26 | LEXPERT • December 2016 | www.lexpert.ca
Re Zochem. Newbould took pains in his deci-
sion to remind directors of their fiduciary du-
ties, even while recognizing US proceedings
as a "main proceeding," giving his approval
to a US interim financing order and granting
the security requested for a DIP loan.
For their part, Americans are starting
to discover the advantages of some of the
unique features of Canadian bankruptcy law.
For example, in the cross-border proceedings
surrounding the Lac-Mégantic rail disaster,
which wiped out part of the southern Qué-
bec town and caused huge losses of life and
infrastructure, the courts in Québec and in
Maine worked seamlessly together to broker
a settlement.
Much of the credit for this collaboration
can be attributed to Canadian law's resort to
a "monitor," a concept unfamiliar to bankruptcy law in the Unit-
ed States. "Because monitors are court-appointed officers who are
the eyes and ears of the court, they have a special standing and
engender a great deal of respect and are in an excellent position to
broker settlements," says Abitan.
Aiding greatly in the Lac-Mégantic settlement as well was the
monitor's ability to implement a number of third-party releases,
whose availability is much more restricted in the US. "For sure,
the case would have gone on much longer in the US than the two
years it took to settle here," Abitan says.
ACROSS OTHER BORDERS
The past seven years have seen more cross-border insolvencies
involving countries other than the United States. "Things have
become much more European and Asia-focused, especially in
Kenneth Lenz Bennett Jones LLP
"Pre-litigation matters — often corporate-type banking
work where companies have to deal with their balance sheet,
renegotiate bonds and long-term debt, or raise equity
— are often becoming the biggest part of a case."
INSOLVENCY
RECOGNITION PROCEEDINGS
Cross-border recognition proceedings are becoming a staple for
the Canadian insolvency Bar. "I think we're becoming a lot more
comfortable with the flexibility that recognition provides, and
with the ways in which Canadian creditors can be protected in
proceedings in the US," Dietrich says. "Some of the best evidence
of that can be seen in the fact that Canadian companies are ex-
tending debtor-in-possession [DIP] financing to related compa-
nies involved in Chapter 11 proceedings."
Despite the fact that courts have allowed a great deal of latitude
in accepting US proceedings as "main proceedings" under Cana-
dian law, what Canadian courts have made clear is that such rec-
ognition is not to be taken as indicating that Canadian creditors
are ceding any of their rights. A case in point is the February 2016
Ontario Superior Court decision of Justice Frank Newbould in
