In a previous post, we discussed areas of exposure and avenues for recourse for directors of insolvent companies. In this post, we look at how directors' legally prescribed duties may shift during insolvency.
When the claims against an insolvent company include environmental remediation orders, a clear question of public priorities arises. Which comes first: the public-interest concern for environmental protection or the need of a well-regulated economy to protect the interests of lenders?
When an oil well operator becomes insolvent, a significant liability will often exist for "orphan wells," wells with environmental remediation costs which exceed any remaining value. Under provincial legislation, such remedial costs must be paid before even secured creditors recover any money. But does this legislation, having the goal of environmental protection, conflict with the priority regime under the federal Bankruptcy and Insolvency Act("BIA")?
The fruits of a business owner's lifetime of hard work can vanish almost instantly with the insolvency of a company. Unfortunately, in the heady, frantic days of business startup, many owners may be too focused on success to think about protecting themselves and their assets from the possibility of failure.
Most businesses are carried on through incorporated companies, and when those companies have more than one shareholder, the relationship between the shareholders can go through difficulties. Disagreements about the direction of the business, or external challenges faced by the business, can give rise to shareholder disputes that can threaten the company's business and even its existence.