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Insolvency & Financial Restructuring: Recent Developments of Importance

January-4-2012

Lawyer Joe Latham, Brendan O'Neill
Area Corporate Restructuring

Summary

Article originally published in the 2012 Lexpert/American Lawyer Guide to the Leading 500 Lawyers in Canada

Excerpt from "Insolvency & Financial Restructuring:  Recent Developments of Importance"

Credit bidding is firmly established in the US and on the rise in Canada.  Several factors have contributed to its development.  First, it has become increasingly common for CCAA proceedings (and Chapter 11 proceedings) to involve (indeed to basically conclude by way of) a sale of all or substantially all of the debtor’s assets.  Second, these large-scale asset sales are increasingly being conducted by way of a competitive CCAA auction process at which one or more bids compete for the assets.  Third, these CCAA auctions are increasingly being attended by sophisticated loan-to-own investors (acting individually or as a syndicate of lenders) who generally seek to acquire a distressed company and/or its assets by way of either (a) exchanging their debt into equity of there organized company in a plan scenario or (b) credit bidding that debt in the event that the restructuring proceeds by way of a sale process.  As each of these factors becomes increasingly common and commonplace in Canada, so too does credit bidding.

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