Supreme Court

Bankruptcy and Insolvency

Orders issued by regulatory bodies may be provable claims in insolvency proceedings even if not quantified

Pulp and paper company carried on industrial activities at several locations in province between 1905 and 2008. In December 2008, company announced closure of last remaining mill operation. Company experienced financial difficulties and placed itself under protection of Companies’ Creditors Arrangement Act (Can.) (CCAA). Initial order extended and claims procedure order (CPO) issued for purpose of setting up claims procedure for company’s creditors. Province, acting pursuant to Environmental Protection Act (Nfld. & Lab.), issued five Ministerial orders requiring company to perform, at its own expense, remediation actions with respect to sites where company previously carried on industrial activities. Province brought motion seeking declaration that orders affected by neither CPO nor CCAA proceedings. Company contested motion, asserting that orders stayed by initial order. Motion judge held that orders were financial in nature, should be treated as claims in CCAA proceedings and should be subject to compromise. Province’s motion dismissed and application for leave to appeal dismissed. Province’s appeal to Supreme Court of Canadadismissed. Orders issued by regulatory bodies may be provable claims in insolvency proceeding even if amounts involved not quantified at outset. Inenvironmental context, CCAA court must determine whether there exists environmental duty that will ripen into financial liability owed to regulatory body that issued order. Form of order not determinative; CCAA court must determine whether claim will be subject to claims process. To be considered claims that may be subject to insolvency process, there must be debt, liability or obligation to creditor incurred as of specific time to which it must be possible to attach monetary value. Province identified itself as creditor by resorting to environmental protection enforcement mechanisms and environmental damage occurred before CCAA proceedings commenced. Real issue was whether orders not expressed in monetary terms could be translated into such terms. In context of environmental protection order, to determine whether contingent claim will be included in insolvency process, there must be sufficient certainty that regulatory body that triggered enforcement mechanism will ultimately perform remediation work and assert monetary claim. CCAA court’sassessment of facts indicated sufficient certainty that province would perform remediation work, particularly finding that orders were first step towards performance of remediation work by province.

AbitibiBowater inc. (Arrangement relatif a) (Re) (Dec. 7, 2012, S.C.C., McLachlin C.J.C., LeBel, Deschamps, Fish, Abella, Rothstein, Cromwell, Moldaver and Karakatsanis JJ., File No. 33797) Decision at 190 A.C.W.S. (3d) 9 was affirmed. 221 A.C.W.S. (3d) 264.

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