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[BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS IN CANADA]
provisions of the BIA are more analogous to Chapter 11 of the Code. ii. The CCAA ; This is the principal federal restructuring and recovery insolvency statute for DIP debtors. In comparison with the analogous BIA framework, it is generally more flexible in scope and application. The CCAA evolved from a largely unused and very brief statute conceived in the 1930s but has been extensively used and adapted since that time. In the present day, it is used mainly for the restructuring of large commercial enterprises with aggregate debt owing in excess of CAD5,000,000. While analogous to Chapter 11 of the Code, the CCAA differs in many material respects, not the least of which are the generally increased speed and lower costs in most scenarios. The CCAA remains a relatively brief statute, and not all aspects of the law applicable in connection with proceedings there under have been codified. It allows for wide powers of judicial discretion, which is of utility in quickly changing fact scenarios. Cases coming within its wide scope have received a considerable display of jurisprudential flexibility and expediency in many cases, due to the lack of codified rules and procedures. iii. The Personal Property Security Act/Civil Code in each Province (collectively, " PPSAs "); Each province outside Quebec has enacted statutes relating to property rights in assets and security, to partially replace a pre-existing patchwork of common law that preceded them. They also allow for the appointment of receivers both in and out of court. The PPSAs contain attachment, perfection, and priority rules in collateral that were initially modelled on the Uniform Commercial Code used in US States (collectively, " UCC "), but do nevertheless have significant differences. For instance, the PPSAs are mainly notice registry systems, and are not title based. There are also differences with UCC Article 9 procedures and accommodation for security
interests in cash collateral, and other personal property. iv. Rules of Court/Rules of Practice (" Rules "); These apply in all provinces other than Quebec and have direct and indirect influences on judgements and rulings regarding enforcement and interpretations under applicable statutes. For instance, where it is found to be 'just or convenient', courts may appoint receivers for interests including secured creditors. v. The Winding Up and Restructuring Act (" WURA "); This federal statute has been used infrequently and is generally for the restructuring and reorganisation or liquidation of specific entities, mainly banks and insurance or trust companies. In the context of more recent financial upheaval in financial markets and financial institutions in Canada and abroad, this legislation may assume a more prominent role than has unfolded in its recent past. vi. Business Corporation Statutes; These include multiple statutes in both the federal and provincial domains, such as the Canada Business Corporations Act (" CBCA ") and the various provincial counterparts. These are significant because they allow courts to authorise fundamental changes in corporate structure in distressed scenarios. They contribute to balance sheet refreshments through such arrangements where debt can be converted to equity including through implementation of distress preferred share arrangements as may be approved in Canadian insolvency proceedings. These statutes may also be used to effect liquidations in certain circumstances. 3. The Acts: Basics BIA Applications for bankruptcy orders may be filed by the debtor, or by his/her/its creditors. When filed by creditors, there can be proceedings contesting the filing, to be heard by the
ILN Restructuring & Insolvency Group – Bankruptcy, Insolvency & Rehabilitation Series
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