A major package of reforms to Canada's Bankruptcy and
Insolvency Act ("BIA") and Companies' Creditors
Arrangement Act ("CCAA") came into force on September 18,
2009. The most significant features of the insolvency reforms
pertaining to business cases include:
Codification of a large body of case law developed in
restructurings under the CCAA regarding a court's authority to
authorize debtor-in-possession financing, to authorize the sale of
assets in a restructuring proceeding, and to permit the debtor to
reject or assign certain kinds of contracts;
Enhanced protection for collective bargaining agreements and
intellectual property licenses;
Provisions authorizing the appointment of a national receiver
with powers that are exercisable throughout Canada, rather than
merely in the province where the appointment is made, and
provisions specifying the powers that the court may confer upon a
Limitations on the rights of equity holders in
The adoption of procedures for dealing with cross-border
insolvency proceedings based on the UNCITRAL Model Law, which has
been enacted in various forms in 17 countries or territories,
including the U.S. (in the new chapter 15 of the U.S. Bankruptcy
Code), Great Britain, and Japan;
Provisions protecting a receiver or trustee in bankruptcy from
personal liability for claims made in connection with collective
bargaining agreements or pension plans; and
The replacement of several technical remedies in the BIA with a
general power to challenge "transfers at undervalue" by
the debtor and the incorporation of this power in CCAA
The amendments are effective in bankruptcies or restructurings
that formally commenced under the BIA or CCAA on or after September
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guide to the subject matter. Specialist advice should be sought
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The Canadian bankruptcy regime was designed with two key purposes in mind – provide options to ‘honest but unfortunate' debtors struggling with an unmanageable financial load and create an orderly means for creditors to recover amounts owed them.
The Court of Queen's Bench of Alberta authorized a disposition of a debtor's assets by a receiver immediately upon appointment and without being forced to conduct a marketing process within the receivership proceedings.
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