Receivership versus CCAA in real property development: constructing a framework for analysis

There is a presumption among insolvency practitioners that, when it comes to real property, in a contest between a receivership and the Companies’ Creditors Arrangement Act (CCAA), the receivership is bound to emerge victorious. However, this is not the legal rule: there is nothing barring a CCAA proceeding for a real estate development company or other real property-centric company. Nor is it absolute: there are examples of a CCAA being granted instead of a receivership. That said, in a significant majority of cases, secured creditors’ receivership applications will be granted instead of competing debtors’ CCAA applications.

This article, written by Jeremy Opolsky, Jacob Babad and Mike Noel and published on CanLii, explores the rationale behind the courts’ proclivity to lean toward a receivership by synthesizing the relevant factors that courts consider and offers a suggested framework for addressing such circumstances in future cases. In AFC Mortgage Administrative Inc. v. Sunrise Acquisitions (Stayner) Inc. et al., the Superior Court of Justice found the analysis “very helpful” when reviewing relevant cases in real estate development before granting the receivership sought by the lenders.

You can read the full piece on the CanLii website.

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