Companies’ Creditors Arrangement Act (R.S.C., 1985, c. C-36)

Short Title

Marginal note:Short title

1 This Act may be cited as the Companies’ Creditors Arrangement Act.

Interpretation

Marginal note:Definitions

• 2 (1) In this Act,

  aircraft objects

  aircraft objects[Repealed, 2012, c. 31, s. 419]

  bargaining agent

  bargaining agent means any trade union that has entered into a collective agreement on behalf of the employees of a company; (agent négociateur)

  bond

  bond includes a debenture, debenture stock or other evidences of indebtedness; (obligation)

  cash-flow statement

  cash-flow statement, in respect of a company, means the statement referred to in paragraph 10(2)(a) indicating the company’s projected cash flow; (état de l’évolution de l’encaisse)

  claim

  claim means any indebtedness, liability or obligation of any kind that would be a claim provable within the meaning of section 2 of the Bankruptcy and Insolvency Act; (réclamation)

  collective agreement

  collective agreement, in relation to a debtor company, means a collective agreement within the meaning of the jurisdiction governing collective bargaining between the debtor company and a bargaining agent; (convention collective)

  company

  company means any company, corporation or legal person incorporated by or under an Act of Parliament or of the legislature of a province, any incorporated company having assets or doing business in Canada, wherever incorporated, and any income trust, but does not include banks, authorized foreign banks within the meaning of section 2 of the Bank Act, telegraph companies, insurance companies and companies to which the Trust and Loan Companies Act applies; (compagnie)

  court

  court means

  • (a) in Nova Scotia, British Columbia and Prince Edward Island, the Supreme Court,

  • (a.1) in Ontario, the Superior Court of Justice,

  • (b) in Quebec, the Superior Court,

  • (c) in New Brunswick, Manitoba, Saskatchewan and Alberta, the Court of Queen’s Bench,

  • (c.1) in Newfoundland and Labrador, the Trial Division of the Supreme Court, and

  • (d) in Yukon and the Northwest Territories, the Supreme Court, and in Nunavut, the Nunavut Court of Justice; (tribunal)

  debtor company

  debtor company means any company that

  • (a) is bankrupt or insolvent,

  • (b) has committed an act of bankruptcy within the meaning of the Bankruptcy and Insolvency Act or is deemed insolvent within the meaning of the Winding-up and Restructuring Act, whether or not proceedings in respect of the company have been taken under either of those Acts,

  • (c) has made an authorized assignment or against which a bankruptcy order has been made under the Bankruptcy and Insolvency Act, or

  • (d) is in the course of being wound up under the Winding-up and Restructuring Act because the company is insolvent; (compagnie débitrice)

  director

  director means, in the case of a company other than an income trust, a person occupying the position of director by whatever name called and, in the case of an income trust, a person occupying the position of trustee by whatever named called; (administrateur)

  eligible financial contract

  eligible financial contract means an agreement of a prescribed kind; (contrat financier admissible)

  equity claim

  equity claim means a claim that is in respect of an equity interest, including a claim for, among others,

  • (a) a dividend or similar payment,

  • (b) a return of capital,

  • (c) a redemption or retraction obligation,

  • (d) a monetary loss resulting from the ownership, purchase or sale of an equity interest or from the rescission, or, in Quebec, the annulment, of a purchase or sale of an equity interest, or

  • (e) contribution or indemnity in respect of a claim referred to in any of paragraphs (a) to (d); (réclamation relative à des capitaux propres)

  equity interest

  equity interest means

  • (a) in the case of a company other than an income trust, a share in the company — or a warrant or option or another right to acquire a share in the company — other than one that is derived from a convertible debt, and

  • (b) in the case of an income trust, a unit in the income trust — or a warrant or option or another right to acquire a unit in the income trust — other than one that is derived from a convertible debt; (intérêt relatif à des capitaux propres)

  financial collateral

  financial collateral means any of the following that is subject to an interest, or in the Province of Quebec a right, that secures payment or performance of an obligation in respect of an eligible financial contract or that is subject to a title transfer credit support agreement:

  • (a) cash or cash equivalents, including negotiable instruments and demand deposits,

  • (b) securities, a securities account, a securities entitlement or a right to acquire securities, or

  • (c) a futures agreement or a futures account; (garantie financière)

  income trust

  income trust means a trust that has assets in Canada if

  • (a) its units are listed on a prescribed stock exchange on the day on which proceedings commence under this Act, or

  • (b) the majority of its units are held by a trust whose units are listed on a prescribed stock exchange on the day on which proceedings commence under this Act; (fiducie de revenu)

  initial application

  initial application means the first application made under this Act in respect of a company; (demande initiale)

  monitor

  monitor, in respect of a company, means the person appointed under section 11.7 to monitor the business and financial affairs of the company; (contrôleur)

  net termination value

  net termination value means the net amount obtained after netting or setting off or compensating the mutual obligations between the parties to an eligible financial contract in accordance with its provisions; (valeurs nettes dues à la date de résiliation)

  prescribed

  prescribed means prescribed by regulation; (Version anglaise seulement)

  secured creditor

  secured creditor means a holder of a mortgage, hypothec, pledge, charge, lien or privilege on or against, or any assignment, cession or transfer of, all or any property of a debtor company as security for indebtedness of the debtor company, or a holder of any bond of a debtor company secured by a mortgage, hypothec, pledge, charge, lien or privilege on or against, or any assignment, cession or transfer of, or a trust in respect of, all or any property of the debtor company, whether the holder or beneficiary is resident or domiciled within or outside Canada, and a trustee under any trust deed or other instrument securing any of those bonds shall be deemed to be a secured creditor for all purposes of this Act except for the purpose of voting at a creditors’ meeting in respect of any of those bonds; (créancier garanti)

  shareholder

  shareholder includes a member of a company — and, in the case of an income trust, a holder of a unit in an income trust — to which this Act applies; (actionnaire)

  Superintendent of Bankruptcy

  Superintendent of Bankruptcy means the Superintendent of Bankruptcy appointed under subsection 5(1) of the Bankruptcy and Insolvency Act; (surintendant des faillites)

  Superintendent of Financial Institutions

  Superintendent of Financial Institutions means the Superintendent of Financial Institutions appointed under subsection 5(1) of the Office of the Superintendent of Financial Institutions Act; (surintendant des institutions financières)

  title transfer credit support agreement

  title transfer credit support agreement means an agreement under which a debtor company has provided title to property for the purpose of securing the payment or performance of an obligation of the debtor company in respect of an eligible financial contract; (accord de transfert de titres pour obtention de crédit)

  unsecured creditor

  unsecured creditor means any creditor of a company who is not a secured creditor, whether resident or domiciled within or outside Canada, and a trustee for the holders of any unsecured bonds issued under a trust deed or other instrument running in favour of the trustee shall be deemed to be an unsecured creditor for all purposes of this Act except for the purpose of voting at a creditors’ meeting in respect of any of those bonds. (créancier chirographaire)

• Marginal note:Meaning of related and dealing at arm’s length

  (2) For the purpose of this Act, section 4 of the Bankruptcy and Insolvency Act applies for the purpose of determining whether a person is related to or dealing at arm’s length with a debtor company.

Marginal note:Application

• 3 (1) This Act applies in respect of a debtor company or affiliated debtor companies if the total of claims against the debtor company or affiliated debtor companies, determined in accordance with section 20, is more than $5,000,000 or any other amount that is prescribed.

• Marginal note:Affiliated companies

  (2) For the purposes of this Act,

  • (a) companies are affiliated companies if one of them is the subsidiary of the other or both are subsidiaries of the same company or each of them is controlled by the same person; and

  • (b) two companies affiliated with the same company at the same time are deemed to be affiliated with each other.

• Marginal note:Company controlled

  (3) For the purposes of this Act, a company is controlled by a person or by two or more companies if

  • (a) securities of the company to which are attached more than fifty per cent of the votes that may be cast to elect directors of the company are held, other than by way of security only, by or for the benefit of that person or by or for the benefit of those companies; and

  • (b) the votes attached to those securities are sufficient, if exercised, to elect a majority of the directors of the company.

• Marginal note:Subsidiary

  (4) For the purposes of this Act, a company is a subsidiary of another company if

  • (a) it is controlled by

    • (i) that other company,

    • (ii) that other company and one or more companies each of which is controlled by that other company, or

    • (iii) two or more companies each of which is controlled by that other company; or

  • (b) it is a subsidiary of a company that is a subsidiary of that other company.

PART ICompromises and Arrangements

Marginal note:Compromise with unsecured creditors

4 Where a compromise or an arrangement is proposed between a debtor company and its unsecured creditors or any class of them, the court may, on the application in a summary way of the company, of any such creditor or of the trustee in bankruptcy or liquidator of the company, order a meeting of the creditors or class of creditors, and, if the court so determines, of the shareholders of the company, to be summoned in such manner as the court directs.

Marginal note:Compromise with secured creditors

5 Where a compromise or an arrangement is proposed between a debtor company and its secured creditors or any class of them, the court may, on the application in a summary way of the company or of any such creditor or of the trustee in bankruptcy or liquidator of the company, order a meeting of the creditors or class of creditors, and, if the court so determines, of the shareholders of the company, to be summoned in such manner as the court directs.

Marginal note:Claims against directors — compromise

• 5.1 (1) A compromise or arrangement made in respect of a debtor company may include in its terms provision for the compromise of claims against directors of the company that arose before the commencement of proceedings under this Act and that relate to the obligations of the company where the directors are by law liable in their capacity as directors for the payment of such obligations.

• Marginal note:Exception

  (2) A provision for the compromise of claims against directors may not include claims that

  • (a) relate to contractual rights of one or more creditors; or

  • (b) are based on allegations of misrepresentations made by directors to creditors or of wrongful or oppressive conduct by directors.

• Marginal note:Powers of court

  (3) The court may declare that a claim against directors shall not be compromised if it is satisfied that the compromise would not be fair and reasonable in the circumstances.

• Marginal note:Resignation or removal of directors

  (4) Where all of the directors have resigned or have been removed by the shareholders without replacement, any person who manages or supervises the management of the business and affairs of the debtor company shall be deemed to be a director for the purposes of this section.

Marginal note:Compromises to be sanctioned by court

• 6 (1) If a majority in number representing two thirds in value of the creditors, or the class of creditors, as the case may be — other than, unless the court orders otherwise, a class of creditors having equity claims, — present and voting either in person or by proxy at the meeting or meetings of creditors respectively held under sections 4 and 5, or either of those sections, agree to any compromise or arrangement either as proposed or as altered or modified at the meeting or meetings, the compromise or arrangement may be sanctioned by the court and, if so sanctioned, is binding

  • (a) on all the creditors or the class of creditors, as the case may be, and on any trustee for that class of creditors, whether secured or unsecured, as the case may be, and on the company; and

  • (b) in the case of a company that has made an authorized assignment or against which a bankruptcy order has been made under the Bankruptcy and Insolvency Act or is in the course of being wound up under the Winding-up and Restructuring Act, on the trustee in bankruptcy or liquidator and contributories of the company.

• Marginal note:Court may order amendment

  (2) If a court sanctions a compromise or arrangement, it may order that the debtor’s constating instrument be amended in accordance with the compromise or arrangement to reflect any change that may lawfully be made under federal or provincial law.

• Marginal note:Restriction — certain Crown claims

  (3) Unless Her Majesty agrees otherwise, the court may sanction a compromise or arrangement only if the compromise or arrangement provides for the payment in full to Her Majesty in right of Canada or a province, within six months after court sanction of the compromise or arrangement, of all amounts that were outstanding at the time of the application for an order under section 11 or 11.02 and that are of a kind that could be subject to a demand under

  • (a) subsection 224(1.2) of the Income Tax Act;

  • (b) any provision of the Canada Pension Plan or of the Employment Insurance Act that refers to subsection 224(1.2) of the Income Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, or a premium under Part VII.1 of that Act, and of any related interest, penalties or other amounts; or

  • (c) any provision of provincial legislation that has a purpose similar to subsection 224(1.2) of the Income Tax Act, or that refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, and the sum

    • (i) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or

    • (ii) is of the same nature as a contribution under the Canada Pension Plan if the province is a province providing a comprehensive pension plan as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a provincial pension plan as defined in that subsection.

• Marginal note:Restriction — default of remittance to Crown

  (4) If an order contains a provision authorized by section 11.09, no compromise or arrangement is to be sanctioned by the court if, at the time the court hears the application for sanction, Her Majesty in right of Canada or a province satisfies the court that the company is in default on any remittance of an amount referred to in subsection (3) that became due after the time of the application for an order under section 11.02.

• Marginal note:Restriction — employees, etc.

  (5) The court may sanction a compromise or an arrangement only if

  • (a) the compromise or arrangement provides for payment to the employees and former employees of the company, immediately after the court’s sanction, of

    • (i) amounts at least equal to the amounts that they would have been qualified to receive under paragraph 136(1)(d) of the Bankruptcy and Insolvency Act if the company had become bankrupt on the day on which proceedings commenced under this Act, and

    • (ii) wages, salaries, commissions or compensation for services rendered after proceedings commence under this Act and before the court sanctions the compromise or arrangement, together with, in the case of travelling salespersons, disbursements properly incurred by them in and about the company’s business during the same period; and

  • (b) the court is satisfied that the company can and will make the payments as required under paragraph (a).

• Marginal note:Restriction — pension plan

  (6) If the company participates in a prescribed pension plan for the benefit of its employees, the court may sanction a compromise or an arrangement in respect of the company only if

  • (a) the compromise or arrangement provides for payment of the following amounts that are unpaid to the fund established for the purpose of the pension plan:

    • (i) an amount equal to the sum of all amounts that were deducted from the employees’ remuneration for payment to the fund,

    • (ii) if the prescribed pension plan is regulated by an Act of Parliament,

      • (A) an amount equal to the normal cost, within the meaning of subsection 2(1) of the Pension Benefits Standards Regulations, 1985, that was required to be paid by the employer to the fund, and

      • (A.1) an amount equal to the sum of all special payments, determined in accordance with section 9 of the Pension Benefits Standards Regulations, 1985, that were required to be paid by the employer to the fund referred to in sections 81.5 and 81.6 of the Bankruptcy and Insolvency Act to liquidate an unfunded liability or a solvency deficiency,

      • (A.2) any amount required to liquidate any other unfunded liability or solvency deficiency of the fund as determined on the day on which proceedings commence under this Act,

      • (B) an amount equal to the sum of all amounts that were required to be paid by the employer to the fund under a defined contribution provision, within the meaning of subsection 2(1) of the Pension Benefits Standards Act, 1985,

      • (C) an amount equal to the sum of all amounts that were required to be paid by the employer to the administrator of a pooled registered pension plan, as defined in subsection 2(1) of the Pooled Registered Pension Plans Act, and

    • (iii) in the case of any other prescribed pension plan,

      • (A) an amount equal to the amount that would be the normal cost, within the meaning of subsection 2(1) of the Pension Benefits Standards Regulations, 1985, that the employer would be required to pay to the fund if the prescribed plan were regulated by an Act of Parliament, and

      • (A.1) an amount equal to the sum of all special payments, determined in accordance with section 9 of the Pension Benefits Standards Regulations, 1985, that would have been required to be paid by the employer to the fund referred to in sections 81.5 and 81.6 of the Bankruptcy and Insolvency Act to liquidate an unfunded liability or a solvency deficiency if the prescribed plan were regulated by an Act of Parliament,

      • (A.2) any amount required to liquidate any other unfunded liability or solvency deficiency of the fund as determined on the day on which proceedings commence under this Act,

      • (B) an amount equal to the sum of all amounts that would have been required to be paid by the employer to the fund under a defined contribution provision, within the meaning of subsection 2(1) of the Pension Benefits Standards Act, 1985, if the prescribed plan were regulated by an Act of Parliament,

      • (C) an amount equal to the sum of all amounts that would have been required to be paid by the employer in respect of a prescribed plan, if it were regulated by the Pooled Registered Pension Plans Act; and

  • (b) the court is satisfied that the company can and will make the payments as required under paragraph (a).

• Marginal note:Non-application of subsection (6)

  (7) Despite subsection (6), the court may sanction a compromise or arrangement that does not allow for the payment of the amounts referred to in that subsection if it is satisfied that the relevant parties have entered into an agreement, approved by the relevant pension regulator, respecting the payment of those amounts.

• Marginal note:Payment — equity claims

  (8) No compromise or arrangement that provides for the payment of an equity claim is to be sanctioned by the court unless it provides that all claims that are not equity claims are to be paid in full before the equity claim is to be paid.