Case Study: In Re Hartford Computer Hardware

Law360, New York (May 16, 2012, 4:32 PM EDT) -- Section 11.2 of the Companies’ Creditors Arrangement Act (CCAA) gives the Canadian court explicit authority to grant a priority charge for amounts advanced by a lender to a CCAA debtor after the CCAA filing (a “DIP Loan”); however, the section provides that the charge may not be granted to secure an obligation that exists before the order is made.

Section 11.2 effectively prevents a roll-up of prepetition debt into a DIP Loan. A “roll-up” is an arrangement where all or a portion of prepetition loans provided...
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