Dianne gave a well received presentation on the Abitibi case at
the Annual Review
of Insolvency Law in Montréal during the big snowstorm.
In essence, Dianne believes that the Supreme Court's decision,
that the provincial environmental orders were subject to federal
insolvency rules, was correct, but for the wrong reason, and that
attempts to apply the Court's new rule will have perverse
The Court decided that the principal factor determining which
environmental orders should survive insolvency is whether the
provincial government is likely to do the work itself, if the
insolvent organization does not do so. If the province will pay,
the insolvency rules apply, and the cost of the environmental work
does not have priority over the other creditors. If the province
will not pay, the environmental work is not subject to insolvency
rules, and therefore should take priority over the assets available
to other creditors. In Dianne's view, this produces exactly
backward results, and provides both creditors and regulators with
strong financial incentives not to take direct remedial action,
even in the face of a serious environmental emergency. The
Court seemed to be unaware how rare it is for provincial
governments to pay themselves for environmental cleanups, and of
the many different factors that affect both the urgency and the
fairness of allowing regulatory orders to jump the queue of other
creditors, such as pensioners, the disabled, municipalities, and
the small business down the road who fixed a piece of
The ARIL conference was attended by an impressive number of both
bench and bar, including both Judge Gascon (Abitibi) and Judge
Morawetz (Northstar/ Nortel). Insolvency commentator, Anna Lund,
described Dianne's comments as one of her favourite moments of the conference.
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