In Brief
For the first time, a court has adopted the ‘centre of main interest’ (COMI) as grounds at common law to recognise foreign insolvency proceedings.
The decision earlier this year by the High Court of Singapore (the Court) recognised a Japanese bankruptcy trustee appointed to companies incorporated in the British Virgin Islands (BVI):
On July 6, 2012, in Lightsquared LP (Re),1 the Ontario Superior Court of Justice (the "Ontario Court"), released reasons that clarify the criteria for the identification of the centre of main interest ("COMI") of an applicant seeking recognition of foreign insolvency proceedings as "Foreign Main Proceedings" pursuant to Section 46 of the Companies' Creditors Arrangement Act ("CCAA").2
What happens when Canadian entities are part of a corporate group with international operations that seeks to restructure? A recent decision of the Ontario Superior Court of Justice in Re Massachusetts Elephant & Castle Group, Inc. provides guidance on how Canadian courts will consider recognition of foreign restructuring proceedings.
Re Gyro-Trac (USA) Inc. (“Gyro-Trac””) is the first appellate decision to consider the centre of main interests (COMI) of a corporate group. In that case, the Quebec Court Appeal upheld the lower court’s decision to recognize proceedings under Chapter 11 of the United States Bankruptcy Code (“Chapter 11”) and to stay Canadian bankruptcy proceedings against Canadian members of a corporate group.
In the recent decision in Re Xerium Technologies Inc.1, the Ontario Superior Court of Justice recognized an order made by the U.S. Bankruptcy Court for the District of Delaware that confirmed the debtor’s pre-packaged Chapter 11 plan of reorganization. The decision provides useful guidance on how the Ontario Court may consider similar applications in the future. Many will take comfort from the fact that the decision revisits a number of relevant factors established in case law that pre-dates the current formulation of the cross-border provisions that make up Part IV of the CCA A.
After years of waiting, significant amendments to the Canadian regime of bankruptcy and insolvency law were declared in force as of September 18, 2009 (Amendments).
Insolvency law amendments were declared in force as of September 18, 2009 (the “Amendments”). The Amendments were contained in bills which received Royal assent on November 25, 2005 and on December 14, 2007, but the Amendments were not proclaimed into force until now.
Canada’s insolvency and restructuring regime consists primarily of two separate statutes that have been substantially amended in recent years to align their restructuring provisions. Despite some similarities with its U.S. counterpart, the amended Canadian regime remains distinct.