Category: Bankruptcy

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Crown Loses Priority Battle Over GST Funds: Century Services Inc v Canada (Attorney General)

To mark the looming onslaught of bills from holiday expenses, it is fitting, albeit in somewhat of a sadistic way, to discuss the Supreme Court of Canada’s (“SCC”) most recent pronouncements in the field of insolvency law. On December 16, 2010 the SCC released its decision in Century Services Inc v Canada (Attorney General), 2010 SCC 60. This decision marks the first time that the SCC has had to directly interpret the provisions of the Companies’ Creditors Arrangement Act, RSC 1985, c C-36 [CCAA]. Specifically, the SCC had to reconcile the CCAA with the Excise Tax Act, RSC 1985, c E-15...

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“Letter of the Law” Poised to Undermine Equity in Divorce: A Look Ahead to Schreyer v Schreyer

This November, the Supreme Court of Canada (“SCC”) will weave in and around federal and provincial legislation that has generated consternation over divorce and property division equity in Canadian provinces. The judges will hear party submissions from the Manitoba Court of Appeal (“MCA”) decision of Schreyer v Schreyer, 2009 MBCA 84, a judgment that ultimately released Mr. Schreyer from any obligation to make an equalization payment to his former wife, Mrs. Schreyer, even though he had been discharged from bankruptcy and was no longer required to pay his debts. I ask my readers to bear with the wave of legislation and...

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Newfoundland Loses Latest Round Against AbitibiBowater Inc.

Newfoundland has failed in its latest effort to compel AbitibiBowater Inc. to clean up industrial sites that the company once owned and operated in the province. The Quebec Court of Appeal decision in Newfoundland v. AbitibiBowater Inc., 2010 QCCA 965, denied the province leave to appeal of an earlier decision by the Superior Court in AbitibiBowater Inc. (Arrangement relatif à), 2010 QCCS 1261. Media reports suggest that the Newfoundland may seek leave to appeal to the SCC, though that is not certain. Background and Facts AbitibiBowater Inc., a US incorporated pulp and paper manufacturer, operated throughout the province of Newfoundland...

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Caisse Populaire Desjardins de Montmagny: Crown Does Not “Own” Unremitted GST Amounts

The only surprising thing about the recent Supreme Court of Canada (“SCC”) decision in Quebec (Revenue) v Caisse Populaire Desjardins de Montmagny, [2009] 3 SCR 286 [CP Desjardins de Montmagny] is that the Quebec Superior Court (“QCSC”) at first instance found in favour of the Crown in all three cases from which the appeals arose. The issue in CP Desjardins de Montmagny was determining the status of collected but unremitted GST and QST amounts where a business later filed for bankruptcy, and determining the priority as between the government, the trustee in bankruptcy, and secured creditors in claiming the amounts in question....

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Third Party Liability in Insolvency Cases Favour Revenue Canada

In its recent decision in Caisse Populaire Desjardins de L’est de Drummond v. Her Majesty the Queen in Right of Canada, 2009 SCC 29, the Supreme Court considered a controversial topic in insolvency law: federal deemed trusts as they are applicable to payroll deduction. Justice Rothstein, writing for the majority, concurred with the Federal Court of Appeal decision favouring the tax authorities and dismissed the appeal. In essence, the SCC allowed a financial institution to repay its loans to tax authorities by way of setting off against its own term deposit when the borrower is also indebted to the tax authorities for payroll...

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Galambos v Perez: Not Likely to Clarify Our “Mutual Understanding”

On October 23, 2008, the Supreme Court of Canada announced that it granted leave to appeal to an unusual B.C. case that, despite a recognized need for refinement, is unlikely to significantly clarify the law of fiduciary duty. Perez v Galambos, 2008 BCCA 91 presents a fact scenario in which the relationship between the parties suffers from a rather uncommon blurring of lines, between solicitor and client, employer and employee, as well as debtor and creditor. The case will therefore be of limited precedential value.

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Saulnier v RBC: A big catch for the fishing industry?

Last Friday, the Supreme Court of Canada (“SCC”) released a decision that may prove to be the big catch the Canadian fishing industry was waiting for. In Saulnier v Royal Bank of Canada, [2008] 3 SCR 166, fishing licenses were held to be “property” for the purposes of the federal Banking and Insolvency Act, RSC 1985, c B-3 [BIA] and Nova Scotia’s Personal Property Security Act, SNS 1995-96, c 13 [PPSA]. This will allow fishing licenses (which may cost hundreds of thousands of dollars) to be pledged as security for bank loans; which, in turn, should make loans easier to acquire and facilitate...

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Metcalfe And Mansfield Must Wait On Its Turn

Both sides in Barclays Bank PLC v Metcalfe & Mansfield Alternative Investments VII Corp., in its capacity as trustee of Devonshire Trust, et al. [Metcalfe & Mansfield] (involving the treatment of asset-backed commercial paper in a bankruptcy settlement) have now stated their hopes that, should the Supreme Court of Canada hear the case, it might come to a quick decision. More pointedly, counsel for Ivanhoe Mines say they want a hearing by the end of September. Now, obviously the Metcalfe & Mansfield case is a serious one, as it involves the disposition of $32 billion in assets, and just as obviously every...

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Will The Supreme Court Intervene in Metcalfe and Mansfield?

After the Supreme Court of Canada’s (“SCC”) decision in BCE Inc, et al. v A Group of 1976 Debentureholders, [2008] 3 SCR 560 in June, newspaper business pages across the nation were once more reminded that the Supreme Court exists and is relevant to the financial news which they cover. Now, once more, the media is abuzz over a big-money case. Ivanhoe Mines Ltd. has requested that the SCC review Metcalfe & Mansfield Alternative Investments II Corp., (Re), 2008 ONCA 587 [Metcalfe & Mansfield]. It is extremely likely, in this writer’s opinion, that the SCC will agree to hear the case. The...