Canadian Structured Finance Law : Canadian Structured Finance Law: Securitization/OTC Derivatives Blog by Stikeman Elliot Lawyers & Attorneys

Alix d'Anglejan-Chatillon

In Decision No. 2009-PDG-0064 in the matter of CMC Markets UK Plc (June 16, 2009), the Quebec Autorité des marchés financiers (AMF) granted a temporary exemption to a London-based firm regulated by the UK Financial Services Authority from requirements under section 82 of the Derivatives Act (Quebec) (QDA) in connection with the offering of contracts for differences (CFDs) in Quebec. This is one of the first exemption decisions granted by the AMF since the coming into force of the QDA on February 1, 2009. The QDA regulates all activities with respect to OTC and exchanges traded-derivatives carried on in Quebec.

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Margaret Grottenthaler

The Budget Implementation Act, 2009 (Canada) S.C. 2009, c.2, passed on March 12, 2009, introduced amendments to the financial institution restructuring provisions of the Canada Deposit Insurance Corporation Act (CDIC Act) that will modify the stay exemption for close-out netting and collateral enforcement rights under eligible financial contracts (EFCs) with CDIC member institutions. These provisions are not yet in force and will come into effect by Order-in-Council.

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Margaret Grottenthaler

Earlier this year Abitibi-Consolidated Inc. (Abitibi) and various related entities proposed to enter into an arrangement with certain classes of its creditors relying on the plan of arrangement provisions in the Canada Business Corporations Act (CBCA). It is unusual to propose a corporate plan with respect to a company's debt.  The CBCA plan of arrangement provision is not fundamentally an insolvency law.  The procedure is most often used to restructure securityholder relationships within solvent companies and that is the primary intention.  Restructurings involving insolvent entities are typically done under the Companies' Creditors Arrangement Act (CCAA). However, on rare occasions, the corporate proceeding is used by corporations that are insolvent. While the CBCA requires that a corporation be solvent to use the proceeding, courts have "finessed" this requirement by holding that it is satisfied as long as one of the applicant companies is solvent (even where the applicant is often a corporation newly established to take part in the plan) and the insolvent companies will emerge solvent from the plan.

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