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Editor's Note Bankruptcy reform in Canada has been at best delayed and at worst derailed. On 25 November 2005 legislation was passed by the Canadian Parliament to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act and to introduce a controversial government funded wage-earner protection programme for employees with unpaid wages at the time of their employer’s bankruptcy. The legislation was passed hurriedly as the government was about to be defeated and an election was to be called. However, all political parties agreed that the legislation was important and it was therefore rushed through Parliament even though it had not been fully vetted and technical errors had not all been corrected. For this reason it was agreed that the legislation would not come into force until it was further reviewed and technical amendments, if required, were made. We are now over a year later and while we know the technical amendments had been drafted, none had been introduced into Parliament and the legislation has not been put into force. However, immediately before Parliament recessed until the end of January 2007, the Minister of Labour announced the Governments intent to introduce the amendments in the spring of 2007. Not withstanding this intent there is speculation that another election may be called before any meaningful business is conducted once Parliament reconvenes. In such an event, the reform legislation at best will be delayed for some considerable time and at worse will be abandoned. In the meantime the problems that the legislation was directified continue to exist in the Canadian insolvency system. The INSOL Cape Town conference to be held in Cape Town, South Africa from March 18 to 21, 2007 is fast approaching. A tremendous programme has been developed for this conference. There are many breakout sessions so that topics of interest are available for large and small file practitioners alike. If you have not registered for this conference I would recommend that you review the programme and register as soon as possible. For information on the conference please click here. Ralph T. Neville F.C.A. |
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Supreme Court of Canada Wades in on Receivership: A New Beginning or an End? In its recent decision in the GMAC - Canada v. TCT Logistics Inc. the Supreme Court of Canada determined that the Ontario Labour Relations Board should hear a union’s claim that a courtappointed interim receiver and trustee in bankruptcy, appointed under federal statutes, has become a “successor employer” under provincial labour laws. Some herald the case as bringing to an end the expanded operating receivership process that had developed to accommodate going concern realisation proceedings in Ontario even where there was no remaining debtor-in-possession. Others read the case more narrowly as a re-assertion of limited provincial legislative competency in bankruptcy in Canada’s federal system. While re-asserting the ability of provincial legislatures to define rights and remedies that bind federally constituted insolvency administrators, the Supreme Court of Canada made clear note of the supremacy of the federal protections that are in place to protect interim receivers, receivers and trustees in bankruptcy, specifically protecting them (and therefore creditors) from a re-definition of priorities as a result of the assertion of provincial employment laws. The GMAC v. TCT case is indeed a watershed in Canada. But which way will the flow go? For more details please click here. Fred Myers |
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ASIA & PACIFIC RIM Proposed Fees and Remuneration Issues in Australia - Leading Cases The Australian Corporations Act, as it stands at the moment, is of little assistance in respect of deadlocks relating to insolvency practitioners’ remuneration, and the newly-announced amendments will improve the situation only to a limited extent. Even without the problem of deadlocks, the widely varying provisions for fixing remuneration, depending upon whether it’s a court winding up, a voluntary winding up or an administration are a recipe for confusion: The case of Stockford was a disaster waiting to happen. The problem is not just one of regularising and standardising the procedures for fixing remuneration. The current regime arguably gives influential creditors too much scope to block a practitioner's remuneration. That’s not to say that insolvency practitioners are entitled to a blank cheque, but the current system doesn’t contain any quick and simple procedure to overcome deadlocks, whether those deadlocks are the result of disagreements about the level of the remuneration itself or the result of a dispute regarding an entirely different issue. This article discusses the implication of some leading cases on remuneration such as In the Matter of Clynton Court Pty Ltd; Gidley, In the Matter of Alliance Motor Body Pty Limited (Subject to Deed of Company Arrangement); One.Tel ; and Re Carlovers CarWash Limited. For more details please see IPAA (NSW) conference, workshop notes on remuneration. EUROPE, AFRICA & MIDDLE EAST Legal Update - Rich Pickings for the Insolvency Practitioner? The author considers two recent decisions from the English Court of Appeal where it considered the issue of a court’s ability to unwind transactions. The first case is Hill v Spread Trustee Company Limited [ECWA] Civ 542 and the decision was based upon an application under section 423 of the English Insolvency Act, 1986, which deals with transactions aimed at defrauding creditors. The implications of the case are equally applicable to cases under section 238 of the Insolvency Act which deals with transactions at an undervalue. The second case, Barber & Henry v C I Limited [case Number 1242 of 2005] also looks at the avoidability of loan repayments as transactions at an undervalue or on the grounds that they constitute preferences under section 239 of the Insolvency Act. For the full article please see Legal Update, Recovery, Winter 2006, P. 8 |
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ASIA & PACIFIC RIM The Race of Two Tortoises: Insolvency Law Reform in Hong Kong and ChinaIn Hong Kong and the People’s Republic of China (“China”) the commencement of insolvency law reform predated the Asian Financial Crisis: in Hong Kong it began in 1990; and in China, in 1994. In both jurisdictions, the law reform process has been influenced primarily by domestic policy issues. In both jurisdictions corporate insolvency reform efforts stalled, and in recent years the main reason for the delay was an inability to reach a consensus on how to best protect workers’ rights in insolvencies. Recently, this impasse was broken in China and the race (if it may be called that) between these two law reform tortoises came to an end. The new “PRC Enterprise Bankruptcy Law” was adopted on August 27, 2006 and will come into force on 1 June, 2007. In Hong Kong, in contrast, the government has failed to gain support for its corporate rescue proposal which is called Provisional Supervision. It appears that the current corporate rescue Bill will not get enacted; the Hong Kong tortoise will most likely never cross the finish line. This article offers a brief explanation of the potentially fatal weaknesses with the Hong Kong government’s corporate insolvency proposals and then provides an overview of the main aspects of the new PRC Enterprise Bankruptcy Law. For the full article by Professor Charles D. Booth, please click here. |
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AMERICAS Mega-Cases Versus Mid-Market Restructurings Mid-market cases are commonly considered to be those involving companies with revenues between about $25 million to $200 million, and debt in the same range. While on the surface, they bear little resemblance to the mega-cases involving billions in debt and complex capital structures, the basic truths about a successful restructuring remain the same: The same law applies, the same best practices apply, the same worst practices apply. There are, however, key differences in how the cases need to be handled. For the full note please see View Point, Daily Bankruptcy Review, 9 August 2006, |
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EUROPE, AFRICA & MIDDLE EAST European Cross-Border Insolvency - Latest Update The 4th release of Sweet & Maxwell’s European Cross-Border Insolvency Law includes over 23 new decisions on the EC Insolvency Regulation and a new chapter considering the implementation of the UNCITRAL Model Law on Cross-Border Insolvency in Great Britain. |
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INSOL Technical Series INSOL is pleased to launch its "Technical Papers Series". The technical papers will be on current topical issues and will be sent to our members on a regular basis. We hope you find the first paper in this series on Hedge Funds very useful. Paper 1 - Economic and Geographical Implications of Hedge Funds in Distressed Debt This paper covers the following areas:
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This issue was kindly sponsored by:
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