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An exercise in cross-border co-operation: Gandi Innovations Limited, Gandi Innovations Holdings LLC and Gandi Innovations LLC
Practical Law Legal Update 6-386-3714 (Approx. 2 pages)
An exercise in cross-border co-operation: Gandi Innovations Limited, Gandi Innovations Holdings LLC and Gandi Innovations LLC
by Roger Jaipargas and Mary Arzoumanidis, Borden Ladner Gervais LLP
| Published on 10 Jul 2009 • Canada |
Speedread
The restructuring of the Gandi Group (as set out below) presents an interesting example of the co-operation between the Canadian and US courts in facilitating cross border restructurings and also provides an example of a creditor driven CCAA filing.
The initial CCAA order
On 8 May 2009, the Honourable Madam Justice Hoy of the Ontario Superior Court of Justice (Commercial List) granted an Initial Order under the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C 36, as amended (CCAA) in respect of Gandi Innovations Limited (Gandi Canada), Gandi Innovations Holdings LLC (Gandi Holdings) and Gandi Innovations LLC (Gandi Texas) (collectively, the Gandi Group).
Creditor driven CCAA filing
In most CCAA cases, the debtor company(s) typically file for protection from their creditors under the CCAA. However, the relevant provision of the CCAA (section 11(1), CCAA) providing for an application to be made for relief under the CCAA is broad enough that a creditor can seek a CCAA filing on behalf of the debtor company(s).
In this case, the second secured creditor of the Gandi Group applied for an order under the CCAA in respect of the Gandi Group. While this is not the first time that a creditor driven CCAA has occurred in Canada, such occurrences are more infrequent than the traditional CCAA filing by a debtor company.
Chapter 15 proceedings
While Gandi Canada is a Nova Scotia company, Gandi Holdings was incorporated in the State of Delaware and Gandi Texas was incorporated in the State of Texas. The provisions of the Initial Order specifically addressed this issue by empowering the monitor to apply for, or assist the Gandi Group in applying for, orders outside Canada recognising the CCAA proceedings.
BDO Dunwoody Limited as the monitor and authorised foreign representative appointed in the CCAA proceedings made the application for the Chapter 15 relief under the United States Bankruptcy Code. Judge Clark of the United States Bankruptcy Court for the Western District of Texas (San Antonio Division) had little difficulty in finding that Gandi Canada and Gandi Holdings should be "foreign main proceedings". Gandi Texas, however, presented a greater challenge for Judge Clark. After reviewing a number of factors, Judge Clark concluded "that the centre of main interest for Gandi Texas should be Canada as that was the 'nerve centre' for the Gandi Group".