PRESS RELEASE
24 January 2025

What Lies Ahead For Canada’s Insolvency Industry In 2025

TL
Torys LLP

Contributor

Torys LLP is a respected international business law firm with a reputation for quality, innovation and teamwork. Our experience, our collaborative practice style, and the insight and imagination we bring to our work have made us our clients' choice for their largest and most complex transactions as well as for general matters in which strategic advice is key.
2024 was a busy year for insolvency professionals, as businesses across industries experienced challenges in the face of economic turbulence.
Canada

2024 was a busy year for insolvency professionals, as businesses across industries experienced challenges in the face of economic turbulence. In an interview with Insolvency Insider Canada, Calgary-based partner Kyle Kashuba reflected on the past year and shared his thoughts for what's to come in 2025.

When asked about the most interesting or notable restructuring case of 2024, Kyle pointed to the Alberta Court of Appeal's overturning of Qualex-Landmark Towers Inc v 12-10 Capital Corp.

"In the expanding world of post-Redwater environmental liability and the priority of ARO claims, this case clarified that the super priority of environmental remedial obligations does not apply to private litigants," Kyle said.

"This decision alleviated uncertainties for secured lenders regarding environmental liabilities in the insolvency context."

Kyle also reflected on the Long Run Exploration proceedings, stating that they "added some much-needed clarity on the point of the imposition of constructive trusts grounded in fraud allegations—particularly on the eve of a large transaction."

When it comes to prominent trends that emerged throughout 2024, Kyle highlighted the increase in creditor-driven CCAA proceedings, notably in Western Canada. While CCAA proceedings have traditionally been initiated by debtors in possession, this proactive creditor-initiated approach has its advantages, Kyle says, particularly in asset-rich industries like oil and gas and real estate.

"The question of whether or not these sorts of proceedings are liquidations in disguise looms large, but the jurisprudence is somewhat in flux. Limits will be tested," Kyle said.

"I think that creditors—primarily secured creditors but also unsecured creditors—are increasingly favoring this approach (including seeking provisions for enhanced powers for the Monitors that are being appointed) over court-appointed receiverships, especially in complex situations where maintaining the debtor's operations is advantageous."

Looking ahead to 2025, Kyle notes that the results of the U.S. election and the tariff battles that could come along with it will likely be major themes, as well as Canada's own upcoming federal election.

"I'm expecting a serious uptick in insolvency filings, driven by persistent high interest rates and upcoming debt maturities," Kyle said.

"Industries with over-leveraged companies are particularly vulnerable. Of course, we have the real estate sector, which I expect will face continuing challenges, especially in commercial and industrial real estate, due to shifting market dynamics and financial strains.

In Western Canada, the energy transition will continue to play a significant role in Canada's insolvency landscape, Kyle said.

"There are serious pressure points in this space, with mid-sized firms being particularly vulnerable to sustained high interest rates and challenging capital markets. Companies struggling to adapt to changing market demands may increasingly turn to restructuring as a way to integrate a sustainability angle, or consolidate with stronger industry players. It should be an exciting year ahead."

Contributor

Torys LLP is a respected international business law firm with a reputation for quality, innovation and teamwork. Our experience, our collaborative practice style, and the insight and imagination we bring to our work have made us our clients' choice for their largest and most complex transactions as well as for general matters in which strategic advice is key.

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