Many describe the United States as Canada's most important trade partner. Cross-border insolvency proceedings between the two jurisdictions are frequent and the recognition by one country's court of the other's bankruptcy orders is an important tool in facilitating the restructuring of companies with operations that spread across North America. A recent decision from the Ontario Court of Appeal (leave to appeal of which was denied by the Supreme Court of Canada) invites us to reflect on the delicate balance between comity for foreign orders and Canada's sovereignty over domestic laws.

When a financing statement is registered to perfect a security interest in collateral, it is the responsibility of the secured party to monitor the registration to ensure that a new financing statement is filed if the goods move jurisdictions. A recent decision by the Ontario Superior Court of Justice1 emphasizes this point.

Facts

Justice Morawetz of the Ontario Superior Court (also a celebrity among lawyers for being the Morawetz in the trio of Houlden, Morawetz, & Sarra, authors of the Annotated Bankruptcy and Insolvency Act) announced last week (on 8 March) that the next step in the long-running Nortel insolvency proceedings would be a cross-border joint trial to carve up the rump of Nortel’s liquidated assets (app

In a recent decision, the Ontario Superior Court of Justice recognised the English law schemes of arrangement of the Syncreon group under the Companies’ Creditors Arrangement Act, RSC 1985, c C-36 (“CCAA“). This was the first time a Canadian court was asked to determine whether proceedings under Part 26 of the Companies Act 2006 (the “Companies Act“) could be recognised as “foreign proceedings” under Part IV of the CCAA.

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 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 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.

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.

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”).

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.