377:
ceases to have effect. Thus, after reorganization under the CCAA failed, creditors would have had a strong incentive to seek immediate bankruptcy and distribution of the debtor's assets under the BIA. In order to conclude that the discretion does not extend to partially lifting the stay in order to allow for an assignment in bankruptcy, one would have to assume a gap between the CCAA and the BIA proceedings. Brenner C.J.S.C.'s order staying Crown enforcement of the GST claim ensured that creditors would not be disadvantaged by the attempted reorganization under the CCAA. The effect of his order was to blunt any impulse of creditors to interfere in an orderly liquidation. His order was thus in furtherance of the CCAA's objectives to the extent that it allowed a bridge between the CCAA and BIA proceedings. This interpretation of the tribunal's discretionary power is buttressed by s. 20 of the CCAA. That section provides that the CCAA "may be applied together with the provisions of any Act of
Parliament . . . that authorizes or makes provision for the sanction of compromises or arrangements between a company and its shareholders or any class of them", such as the BIA. Section 20 clearly indicates the intention of Parliament for the CCAA to operate in tandem with other insolvency legislation, such as the BIA. The CCAA creates conditions for preserving the status quo while attempts are made to find common ground amongst stakeholders for a reorganization that is fair to all. Because the alternative to reorganization is often bankruptcy, participants will measure the impact of a reorganization against the position they would enjoy in liquidation. In the case at bar, the order fostered a harmonious transition between reorganization and liquidation while meeting the objective of a single collective proceeding that is common to both statutes.
29:
256:, GST that is collected is deemed to be held in trust for the Crown, and that this takes precedence over any other statute other than the BIA. However, the CCAA states that, subject to certain exceptions (none of which relate to GST), deemed trusts do not exist in its proceedings. There was certain jurisprudence that held that the ETA took precedence. Was that correct?
430:. In exercising CCAA authority, the court is to bear in mind the requirements of appropriateness, good faith and due diligence as baseline considerations. As to appropriateness, the court is to inquire whether the order sought advances the public policy objectives of the CCAA – avoiding the social and economic losses resulting from a liquidation.
353:
The legislation is remedial in the purest sense in that it provides a means whereby the devastating social and economic effects of bankruptcy or creditor initiated termination of ongoing business operations can be avoided while a court-supervised attempt to reorganize the financial affairs of the
376:
There is no doubt that had reorganization been commenced under the BIA instead of the CCAA, the Crown's deemed trust priority for the GST funds would have been lost. Similarly, the Crown does not dispute that under the scheme of distribution in bankruptcy under the BIA the deemed trust for GST
334:
Although the CCAA was originally enacted in 1933, extensive use of it only began in the economic downturn of the early 1980s. Recent legislative amendments of the BIA and CCAA have served to harmonize key aspects, such as the use of single proceedings, a common priority of claims structure, and
343:
The
Parliament of Canada's recent legislative activity has tended to favour the diminishing of the Crown's priority in BIA and CCAA proceedings, and both have been expressly amended accordingly. As the ETA does not contain such express language on the subject, it must be construed within the
268:
ruled that, as the funds were being held pending the emergence of a viable reorganization plan, the fact that this was unsuccessful meant that the Crown would lose its priority as a result of the assignment into bankruptcy. Accordingly, the Crown's application was dismissed.
330:
The BIA provides a more rules-based approach for resolving a corporate debtor's insolvency, which must be observed strictly. The CCAA, on the other hand, provides a more discretionary approach that is remedial in nature, which therefore must be broadly construed.
235:
Century
Services Inc was one of the major secured creditors of LeRoy. In April 2008, the court authorized a payment to Century not to exceed $ 5 million from the proceeds of disposal. As LeRoy also owed a significant liability with respect to
243:
In
September 2008, LeRoy concluded that reorganization was not possible and accordingly applied for an assignment into bankruptcy. The Crown applied to have the holdback released for payment and remitted to settle the GST liability.
326:
As this was the first time a case relating to the CCAA had been heard by the
Supreme Court - which it acknowledged in its decision - a detailed analysis was given in explaining the nature of insolvency law in Canada.
240:, it proposed that an amount equal to the liability be held back from the payment to Century and kept in the Monitor's trust account until the outcome of the reorganization was known. The court agreed and so ordered.
405:
in 1933 on the validity of the CCAA, this was the first time that an appeal had been heard by the
Supreme Court. Until now, Canadian jurisprudence in this area came from the various provincial courts of appeal.
389:
Creation of an express trust requires the presence of three certainties: intention, subject matter, and object. There was no certainty that the Crown would actually be the beneficiary, or object, of the trust.
280:
the court at first instance did not have the authority to dismiss the Crown's application, as the ETA's priority scheme took effect once the likelihood of a successful reorganization plant had ceased to
368:
This is noted together with s. 11 of the CCAA, which states that a court may, "subject to the restrictions set out in this Act, . . . make any order that it considers appropriate in the circumstances".
580:
314:
the court of first instance has wide discretionary authority under the CCAA, which must be interpreted having regard to the remedial nature of the CCAA and insolvency legislation generally
228:. In December 2007, it was notified that, as it was in breach of certain loan covenants, its outstanding loans had to be immediately repaid. The company filed for protection under the
483:
601:
229:
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is discouraged and single proceedings are preferred. Because of their harmonized nature, other federal statutes must be accordingly construed.
79:
621:
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was the first opportunity to explain the complete nature of
Canadian insolvency law and how each of the statutes work within that framework.
532:
631:
491:
132:
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A court must first interpret the text of the CCAA, and only then may the court look to fill in legislative "gaps" pursuant to its
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The CCAA and BIA must not be viewed in isolation, as they have many features that form part of a harmonized structure. Therefore,
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the judge's original order had created an express trust for the Crown, and the funds could not be diverted for any other purpose.
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did the court exceed its authority under the CCAA by lifting the stay to allow the debtor to make an assignment into bankruptcy?
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204:
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did the court's April 2008 order create an express trust in favour of the Crown with respect to the GST holdback?
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the CCAA and BIA form an interrelated insolvency scheme for Canada, and the ETA is subordinate to that scheme
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The Court of Appeal's decision was reversed. The following were identified as the key issues in the appeal:
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did the ETA displace the CCAA by giving priority to the Crown's deemed trust in CCAA proceedings?
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94:
595:
552:"Comments on the Supreme Court of Canada's Landmark Insolvency Decision in Ted LeRoy Trucking"
487:
466:
225:
363:, (1990), 41 O.A.C. 282, at para. 57, per Doherty J.A., dissenting (quoted at paragraph 59)
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Accordingly, the supervising judge had the necessary authority to make the order he did.
416:
124:
120:
76:
Ted LeRoy
Trucking Ltd. and 383838 B.C. Ltd. (re.), (2008 BCSC 1805, 2008 G.S.T.C. 221)
533:
Reference re constitutional validity of the
Companies Creditors Arrangement Act (Dom.)
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The decision notes the interrelated nature of proceedings under the CCAA and BIA:
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513:"Ted LeRoy Trucking Ltd. - CCAA, Receivership and Bankruptcy Information"
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232:. The court authorized LeRoy to dispose of certain redundant assets.
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Ted LeRoy
Trucking Ltd. (Re), (2009 BCCA 205, 270 B.C.A.C. 167)
212:, and how other federal statutes are accordingly construed.
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Therefore, no express trust was created in this instance.
220:
Ted LeRoy Trucking Ltd was one of the largest independent
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Kevin P. McElcheran; Heather L. Meredith (2011-05-20).
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Discretionary power of a court in a CCAA reorganization
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459:Century Services Inc. v. Canada (Attorney General)
317:no express trust was created by the court's order
196:that describes the interrelationship between the
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484:"Cash-flow crisis killing independent loggers"
335:encouraging reorganization over liquidation.
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600:: CS1 maint: multiple names: authors list (
272:This order was overturned on appeal to the
461:, 2010 SCC 60, 3 SCR 379 Full text of
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289:Decision of the Supreme Court of Canada
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344:framework of the insolvency statutes.
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7:
199:Companies' Creditors Arrangement Act
175:Companies' Creditors Arrangement Act
447:SCC Case Information - Docket 33239
322:Purpose and scope of insolvency law
189:Century Services Inc v Canada (AG)
22:Century Services Inc v Canada (AG)
14:
575:Sandra Abitan, Andrea Lockhart,
274:British Columbia Court of Appeal
27:
339:GST deemed trust under the CCAA
276:. The court unanimously held:
266:British Columbia Supreme Court
1:
627:Supreme Court of Canada cases
205:Bankruptcy and Insolvency Act
179:Bankruptcy and Insolvency Act
622:Canadian insolvency case law
581:"North of the border update"
577:Osler, Hoskin & Harcourt
540:, SCR 659 (6 June 1934)
16:Supreme Court of Canada case
45:Judgment: December 16, 2010
648:
482:G. Hamilton (2007-12-19).
632:2010 in Canadian case law
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26:
463:Supreme Court of Canada
449:Supreme Court of Canada
354:debtor company is made.
210:Canadian insolvency law
194:Supreme Court of Canada
35:Supreme Court of Canada
583:. Weil Bankruptcy Blog
465:decision available at
428:equitable jurisdiction
401:Apart from an initial
379:
366:
361:Elan Corp. v. Comiskey
238:Goods and Services Tax
181:, Excise Tax Act (GST)
43:Hearing: May 11, 2010
307:The court held that:
192:is a decision of the
260:The judgments below
403:reference question
556:McCarthy Tétrault
488:The Vancouver Sun
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86:Court membership
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579:(2011-05-16).
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74:Appealed from
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585:. Retrieved
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496:. Retrieved
492:the original
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397:Significance
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169:Laws applied
148:Deschamps J.
58:, 3 SCR 379
33:
538:1934 SCC 72
153:Concurrence
56:2010 SCC 60
616:Categories
587:2011-12-09
561:2011-12-09
518:2011-12-09
498:2011-12-08
434:References
252:Under the
63:Docket No.
248:The issue
164:Abella J.
129:Rothstein
113:Deschamps
51:Citations
596:cite web
424:inherent
357:—
202:and the
145:Majority
133:Cromwell
536:,
222:logging
161:Dissent
156:Fish J.
125:Charron
471:CanLII
121:Abella
105:Binnie
66:33239
467:LexUM
216:Facts
109:LeBel
602:link
469:and
264:The
230:CCAA
131:and
117:Fish
426:or
135:JJ.
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