Focus On Insolvency Law - Restructuring

The Ontario Superior Court has found that a successful restructuring under the CCAA was ground upon which the debtor’s bankruptcy could be annulled.

In Greenstone Value Investments Inc. v. Greenstone Resources Ltd. (2007) CarswellOnt. 1385 (Ont. S.C.), the Court considered an application in the CCAA proceedings of the debtor to approve its Plan of Arrangement, and concurrently considered an application in the debtors’ bankruptcy proceedings to annul its bankruptcy.

The debtor had gone bankrupt in the year 2000. The trustee was not able to realize upon any of its assets, due in large in part to the fact that the assets were mostly shares in foreign corporations which had no immediate value. The creditors of the debtor were unsecured noteholders who were owed some $125 million, and other unsecured creditors amounting to $6.5 million.