December 01, 2016
In a significant decision with broad implications for insolvency proceedings, the Ontario Court of Appeal (OCA) appears to have ended equitable subordination claims in Companies’ Creditors Arrangement Act (CCAA) proceedings. The doctrine behind the decision would allow for the re-prioritizing of creditors’ claims where higher-ranked creditors engage in inequitable conduct. Lexpert sought partner and corporate restructuring and advisory expert David Bish for comment. Below is an excerpt of the article.
…David Bish of Torys LLP in Toronto says equitable subordination may still be available in certain circumstances. He notes, for example, that the OCA focused on the fact that equitable subordination arose here in the context of an inter-creditor dispute.
“The key question for the court was whether applying the doctrine furthered the purposes of the CCAA, which are aimed at assisting debtors in their restructuring,” he says. “Here the fight was among creditors, but what if the debtor had been asking for the court to apply the doctrine?”
For the full article, click here.