In a recent decision of the Ontario Superior Court of Justice, Re Smurfit-Stone Container Canada Inc., Justice Pepall examined the conflicting interests that arise where companies within a group of restructuring companies have made intercompany loans to one another, and where the board of directors mirror each other in each subsidiary.

In Rieger Printing Ink Co, 2009 WL 477541 (Ont S.C.J. [Commercial]), the Ontario Superior Court of Justice dealt with a party's right to protection against selfincrimination in relation to an examination held under section 163 of the Bankruptcy and Insolvency Act, R.S.C., 1985 c. B-3 ("BIA").

In the recent case of Re Masonite International Inc., the Ontario Superior Court approved a plan of arrangement under the Canada Business Corporations Act (“CBCA”), notwithstanding that certain insolvent entities were involved. This was a short but complex cross-border restructuring which commenced and was principally completed prior to the recent Canadian insolvency legislation amendments coming into force.

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 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.

On June 29, 2009, Nexient Learning Inc. filed under the CCAA in Ontario. Nexient announced that it made arrangements with The Vengrowth Traditional Industries Fund Inc., one of its lenders, to provide debtor in possession (DIP) financing to support its ongoing operations. Nexient also announced that on July 8, 2009 it received approval from the Ontario Superior Court of Justice to conduct a sale process for the sale of its assets and that it had entered into a stalking horse asset purchase agreement. The sales process is expected to be completed by August 15, 2009.

In Re: Nortel Networks Corp. the Ontario Superior Court of Justice considered an application for court approval of the Bidding Procedures pertaining to the sale of Nortel’s “Layer 4-7” business, as well as approval of a “Stalking Horse” bidding process.

Prior to filing for protection under the CCAA, Nortel decided that the Layer 4-7 business should be sold. Shortly after filing, Nortel agreed to enter into an Asset Purchase Agreement with Radware for the purchase of the Layer 4-7 business (the “Purchase Agreement”).

In a recent decision of the Ontario Superior Court of Justice, the Court rejected a bankrupt music composer’s argument that a security interest the composer had granted in royalty based distributions should be ineffective following his bankruptcy.

The U.S. doctrine of equitable subordination (as now set out in the U.S. Bankruptcy Code) allows a U.S. court to subordinate all or part of a creditor's claim to the claims of other creditors if the creditor has engaged in inequitable conduct that gives the creditor an unfair advantage or is injurious to the other creditors. Will the Canadian courts apply the doctrine?

An Ontario Court recently confirmed that an execution creditor does not have priority over the unsecured creditors of a debtor upon the insolvency of the debtor even if the judgment creditor is then holding funds of the debtor which it has garnisheed.

In February 2008, the Superior Court of Justice – Ontario granted Cotton Ginny Inc., CG Operations Limited ("H/O"), CG Operations I Limited and CG Operations II Limited, protection under the Companies’ Creditors Arrangement Act.