In Re Lightstream Resources Ltd, 2016 ABQB 665 (Lightstream), the Court of Queen’s Bench of Alberta (Court) confirmed that it had jurisdiction to remedy oppressive conduct while a business is restructuring under the Companies’ Creditors Arrangement Act (CCAA). The decision also provides insight as to when a court might exercise its equitable jurisdiction to remedy oppressive conduct in a CCAA proceeding.
Background
The Federal Government has released the Exposure Draft for the much anticipated introduction of:
The High Court of Australia recently dismissed an application brought by former Queensland Nickel Pty Ltd (QN) directors Mr Clive Palmer and Mr Ian Ferguson for a declaration that section 596A of the Corporations Act 2001 (Cth) is constitutionally invalid.
As you may recall, in 2013 ASIC wrote to all liquidators to announce the commencement of an industry-wide project to test all registered liquidators’ compliance with the requirement to publish certain notices on ASIC’s “published notices website” and to lodge forms with ASIC. ASIC refers to this initiative as the “PNW Project”.
A spate of recent decisions approving liquidators’ remuneration on an ad valorembasis had caused some trepidation amongst insolvency practitioners facing the prospect of court fee approval.
A recent decision by the Federal Court of Australia may be useful for liquidators faced with an application to commence or continue civil proceedings against a company in liquidation.
The decision – in brief
From the public policy standpoint, there has been a shift towards more environmental stewardship in Canada, evidenced by heightened media attention on environmental issues and by an expanded legal framework relating to the management of environmental liabilities. For example, directors may be personally liable for violation of environmental statutes1 and may face reputational harm if the corporations they manage are found to have breached environmental rules or norms.
Liquidators can rest assured that courts are reluctant to interfere in their commercial judgments or permit liquidators to be personally exposed to mandatory examinations under s596ACorporations Act 2001 (Cth) (Act).
Companies in distress often undertake a sales of assets to alleviate cash flow or debt repayment issues when other lines of credit or source of funds have been exhausted. Such decisions are not taken lightly, especially as the disposal of assets is likely to detrimentally impact the underlying business or forecasts. Ultimately creditors’ demands and survival instincts will result in action being taken however it is often too late and to the detriment of the business.
Introduction
It is common for companies in distress to undertake a sales process of assets to alleviate cash flow or debt repayment issues. Often this course of action is the last resort after all other lines of credit have been exhausted or creditors have stopped providing extended terms of trade. Companies should not take such decisions lightly, especially if the sale will impact the underlying business or forecasts. However, ultimately creditors’ demands and survival instincts result in action being taken (often too late and to the detriment of the company).