On July 7, 2008 specific provisions of the Insolvency Reform Act, 2005 and the Insolvency Reform Act, 2007 were proclaimed into force by Order in Council. As a result, the Wage Earner Protection Program Act (the “WEPPA”) and certain related amendments to the Bankruptcy and Insolvency Act (“BIA”) have come into immediate effect.

Certain of those amendments are intended to protect current and former employees of insolvent companies and will affect lenders to insolvent businesses.

In anticipation of the coming into force of amendments to current Canadian insolvency legislation, the Toronto Insolvency and Workout Group has created a comprehensive tool to help identify the changes.

We have created blackline versions of the Bankruptcy and Insolvency Act (Canada), the Companies' Creditors Arrangement Act (Canada) and the Wage Earner Protection Program Act (Canada) which show what the statutes will look like when the amendments are proclaimed in force and which specifically illustrate the changes that have been made.

On December 14, 2007, Bill C-12 was given Royal Assent. The Bill involves a comprehensive reform of Canada’s insolvency system. A key component of these reforms was the creation of the Wage Earner Protection Program (WEPP). The WEPP provides statutory wage protection for workers when a) their employer becomes bankrupt or subject to a receivership, and b) their employment is terminated as a result.

LEGEND

What follows are blackline documents outlining amendments to the BIA, CCAA and WEPP which have been passed by the government, but not yet proclaimed in force. It is hoped that these comparisons will serve as a useful tool in providing a comprehensive understanding of what the legislation will ultimately look like, when the proposed amendments are proclaimed in force.

On March 29, 2007 the Federal Government introduced Bill C-52: An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007 (Bill C-52). Bill C-52 amends the Bankruptcy and Insolvency Act (the BIA), the Companies’ Creditors Arrangement Act (the CCAA), the Winding-Up and Restructuring Act, the Canada Deposit Insurance Corporation Act (the CDICA) and the Payment Clearing and Settlement Act with respect to eligible financial contracts (EFCs).

On June 22, 2007, the federal Budget Implementation Act, 2007 (formerly Bill C-52) received royal assent. Most of the Act came into force on that date, including nearly all of Part 9, which makes important amendments to the eligible financial contract provisions of the Bankruptcy and Insolvency Act (BIA), the Companies' Creditors Arrangement Act (CCAA), the Winding-up and Restructuring Act (WURA), the Canada Deposit Insurance Corporation Act (CDIC Act) and the Payment Clearing and Settlement Act (PCSA).

The Bankruptcy Law, applicable to FIEs and most other companies in China, will come into effect on 1 June 2007.

The Bankruptcy Law sets out a dual test of insolvency: inability to pay debts as they fall due ("cash flow insolvency") and insufficient assets to pay off all debts ("balance sheet insolvency"). Either a debtor or a creditor may apply to the court for reorganization or liquidation of the debtor. Court assistance may also be sought to conciliate.

In the current climate, the demand for jobs substantially exceeds the supply. Even so, for employers it can still be difficult to find a quality employee who meets the specific requirements for the given job. Once a suitable employee is found for the vacant position, they complete the usual formalities – submitting documents on their education, health and evidence of criminal records, agree with the employer on wages and other conditions of the employment and sign the labor contract.

The EU Decision

The EU Commission has held on January 26, 2011 that the so called restructuring privilege offered by German corporate tax law, which allows corporations in a distressed financial situation to continue to set off tax loss carry forwards against future profits even if their shareholder structure has substantially changed, is incompatible with EU State Aid provisions.

The recipients, which have applied the restructuring privilege, are now threatened with the reclaim of the tax benefits.

No Respite for Distressed Companies in Hong Kong

In Hong Kong, a company that is financially distressed may generally only avoid being liquidated or wound up if it: