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Banking
Canada
Overview
Including: Regulatory Matters Relating to Foreign Banks; Tax Matters; Legislative Framework for Taking Security; Enforcing Security; Priorities Issues.
A recent Ontario Superior Court of Justice decision provides valuable guidance to creditors on how to protect the enforceability of guarantees where material changes have been made to the underlying loan agreements. The case underscores that where material terms of a loan agreement are amended, restated or replaced, creditors should ensure that the guarantor either confirms the original guarantee or provides a new one.
Employment & Labour
Canada
The Ontario Workplace Safety and Insurance Board is in a state of flux, with many changes occurring and more on the horizon. While the board has forged ahead with several changes to coverage in the construction industry, employers can expect further amendments to Ontario's workers' compensation system and significant changes in the four benefit policies currently under review.
The Federal Court has confirmed the importance of timely and effective resignations by directors, and of retaining evidence of when this was tendered if directors wish to avoid liability for unpaid wages and other compensation owing to employees. The matter serves as a stark reminder that the payment order appeal process set out in the Labour Code should not be taken lightly.
The Saskatchewan Court of Appeal recently ruled that members of the Saskatchewan public service pension plan are not entitled to indexed pension benefits, beyond what was already provided for in legislation. Entities involved with the administration and communication of pension plans must take the utmost care and diligence to ensure that pension benefits are described accurately, consistently and clearly.
The Supreme Court of Canada recently issued its ruling in Indalex Limited, regarding competing interests in an insolvency between pension plan members and a debtor-in-possession lender. The court decided in favour of the lender, meaning that pension plan members would not receive full benefits. The decision could have collective bargaining implications, especially in situations of under-funded pension plans.
In a recent British Columbia case, employees who transferred employment as part of a corporate transaction were awarded monetary damages on account of lost pension benefits. The court awarded damages based on the difference in value between the pension benefits that the employees would have earned at their former employer during a reasonable notice period and what they actually earned at their new employer.
There is a growing awareness of mental health issues in the workplace and increasing calls for the government to enact legislation to provide employees with a psychologically safe workplace. One of the most recent developments in this area is a standard prepared by the Canadian Standards Association and the Bureau de normalisation du Québec, which sets out optimistic suggested goals and processes in this regard.
Insolvency & Restructuring
Canada
The Supreme Court of Canada recently released its much-anticipated decision in the Indalex Limited proceedings under the Companies' Creditors Arrangement Act. The decision is important for secured lenders, both in the context of an insolvency proceeding (ie, debtor-in-possession lenders) and outside such proceedings (ie, secured lenders).
The Supreme Court of Canada recently considered the difficult intersection of Canada's federal insolvency regime with provincial environmental protection laws. Lower courts administering Companies' Creditors Arrangement Act proceedings have observed that Canada's insolvency statutes and environmental legislation do not mesh very well; the Supreme Court's decision attempts to strike a balance between the two regimes.
A recent decision of the Ontario Superior Court of Justice refined the factors to be considered when determining the centre of main interests (COMI) of debtor companies which are part of a larger corporate group. The court identified three principal factors which, considered as a whole, will indicate whether the location in which the proceeding has been filed is the debtor's COMI.
The Ontario Superior Court of Justice recently considered the evidence required when seeking the appointment of a receiver and the approval of a 'quick-flip' sale of a debtor company's assets in circumstances where the debtor, secured party and proposed purchaser are related parties. If privately appointing a receiver appears to be viable, the applicant must show sufficient grounds for the court to intervene.
The Alberta Court of Appeal recently released the first Canadian appellate court decision interpreting a bankruptcy trustee's rights to assign a franchise agreement of a bankrupt franchisee over the franchisor's objections. Permission was granted pursuant to Section 84.1 of the Bankruptcy and Insolvency Act – a relatively new provision which was introduced into the act in 2009.
Recently, the Supreme Court of Canada granted leave to appeal the Ontario Court of Appeal's decision in Indalex Limited (Re). The appeal court's decision has potentially far-reaching implications for lending transactions and has also created uncertainty with respect to the extent of an employer's fiduciary obligations in its role as pension plan administrator.
