Companies’ Creditors Arrangement Act

Marginal note:Interim financing

• 11.2 (1) On application by a debtor company and on notice to the secured creditors who are likely to be affected by the security or charge, a court may make an order declaring that all or part of the company’s property is subject to a security or charge — in an amount that the court considers appropriate — in favour of a person specified in the order who agrees to lend to the company an amount approved by the court as being required by the company, having regard to its cash-flow statement. The security or charge may not secure an obligation that exists before the order is made.

• Marginal note:Priority — secured creditors

  (2) The court may order that the security or charge rank in priority over the claim of any secured creditor of the company.

• Marginal note:Priority — other orders

  (3) The court may order that the security or charge rank in priority over any security or charge arising from a previous order made under subsection (1) only with the consent of the person in whose favour the previous order was made.

• Marginal note:Factors to be considered

  (4) In deciding whether to make an order, the court is to consider, among other things,

  • (a) the period during which the company is expected to be subject to proceedings under this Act;

  • (b) how the company’s business and financial affairs are to be managed during the proceedings;

  • (c) whether the company’s management has the confidence of its major creditors;

  • (d) whether the loan would enhance the prospects of a viable compromise or arrangement being made in respect of the company;

  • (e) the nature and value of the company’s property;

  • (f) whether any creditor would be materially prejudiced as a result of the security or charge; and

  • (g) the monitor’s report referred to in paragraph 23(1)(b), if any.