Will companies filing for pandemic-related creditor protection in the U.S. do the same in Canada?

As employees across the globe continue to work remotely, the reduced demand for desk space has left occupancy rates plummeting in co-working spaces.

Co-working provider Knotel Inc.—who had a vacancy rate below 2% before the pandemic—has become the most recent company to file for creditor protection in the U.S. due to COVID-19 wreaking havoc on its business model.

Speaking to The Globe and Mail on the possibility of Knotel Inc. also filing for creditor protection in Canada, head of Torys’ Corporate Restructuring and Advisory practice David Bish said that U.S. or CCAA filings can take two to seven days to be recognized in Canada.

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David also noted that—due to numerous factors—it’s unknown whether Knotel’s Canadian operations face the same difficulties as its U.S. operations.

“We don't know if the problems that [Knotel is] having south of the border are the same as they are seeing in Canada,” David said.

“The Canadian operations may be performing better than their U.S. operations for a variety of factors, including government support programs.”

You can read more on trends and developments in insolvency from David Bish and our Corporate Advisory and Restructuring Practice in their latest article “Market conditions generate distressed M&A opportunities”.