Sino Forest-subordination of equity interests and collateral damage *

Canada - August 14 2012
On 27 July 2012, Justice Morawetz of the Ontario Superior Court of Justice (Commercial List) released reasons for decision in the Sino-Forest CCAA case concerning the scope and effect of the 2009 amendments to the CCAA that subordinate “equity claims” to all other claims and provide that under a CCAA plan, no payment can be made in respect of equity claims until all other claims are paid in full.

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Dealing with Indalex *

Canada - February 23 2012
In January and February of 2012, Justice Morawetz of the Ontario Superior Court of Justice (Commercial List) released two decisions1 in which he authorized a debtor-in-possession (“DIP”) financing charge, an administration charge, and a directors and officers (“D&O”) charge ranking ahead of, among other claims, possible pension deemed trusts over the objection of the debtor companies’ unions and on notice to the members of the companies’ pension administration committees.

Co-authors: Sam P. Rappos.

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Secured creditors may assert priority over proceeds of a fraudulent preference action *

Canada - January 30 2012
In the decision of Justice Morawetz of the Ontario Superior Court of Justice (Commercial List) (the “Court”) in In the Matter of Aero Inventory (UK) Limited and Aero Inventory PLC, the Court held that proceeds of a fraudulent preference action recovered by a trustee in bankruptcy under section 95 of the Bankruptcy and Insolvency Act (“BIA”) may be subject to the rights of secured creditors, to the extent secured creditors had rights in the collateral in question at the time of the impugned transaction.

Co-authors: Sam P. Rappos.

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The Ontario Court of Appeal’s decision in re Indalex Limited – enhanced pension deemed trusts, enhanced priority and breach of fiduciary duty in liquidating CCAAs *

Canada - April 13 2011
On April 7, 2011, in the context of a liquidating CCAA that achieved a going concern sale of the debtor's business, the Ontario Court of Appeal held that an Ontario statutory pension deemed trust has priority over a court-ordered DIP charge even though the order said that the DIP charge primed statutory trusts.

Co-authors: Craig J. Hill .

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Recent regulations confirm the scope of the GST/HST deemed trust *

Canada - March 24 2011
Recent regulations confirm that the GST/HST deemed trust has priority over all security interests and charges except for land or building charges.

Co-authors: Harriet Greenwood .

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