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US Debtors Beware Of Slipped DIPs In Canada

Law360 (March 31, 2009, 12:00 AM EDT) -- An obvious goal in any corporate restructuring is to unlock hidden value in the assets of an enterprise. In a number of recent Canadian filings, U.S. debtor corporations and their debtor-in-possession lenders have sought to unlock value from Canadian assets in order to support their struggling U.S. operations.

They’ve been able to do this by cross collateralizing previously unencumbered Canadian assets as security for U.S. DIP facilities. Seeing the potential abuse caused by this strategy, Canadian courts are starting to push back when asked to authorize...
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