The rising value of the loonie -- it's gained 17% against the U.S. dollar since 2007 -- has hurt Canadian companies that rely heavily on exporting their products to the U.S. market for their shipments. It's not a new phenomenon. Companies have had difficulty dealing with the increase and have had to seek court protection from creditors as a result. Montreal-based commercial printer Quebecor World Inc. put its U.S. unit into Chapter 11 at the beginning of the year, and Portland, Ore.-based Pope & Talbot Inc., a pulp and timber company with most of its assets in British Columbia, first filed for protection under Canada's Companies Creditors Arrangement Act on Oct. 29 and then under Chapter 11 in Delaware on Nov. 19.
What is new is that now Canadian companies under CCAA protection are now filing for Chapter 15, too, which seeks to recognize the non-U.S. proceeding as the main one and to keep creditors from seizing U.S. assets. In the last couple of months alone, British Columbian telecom Ascalade Communications Inc., Montreal garment maker Main Knitting Inc. and Quebec-based ROL Manufacturing (Canada) Ltd. have all filed for Chapter 15.
Chapter 15 gives foreign debtors the right to stay its creditors from moving against its U.S. assets under the life of its foreign bankruptcy. It was added to the U.S. Bankruptcy Code along with other amendments on Oct. 17, 2005. The entirely new chapter to the Code expanded and replaced Section 304, and none too early for troubled Canadian exporters. After all, it had been 31 years since the loonie had hit parity with the U.S. dollar. - Terry Brennan
See related story from Bankruptcy Insider
See related commentary from Dealscape's Soapbox
Canadian companies are going loony over the loonie -- the Canadian dollar, which is rising. So much so that Chapter 15 filings in the U.S. by Canadian debtors are on the rise.
