News & Blog
Featured News
Insolvency and Restructuring - On the Docket
-
As important as corporations are to modern commerce, Courts have long struggled with how to make these fictional persons responsible for their actions when allegations against them require the Court to assess their state of mind. The problem is as old as the modern corporation, and can cause exasperation when corporations fail, leading Lord Chancellor Thurlow in the 18th century to remark that a corporation, being a fiction, “has neither a body to kick, nor soul to be damned.”
In Poonian v British Columbia (Securities Commission), a majority of the Supreme Court of Canada clarified provisions in the Bankruptcy and Insolvency Act (the “BIA”) that govern when a bankrupt is not released from a claim upon an order of discharge. The Supreme Court concluded that while bankruptcy may release bankrupts from administrative penalties, it will not release them from orders to pay amounts obtained by fraud.
In March 2024, The Body Shop Canada (“TBS Canada”) filed a Notice of Intention to make a Proposal under the Bankruptcy and Insolvency Act after its UK parent company completed a cash sweep of TBS Canada. The cash sweep instantly eliminated TBS Canada’s liquidity, forcing it to suspend online orders and close 33 retail stores.
Court orders must be obeyed. If they are not, the consequences can be severe.
On February 4, 2022, CAIRP held its 19th Annual Review of Insolvency Law. The conference brought together insolvency law practitioners from across Canada for a showcase of papers authored for the latest edition of the Annual Review of Insolvency Law publication. The journal itself is now available in full on CanLII. Each panel was anchored by an ARIL paper whose author(s) led spirited discussions on contested topics important to the future of the insolvency practice.
Peter Griffin, Lawrence Thacker and Derek Knoke acted as counsel to G2S2 Capital Inc., a bondholder and lender to Calfrac Well Services Ltd. (“Calfrac”) in a restructuring and recapitalization implemented pursuant to a plan of arrangement (the "Plan of Arrangement") under the Canada Business Corporations Act ("CBCA").
In Chandos Construction Ltd v Deloitte Restructuring Inc ("Capital Steel") a strong majority of the Supreme Court of Canada affirmed the continuing relevance in Canada of the common-law anti-deprivation rule in insolvency. The rule invalidates any provision in an agreement providing that upon an insolvency (or bankruptcy), value is removed from the reach of the insolvent person’s creditors which would otherwise have been available to them, and places that value in the hands of others. It is a rule protecting the strong public policy in favour of the fair distribution of an insolvent person's assets among unsecured creditors.
In Back to Methuselah, George Bernard Shaw famously wrote that an election was “as bad as a battle except for the blood”. That is perhaps dramatic in the context of the Companies’ Creditors Arrangement Act (“CCAA”), but certainly a creditor vote can be a tense and contested affair. Such was the case when Callidus Capital Corp (“Callidus”), an asset-based or “distressed lender” and secured creditor, made a “second kick at the can” to approve a plan of arrangement already rejected by unsecured creditors, and found itself barred from voting on the plan for having acted for an “improper purpose”.
Earlier this year, in Bill C-97, Parliament introduced significant changes to the Canada Business Corporations Act (“CBCA”), the Bankruptcy and Insolvency Act (“BIA”) and the Companies Creditors Arrangement Act (“CCAA”). The changes to the BIA and CCAA have now been proclaimed in force effective November 1, 2019.
The Supreme Court of Canada today released its long-awaited decision in Orphan Well Association v Grant Thornton Ltd. The Court reversed a decision of the Alberta Court of Appeal that allowed the trustee of a bankrupt oil and gas company to sell its profitable wells and disclaim unprofitable ones, leaving the public to bear the end-of life liability associated with those wells.
