August 10, 2016
Target’s exit from the Canadian market gave rise to a number of restructuring issues, including CCAA proceedings. Partner and Corporate Restructuring and Advisory expert David Bish was asked to provide his insight for a Lexpert article on this complex restructuring. Below is an excerpt of the article discussing Target’s decision to undertake Companies’ Creditors Arrangement Act (CCAA) proceedings rather than declare bankruptcy through the Bankruptcy and Insolvency Act (BIA).
Unlike the BIA, the CCAA gives judges broad discretion to grant releases, including third-party release, where to do so is in the interests of creditors as a whole. During Canada’s asset-backed commercial paper (ABCP) crisis, for example, the court granted some very broad releases. Although the releases were widely criticized, they stood up on appeal.
“Generally speaking, that kind of discretion isn’t available in bankruptcy proceedings, where there would be no issue about staying the guarantees,” Bish says. “There are also a whole lot of rules in the BIA that aren’t in the CCAA, which avoids a lot of disputes because we have clear law.”
To read the full article in Lexpert (subscription only), click here.