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An increasing number of Canadian companies are not only investing abroad, but also setting up permanent operations and facilities outside of Canada. In the rush towards this globalization, a specter looms on the horizon, part and parcel of the inherent risks of doing business. That specter is a novel type of bankruptcy, altered from its traditional role by a series of global, international and multi-jurisdictional elements.

In view of the existence of relatively few and inappropriate international treaties dealing with this complex matter, the Canadian Parliament has recently taken a first, albeit incomplete, step in an attempt to respond to the needs, concerns, and issues raised by bankruptcies affecting more than one state.

To that effect Parliament adopted, in April 1997, changes to both the Bankruptcy and Insolvency Act ("BIA") and to the Companies Creditors' Arrangement Act ("CCCAA"), which are scheduled to come into force some time in the next few months.

One of the major innovations introduced by these changes was the enactment of a whole new section dealing with international insolvencies.

The thrust of this new section is twofold. On the one hand, Canadian courts have been given the power to adopt a wide range of measures aimed at facilitating cooperation between the various jurisdictions affected by an international bankruptcy involving an insolvent or bankrupt person (within the meaning of the BIA) having property in Canada, or a person who has the status of a bankrupt under foreign law and has property in Canada. On the other hand, a new personage has been granted standing before our courts: the foreign representative, who performs functions comparable to those performed by a trustee, liquidator, administrator or receiver appointed by Canadian courts.

In connection with the first objective of the new provisions on international insolvencies, Canadian courts can, for example: 1. limit the Canadian trustee's authority over the debtor's property situated outside the country in cases where both a foreign proceeding and a proceeding under the BIA have been instituted; 2. make such orders and grant such relief as the courts may consider appropriate to facilitate, approve or implement arrangements that will result in a coordination of proceedings under the BIA with any foreign proceeding; 3. seek the aid and assistance of a court, tribunal or other authority in a foreign proceeding.

In connection with the second objective, the foreign representative is given standing to initiate (or, in certain cases, continue) a number of proceedings pursuant to the BIA, among which are: 1. the right to file a petition for a receiving order against the debtor; 2. the right to make a proposal; 3. the right to petition the Canadian courts to appoint an interim receiver in respect of all or any part of the debtor's property in Canada; 4. the right, in certain circumstances, to petition the courts in Canada to obtain a stay of proceedings against the debtor or the debtor's property in Canada; 5. the right to petition the courts to allow the foreign representative the opportunity of examining under oath the debtor or any other person reasonably thought to have knowledge of the affairs of the debtor or any agent, clerk, servant, officer, director or employee of the debtor.

As we can see, Parliament has certainly taken some steps in the right direction in the arduous task of dealing with all the ramifications which an international insolvency, involving various jurisdictions, can generate. How effective these steps will be will not only depend on the interpretation our courts will choose to give to the new provisions but also on whether other countries, particularly our major trade partners, will implement their own legislations dealing with these matters.