The recent decision by the Court of Appeal for Ontario (the “Court”) in 306440 Ontario Ltd. v. 782127 Ontario Ltd.1 serves as a cautionary reminder to secured creditors that their position may not always be at the top of the insolvency food chain, even when they have taken all the proper steps to perfect their security interests.
Recent decisions in the Ontario courts have brought this issue to the forefront, which is salient during this time of economic uncertainty for the oil industry and its related environmental obligations. The courts have had to focus on balancing competing public interests: those of creditors and the general health and safety of the public when a debtor has an outstanding obligation to remediate its pollution.
This article has been contributed by Julien Morissette, associate in the Insolvency & Restructuring and Litigation groups of Osler, Hoskin & Harcourt LLP.
In a trust claim, it has become commonplace to seek a request for a declaration that, if there is judgment for breach of trust, the judgment will survive the subsequent bankruptcy of the judgment debtor. Will that request for relief ever be granted? This question was answered, in part, in B2B Bank v. Batson, a 2014 Ontario Superior Court of Justice decision.
Background
In a recent decision, the Ontario Superior Court clarified the test by which Ontario courts will recognize foreign bankruptcy proceedings.
This article has been contributed to the blog by Andrea Lockhart, an Associate in the Insolvency and Restructuring Group of Osler, Hoskin & Harcourt LLP, and Mary Angela Rowe, an Articling Stu
In his November 20, 2014 decision in CanaSea PetroGas Group Holdings Limited (Re), Sharpe J.A. of the Ontario Court of Appeal did not accept the respondents’ submissions that he should decline to hear an application for leave to appeal a CCAA decision because only a three-judge panel should hear such an application.
On July 31, 2014, the Honourable Mr. Justice Penny of the Ontario Superior Court of Justice ruled in favour of the plaintiff in Indcondo Building Corporation v. Sloan (S.C.J.).
Many secured creditors see their position in absolute terms. They rely on their general security and aggressively assert their priority over unsecured creditors, such as trade creditors. However, a recent decision of the Ontario Court of Appeal(306440 Ontario Ltd. v. 782127 Ontario Ltd. (Alrange Container Services), 2014 ONCA 548) demonstrates that creative arguments by trade creditors may allow them to take priority over even secured creditors in certain circumstances, by using trust principles to remove assets from the estate.
In lengthy insolvency proceedings, interest accrued on existing claims during the “post-filing” period can represent a substantial portion of the debtor’s estate.