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Vol 14, Num 2 l August 2016

Technology and Intellectual Property

► In This Issue:

Supreme Court Expands “Actual Fraud” Discharge Exception

ABI

David R. Doyle
Shaw Fishman Glantz & Towbin LLC
Chicago

If a debtor has received a fraudulent transfer, he or she may also have incurred a nondischargeable debt. According to a recent ruling by the Supreme Court, the discharge exception for “actual fraud” is now broad enough to include the liability imposed, if any, on the recipient of fraudulent transfer. The Court resolved a circuit split in Husky International Electronics Inc. v. Ritz and held that a debtor need not make a “false representation” for a fraud to be nondischargeable in bankruptcy. One practical ramification is that it may be easier for complaints alleging “actual fraud” to survive motions to dismiss.
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Highlights from Justice Antonin Scalia’s Bankruptcy Opinions

ABI

Agnes Romanowska
Reid and Riege, PC
Hartford, Conn.



Justice Antonin Scalia’s death this past February left a vacancy on the Supreme Court and set off a partisan battle over the confirmation of his successor. In the months following his death, his legacy and conservative sway on the world’s most powerful Court has been examined, and much attention has been given to his legal opinions, both in terms of his writing style and conservative substance. He also left a mark on the bankruptcy world (albeit a more delicate one), having written for the majority in several pivotal bankruptcy decisions and authoring pointed dissents during his nearly-30-year term. Below are some highlights from Justice Scalia’s major bankruptcy opinions.
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Liquidation Proceedings in Canada

ABI

Michael J. Hanlon
McMillan LLP
Montreal, Quebec

ABI

Mudasir Marfatia
McMillan LLP
Montreal, Quebec


This article outlines the legislative framework behind and briefly describes the process of a bankruptcy proceeding, the Canadian equivalent of a chapter 7 filing in the U.S. Proposals under the BIA and the Companies’ Creditors Arrangement Act, the Canadian equivalents to a chapter 11 filing in the U.S., will be dealt with in a subsequent article.

In Canada, the principal federal insolvency statute that governs bankruptcy (liquidation) proceedings is the Bankruptcy and Insolvency Act (BIA). Bankruptcy proceedings may be commenced voluntarily or involuntarily. An insolvent company may make a voluntary assignment in bankruptcy if (1) it has unsecured debts of at least CAD$1000; (2) is resident, carries on business or has property in Canada; and (3) satisfies either a cash-flow or balance-sheet test for insolvency. A creditor may apply for a bankruptcy order against a debtor if it can demonstrate that (1) it is owed at least CAD$1000 on an unsecured basis, (2) the debtor satisfies the residency requirements (noted above) and (3) the debtor has committed a specified ”act of bankruptcy“ within the six-month period before the application. Under the BIA, “acts of bankruptcy” include conduct that demonstrates attempts to defraud, defeat or delay creditors or conduct that demonstrates insolvency such as the debtor ceasing to meet its obligations as they become due. A secured creditor may apply for a bankruptcy order against its debtor, provided that at least CAD$1000 of its claim is unsecured.
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Publication Bridges Divides Between Classroom, Courtroom, and Conference Room

2016 Annual Spring MeetingHailed as “an eminently readable and accessible text that skillfully addresses the issues central to bankruptcy practice” (Prof. Lois R. Lupica, University of Maine School of Law) and “the best bankruptcy desk book on the market” (Ford Elsaesser, Managing Partner, Elsaesser Jarzabek Anderson Elliott & Macdonald, Chtd.), Bankruptcy in Practice is ideal for practitioners who need to get up to speed quickly on the theoretical underpinnings of bankruptcy practice. Order here.

 

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