Limits on CCAA court’s broad jurisdiction

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The federal Companies’ Creditors Arrangement Act (CCAA) is one of the two main pieces of legislation intended to help troubled businesses restructure in appropriate circumstances. In proceedings under the CCAA, a particular judge is appointed to supervise the process, typically hearing all applications to court. This lends consistency and efficiency to the process, and also allows such a judge an overall perspective on the debtor company and its significant stakeholders.

Cases have established that such a judge enjoys considerable discretion to shape orders which best accomplish the overall goals of the legislation. But that discretion has limits, and these limits were explored in the recent Alberta Court of Appeal decision in Wiebe v Weinrich Contracting Ltd, 2020 ABCA 396.

In Wiebe, the supervising judge had granted sale and vesting orders which expressly preserved certain claims, and affected parties maintained that these orders effectively resolved a contentious issue without reasonable notice to affected parties.

The Court of Appeal held that, even in the “real-time” urgency of CCAA proceedings which usually involve an operating business, nevertheless procedural fairness is a fundamental value that cannot be ignored. The Court concluded that affected parties were not given a reasonable opportunity to respond to an issue raised with little or no notice, and the offending provisions in the order were struck.

In-depth knowledge of Canada’s restructuring regimes is critical to effectively advising parties navigating such proceedings. Reach out to Gehlen Dabbs Cash LLP for advice if you find yourself in such proceedings.

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