2019 CCAA Amendments and their Impact on First-Day Relief

  • June 30, 2021
  • Namrata Bhagia, Michael MacNaughton Student Writing Award finalist

  1. Introduction:

On November 01, 2019, amendments pertaining to the insolvency and restructuring regime came into force, which were introduced by Bill C-97, An Act to Implement Certain Provisions of the Budget Tabled in Parliament on March 19, 2019 and other measures.[1] Amongst other statutes, such as, the Bankruptcy and Insolvency Act,[2] and the Canada Business Corporations Act,[3] Bill C-97 also amended the Companies’ Creditors Arrangement Act (CCAA).[4]

CCAA provides a flexible restructuring mechanism for companies that owe their creditors more than $5 million. An initial order under CCAA temporarily stays legal proceedings against the debtor company, and provides additional relief. The 2019 amendments to the CCAA that are pertinent to initial order include:

  1. Section 11.02(1), which has reduced the time period of the initial stay order to ten days from the erstwhile thirty-day period;[5] and
  2. Sections 11.001 and 11.2(5), which have limited the relief provided during the initial stay period, including interim finance and security, to what is “reasonably necessary for the continued operations of the debtor company in the ordinary course of business during that period”.[6]

The above-mentioned amendments are collectively referred to as “CCAA amendments” in this article. The legislative intent behind the CCAA amendments was to provide enhanced protections for pensioners and workers, and ensure that proceedings are fair, transparent, and more accessible to allow for broader participation by relevant stakeholders.[7] There were additional amendments pertaining to good faith obligations,[8] and disclosure of economic interest during the proceedings;[9] however, those are out of the scope of this article.

The purpose of this article is to determine the practical implications of the CCAA amendments on timeline of initial stay order and first-day relief. In doing so, the initial orders in Clover Leaf Holdings Company, Re,[10] Lydian International Limited (Re),[11] and Laurentian University of Sudbury[12] will be briefly analysed and compared.