Re MtGox: Using The BIA To Recognize Foreign Insolvency Proceedings

In a recent decision, the Ontario Superior Court clarified the test by which Ontario courts will recognize foreign bankruptcy proceedings. Specifically, in Re MtGox Co¹ the court applied Part XIII of the Bankruptcy and Insolvency Act ("BIA"),² which deals with cross-border insolvencies, to recognize Japanese bankruptcy proceedings for MtGox Co., Ltd. ("MtGox") in Canada.

Earlier cases in Canada had recognized foreign insolvency proceedings under parallel provisions in the Companies' Creditors Arrangement Act ("CCAA"),³ but there is little, if any jurisprudence dealing with the cross-border insolvency provisions of the BIA introduced in 2009. In addition to clarifying the test to recognize a foreign bankruptcy proceeding under the BIA, the MtGox decision also indicates that BIA cross-border provisions are equally as effective and useful as similar CCAA cross-border provisions.