Vancouver Business Bankruptcy, Insolvency and Restructuring Law Blog

In larger restructurings involving the Companies' Creditors Arrangement Act, there can be concerns raised that some groups of creditors are not adequately represented, since no single creditor in the group has enough of a stake to justify hiring a lawyer to protect their interests. Employees are an example of such a creditor group.

The federal Companies’ Creditors Arrangement Act (CCAA) is one of the two main pieces of legislation intended to help troubled businesses restructure in appropriate circumstances. In proceedings under the CCAA, a particular judge is appointed to supervise the process, typically...

In North Shore Law LLP v Cassidy, 2020 BCSC 1658 Master Elwood dismissed an action for delay and cancelled the Certificate of Pending Litigation ("CPL") filed against the subject property stating that...

Delinquency rates for mortgages in the Greater Vancouver area are at their highest level since 2016 and every indication is that they are continuing to rise.

Question: If a court-appointed receiver wishes to sue on a contract entered into by the now insolvent company, is the receiver bound by an arbitration clause in the agreement?

In trying to respond to the extraordinary circumstances of the Covid-19 pandemic, the court has had ample opportunity to utilize its inherent jurisdiction in the interests of justice. In Durham Sports Barn Inc. Bankruptcy Proposal 2020 ONSC 5938, the court used its inherent jurisdiction to extend the time that a debtor has to make a proposal to its creditors under s. 50.4(9) of the Bankruptcy and Insolvency Act ("BIA&").

In a recent decision of the Supreme Court of British Columbia, Quest University Canada (Re) 2020 BCSC 1883, the court became the second in Canada to grant a reverse vesting order in contested proceedings under the Companies' Creditors Arrangement Act, RSC 1985, c C-36, after another recent decision of the Québec Superior Court.

Commercial agreements often contains provisions that set out what happens if one of the parties defaults. These provisions, sometimes called "ipso facto" clauses, might give the innocent party the right to end the agreement, or might set out an agreed additional amount ("liquidated damages") that the innocent party can claim as a result of the other party's default.

It is somewhat uncommon for a co-operative to seek protection from its creditors under the Companies' Creditors Arrangement Act, R.S.C. 1985, C. C-36, as amended (the "CCAA") but that is what the beloved Canadian outdoor retailer, Mountain Equipment Co-operative ("MEC"), did in Mountain Equipment Co-operative (Re), 2020 BCSC 1586.

The recent decision in Re Michie, 2020 BCSC 1611, addresses the entitlement of a trustee in bankruptcy to claim its fees and disbursements from property not owned by the bankrupt, in priority to the person entitled to the property, where such property has come into the trustee's possession and control in the course of the bankruptcy.

In the last week three more well-known retailers have been forced to seek creditor protection amid the pandemic-related shrinkage in consumer spending. Geox Canada, a shoe and clothing retailer with 30 stores, has seen its sales for the first half of 2020 drop to half that of 2019. Its restructuring under the Bankruptcy and Insolvency Act will focus on store closings and stronger e-commerce.

After the expiration of the “usual” six month redemption period in a foreclosure action in British Columbia, the mortgagee will generally apply for an order for conduct of sale with respect to the subject property. However, where the mortgagor believes that the subject property has ample value to satisfy the mortgagee’s claim, the mortgagee may apply for an extension of the redemption period.

The security granted to lenders and other creditors almost always provides for the appointment of a receiver: an agent of the creditor with the power to take over the property and business charged by the security, often with the purpose of arranging a sale.

Suppliers deemed to be critical to the survival of an insolvent business can be compelled to continue supplying, even over their objections. In a recent British Columbia decision, Soccer Express Trading Corp. (Re), Adidas Canada was ordered to continue selling inventory to their struggling customer, a retailer and wholesaler of sporting equipment, apparel and related items.

Not completely surprisingly, Covid-19 has created increased financial challenges for many Canadian companies and statistics show that they are increasingly seeking creditor protection in the hope of being able to weather the storm.

The impacts of Covid-19 have been felt in most aspects of life in Canada and insolvency proceedings are no exception. Generally, where general procedures have required people to gather together or even be in each other’s presence, new laws have been introduced...

In a sign of the continuing disruption in Canada’s retail landscape, Reitmans Canada Ltd. was recently granted creditor protection in Quebec proceedings under the federal Companies’ Creditors Arrangement Act...

Cannabis-related businesses continue to struggle. Last week Destiny Bioscience Global Corp., an Alberta research and development company focused on the genetics and cultivation of cannabis, was placed in receivership by its main lender...

BC's biggest chain of fitness clubs has joined the growing list of businesses unable to survive the "medically-induced coma" which the COVID-19 pandemic has forced on the economy. SNFW Fitness B.C. Ltd., which brought together the Fitness World and Steve Nash Sports fitness clubs, and also operated several "UFC Gym" facilities...

The legal cannabis industry is a relatively new addition to the Canadian economy since its introduction in November 2018. Until December 2019 there had been very few insolvency proceedings commenced by cannabis companies but 2020 has seen at least 6 such insolvency proceedings ranging from receiverships to BIA proposal proceedings to CCAAs. With the onslaught of the COVID-19 pandemic...

Question: I’ve heard the courts are closed during the COVID-19 crisis. Can anything be done to help my business?

Question: We've downsized our business to weather the COVID-19 crisis, including laying off staff, but what can we do about the rent owing on our lease?

A broad retreat in the pot industry was confirmed recently with the reporting of quarterly results by a number of publicly traded cannabis companies.

Einstein Exchange Inc. joins QuadrigaCX as the second cryptocurrency exchange to fall under court protection in 2019. In early February, 2019, the Quadriga group sought protection under the Companies’ Creditors Arrangement Act (the “CCAA”) following the death of the founder, Gerald Cotton. Mr. Cotton had sole responsibility for the wallet storage protocols and wallet passwords for Quadriga’s cryptocurrency inventory. When he died...

Amendments to the Bankruptcy and Insolvency Act (“BIA”) and the Companies’ Creditors Arrangement Act (“CCAA”) Came into effect on November 1, 2019. As of the publishing of this article, these changes are not yet reflected on the Department of Justice website, or on CanLII. However, it is important for debtors, creditors, and others to be aware of...

Lenders sometimes charge an “interest rate” that varies with the profits of the borrower’s business. So, rather than an interest rate of 5% per annum of the principal amount, the rate of return might be 5% of the borrower’s before-tax profit for that year. This can be attractive to the lender, as it gives them a share in the borrower’s “upside” if the business does well. (What about the “downside” of the business not doing well?

Under provincial law in most provinces (including British Columbia), on the bankruptcy of a commercial tenant and the “disclaimer” of the lease by the trustee in bankruptcy, the lease is terminated as if by a voluntary surrender between the landlord and tenant.

Suppliers of goods and services to the debtor following the initial order in proceedings under the Companies’ Creditors Arrangement Act (the “CCAA”) can be in a precarious position with respect to payment for those post-filing goods and services. While section 11.01 of the CCAA permits payment to be made to post-filing suppliers, there is no specific requirement for suppliers to be paid and no statutory priority over other parties in respect of such payment.

When companies seek to restructure through insolvency proceedings there is frequently an interim lender who “primes” the restructuring process by making a loan to fund the company taking necessary restructuring steps. This lender is routinely given a super-priority ahead of all other potential creditors, which is seen as a necessity to entice someone to inject new funds into an otherwise heavily encumbered and insolvent operation.

Get it in writing! A recent BC case highlighted the dangers of entering into financial arrangements with family members, without a clear written agreement on the terms of the arrangements. In T.L.G. v. K.M.G. (unusually, the names of the parties are not disclosed), a mother and father advanced money to their daughter which was used to buy her a house near Victoria. The daughter’s name went on the title, except for a 1% interest to the parents’ names.

Under recent changes to B.C.’s employment legislation, directors and officers of companies are personally responsible for wages owing by the company, even if the company is in bankruptcy.

Amid continuing weakness in lumber markets, Teal-Jones recently announced a halt in all logging on the B.C. Coast including under a significant timber farm licence in the Fraser Valley and Honeymoon Bay. As the company’s news release acknowledged, this halt “will result in substantial loss of employment for the company’s forestry employees and contractors.

According to a recent report in Better Dwelling, an independent online outlet for housing news, Vancouver’s sales-to-listings ratio, a measure of demand in the real estate industry, slipped into “buyer’s market” territory in July.

It is not uncommon for a parent to decide to hold property in joint tenancy with one or more adult children in joint tenancy as an estate planning tool. A parent may transfer title to a property into joint tenancy with a child with the intention that the child will become the sole owner of the property on the parent’s death, thereby avoiding probate fees associated with the property being held as part of a joint estate. However...

The British Columbia Personal Property Security Act (“PPSA”) has recently been updated to provide new rules for determining the location of a debtor where security is taken over mobile or intangible personal property.

The challenges faced by bricks-and-mortar retail businesses are also being faced by the owners of the bricks and mortar. Shopping mall owners struggle when their tenants struggle, and many landlords are now considering “doubling down” on their tenant’s business by also acting as lenders.