On January 31, 2019, the Supreme Court of Canada released its decision in Orphan Well Association, Alberta Energy Regulator v. Grant Thornton Limited and ATB Financial.[1] This important decision may have profound implications, potentially limiting the ability of oil and gas producers to secure credit and impairing the effectiveness of the insolvency system where debtors have significant regulatory obligations.
Bankruptcy & restructuring
The economies of the United States (U.S.) and Canada are closely intertwined. As operations expand across the border, so too do the complexities associated with carrying on business — particularly the insolvency of a company spanning both jurisdictions. As such, understanding how to navigate the complexities of Canadian insolvency regimes is essential to successfully doing business in the country.
1. Legislation and court system
In a pivotal decision released May 19, an Alberta court ruled in favour of Grant Thornton Limited, the Receiver and Trustee in the Redwater Energy Corporation (Redwater) receivership and bankruptcy proceedings, upholding its right to disclaim Redwater’s non-producing oil wells and sell its producing ones. Gowling WLG served as co-counsel to Grant Thornton throughout the proceedings.
It’s been almost two years since the Supreme Court of Canada (SCC) decision in Indalex Ltd., Re.1 Currently, Canada’s lower courts are being challenged to interpret the decision in a variety of different contexts. The purpose of this article is to review the Indalex decision within the broader context of pre- and post-Indalex case law and to briefly comment on its impact in the lending marketplace.
In 2008, the Supreme Court of Canada ruled in Saulnier5 that a commercial fishing licence constitutes ‘property’ within the context of the Bankruptcy and Insolvency Act (“BIA”) and the Nova Scotia PPSA6, thereby allowing the trustee in bankruptcy to seize the licence from the bankrupt.
RCR International, Inc. (“RCR”), along with its wholly-owned subsidiary, has filed a petition under Chapter 15 in the Bankruptcy Court for the District of Delaware (Lead Case No. 18-10112).
The Supreme Court of Canada’s decision inSun Indalex Finance, LLC v United Steelworkers, 2013 SCC 6, has a number of implications for employers, pension plan administrators, as well as both secured and unsecured creditors.
In MNP Ltd. v. Canada Revenue Agency (MNP v CRA), the Alberta Court of Queen’s Bench (“ABQB”) clarified the effect of bankruptcy on a writ of enforcement’s “binding interest” acquired on registration against a debtor’s land, ultimately holding that whatever priority a writ’s binding interest has before bankruptcy, it is undercut by the debtor’s bankruptcy. In so doing, the ABQB reaffirmed the validity of a “priority flip” between secured creditors and unsecured judgment creditors upon a debtor’s bankruptcy.
Background
The Supreme Court of Canada’s decision in the case of Re Indalex Ltd. [2013] SCC 6 (the “Decision”) does not, as one national newspaper put it place “creditors before pensioners”. The Decision which overturned the Ontario Court of Appeal’s decision in Re Indalex Ltd. [2011] O.J. No.
In its unanimous decision, Ernst & Young Inc. v. Aquino, the Ontario Court of Appeal modified the common law doctrine of corporate attribution in the bankruptcy and insolvency context to uphold a decision of Ontario Superior Court’s Commercial List, which ordered a corporate officer and his associates, whom collectively orchestrated a fraudulent invoicing scheme, to repay over $30 million to company creditors pursuant to s. 96 of the Bankruptcy and Insolvency Act (“BIA”).
Background