When can Environmental Regulatory Orders be Compromised Claims under the Companies’ Creditors Arrangement Act? Supreme Court of Canada Provides Clarification

In its recent decision, the Supreme Court of Canada held that claims in respect of provincial environmental clean-up orders can be compromised under the federal CCAA. While the Court disagreed on whether the particular facts warranted compromising the provincial remediation orders at issue, the majority concluded that claims in respect of the orders were compromised claims in the circumstances. The Court also held that where there is “sufficient certainty” that an order from an environmental regulator will result in a monetary obligation of a CCAA debtor, the order will be subject to the stay of proceedings under the CCAA. This decision is significant from both the environmental perspective and an insolvency perspective.