppliers are generally unsecured in liquidation proceedings. A supplier can elevate its unsecured claim by taking security from the debtor or modifying its supply contract by inserting an effective title retention clause. The supplier may also rely on the BIA unpaid supplier provision to assert a super-priority for the return of its goods.