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Appeal Dismissed: Decision of the Alberta Court of Appeal in Re Redwater Confirms Paramountcy of BIA

The Alberta Court of Appeal has dismissed the appeal brought by the Alberta Energy Regulator and the Orphan Well Association from the decision of the Court of Queen’s Bench of Alberta in Re Redwater Energy Corporation. A majority of the panel held that the provisions of the provincial legislation governing certain actions of licensees of oil and gas assets do not apply to receivers and trustees in bankruptcy of insolvent companies, given the paramountcy of the Bankruptcy and Insolvency Act over provincial legislation where the governing provisions conflict.

Canada, Alberta, Energy & Natural Resources, Insolvency & Restructuring, Litigation, McMillan LLP, Alberta Energy Regulator, Bankruptcy and Insolvency Act 1985 (Canada), Court of Appeal of Alberta
The Enforceability of Make-Whole Clauses in Bankruptcy

When a lender makes an interest bearing loan to a borrower for a fixed term, the contract may provide that the borrower cannot repay the principal sum before maturity. This is often referred to as a “no call” provision. The intent of this provision is to protect the lender’s expected return on its investment during the term of the contract. Otherwise, the lender could be faced with the loss of interest payments that the borrower would have otherwise paid to the lender.

Canada, Insolvency & Restructuring, Litigation, McMillan LLP, Canada Business Corporations Act 1985
Redwater Appeal Creates Continued Uncertainty for Insolvent Oil and Gas Companies in Alberta

As discussed in our May 2016 bulletin, New Rules for Asset Sales by Insolvent Producers (at least for now), the decision of the Court of Queen's Bench of Alberta in Re Redwater Energy Corporation, 2016 ABQB 278 ("Redwater") determined that provisions of the provincial legislation governing the actions of licensees of oil and gas assets did not apply to receivers and trustees in bankruptcy of insolvent companies, given the paramountcy of the Bank

Canada, Alberta, Insolvency & Restructuring, Litigation, McMillan LLP, Alberta Energy Regulator, Court of Appeal of Alberta
The 5th edition of the Bankruptcy Deadline Checklist, authored by Norman Pernick and edited by David Dean and Jonathan Grasso, has just been released by the American Bar Association

The Bankruptcy Deadline Checklist is a quick reference guide for those who handle bankruptcy cases including judges, lawyers, paralegals, credit managers, collection agents, professors, law students, and others.

USA, Insolvency & Restructuring, Cole Schotz PC, Bankruptcy, American Bar Association
New Rules for Asset Sales by Insolvent Producers (at least for now)

In Alberta, regulations have historically prohibited purchasers of oil and gas assets from cherry picking operating interests in economic properties while leaving behind interests in uneconomic wells. This has had a significant negative impact on the ability of a receiver or trustee to market and sell assets owned by insolvent companies and on the prices those assets are able to attract.

Canada, Alberta, Energy & Natural Resources, Insolvency & Restructuring, McMillan LLP, Liability (financial accounting), Alberta Energy Regulator, Bankruptcy and Insolvency Act 1985 (Canada)