Recent Case Law on Cross-Border Guarantees

Abstract

Two recent cases decided under the Companies’ Creditors Arrangement Act highlight some potential snares in coordinating U.S. and Canadian insolvency proceedings. In both cases, the Canadian debtors had guaranteed the obligations of their U.S. affiliates, in one case under a secured loan and in the other under a debtor in possession loan. These cases illustrate how the Canadian courts are dealing with the issue of cross-border guarantees and the extent to which they are concerned that the interests of Canadian unsecured creditors be considered.