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

Act current to 2016-02-03 and last amended on 2015-02-26. Previous Versions

Marginal note:Collective agreements
  •  (1) If proceedings under this Act have been commenced in respect of a debtor company, any collective agreement that the company has entered into as the employer remains in force, and may not be altered except as provided in this section or under the laws of the jurisdiction governing collective bargaining between the company and the bargaining agent.

  • Marginal note:Application for authorization to serve notice to bargain

    (2) A debtor company that is a party to a collective agreement and that is unable to reach a voluntary agreement with the bargaining agent to revise any of the provisions of the collective agreement may, on giving five days notice to the bargaining agent, apply to the court for an order authorizing the company to serve a notice to bargain under the laws of the jurisdiction governing collective bargaining between the company and the bargaining agent.

  • Marginal note:Conditions for issuance of order

    (3) The court may issue the order only if it is satisfied that

    • (a) a viable compromise or arrangement could not be made in respect of the company, taking into account the terms of the collective agreement;

    • (b) the company has made good faith efforts to renegotiate the provisions of the collective agreement; and

    • (c) a failure to issue the order is likely to result in irreparable damage to the company.

  • Marginal note:No delay on vote

    (4) The vote of the creditors in respect of a compromise or an arrangement may not be delayed solely because the period provided in the laws of the jurisdiction governing collective bargaining between the company and the bargaining agent has not expired.

  • Marginal note:Claims arising from termination or amendment

    (5) If the parties to the collective agreement agree to revise the collective agreement after proceedings have been commenced under this Act in respect of the company, the bargaining agent that is a party to the agreement is deemed to have a claim, as an unsecured creditor, for an amount equal to the value of concessions granted by the bargaining agent with respect to the remaining term of the collective agreement.

  • Marginal note:Order to disclose information

    (6) On the application of the bargaining agent and on notice to the person to whom the application relates, the court may, subject to any terms and conditions it specifies, make an order requiring the person to make available to the bargaining agent any information specified by the court in the person’s possession or control that relates to the company’s business or financial affairs and that is relevant to the collective bargaining between the company and the bargaining agent. The court may make the order only after the company has been authorized to serve a notice to bargain under subsection (2).

  • Marginal note:Parties

    (7) For the purpose of this section, the parties to a collective agreement are the debtor company and the bargaining agent that are bound by the collective agreement.

  • Marginal note:Unrevised collective agreements remain in force

    (8) For greater certainty, any collective agreement that the company and the bargaining agent have not agreed to revise remains in force, and the court shall not alter its terms.

  • 2005, c. 47, s. 131.
Marginal note:Certain rights limited
  •  (1) No person may terminate or amend, or claim an accelerated payment or forfeiture of the term under, any agreement, including a security agreement, with a debtor company by reason only that proceedings commenced under this Act or that the company is insolvent.

  • Marginal note:Lease

    (2) If the agreement referred to in subsection (1) is a lease, the lessor may not terminate or amend the lease by reason only that proceedings commenced under this Act, that the company is insolvent or that the company has not paid rent in respect of any period before the commencement of those proceedings.

  • Marginal note:Public utilities

    (3) No public utility may discontinue service to a company by reason only that proceedings commenced under this Act, that the company is insolvent or that the company has not paid for services rendered or goods provided before the commencement of those proceedings.

  • Marginal note:Certain acts not prevented

    (4) Nothing in this section is to be construed as

    • (a) prohibiting a person from requiring payments to be made in cash for goods, services, use of leased property or other valuable consideration provided after the commencement of proceedings under this Act;

    • (b) requiring the further advance of money or credit; or

    • (c) [Repealed, 2012, c. 31, s. 421]

  • Marginal note:Provisions of section override agreement

    (5) Any provision in an agreement that has the effect of providing for, or permitting, anything that, in substance, is contrary to this section is of no force or effect.

  • Marginal note:Powers of court

    (6) On application by a party to an agreement or by a public utility, the court may declare that this section does not apply — or applies only to the extent declared by the court — if the applicant satisfies the court that the operation of this section would likely cause the applicant significant financial hardship.

  • Marginal note:Eligible financial contracts

    (7) Subsection (1) does not apply

    • (a) in respect of an eligible financial contract; or

    • (b) to prevent a member of the Canadian Payments Association from ceasing to act as a clearing agent or group clearer for a company in accordance with the Canadian Payments Act and the by-laws and rules of that Association.

  • Marginal note:Permitted actions

    (8) The following actions are permitted in respect of an eligible financial contract that is entered into before proceedings under this Act are commenced in respect of the company and is terminated on or after that day, but only in accordance with the provisions of that contract:

    • (a) the netting or setting off or compensation of obligations between the company and the other parties to the eligible financial contract; and

    • (b) any dealing with financial collateral including

      • (i) the sale or foreclosure or, in the Province of Quebec, the surrender of financial collateral, and

      • (ii) the setting off or compensation of financial collateral or the application of the proceeds or value of financial collateral.

  • Marginal note:Restriction

    (9) No order may be made under this Act if the order would have the effect of staying or restraining the actions permitted under subsection (8).

  • Marginal note:Net termination values

    (10) If net termination values determined in accordance with an eligible financial contract referred to in subsection (8) are owed by the company to another party to the eligible financial contract, that other party is deemed to be a creditor of the company with a claim against the company in respect of those net termination values.

  • Marginal note:Priority

    (11) No order may be made under this Act if the order would have the effect of subordinating financial collateral.

  • 2005, c. 47, s. 131;
  • 2007, c. 29, s. 109, c. 36, ss. 77, 112;
  • 2012, c. 31, s. 421.

Obligations and Prohibitions

Marginal note:Obligation to provide assistance
  •  (1) A debtor company shall provide to the monitor the assistance that is necessary to enable the monitor to adequately carry out the monitor’s functions.

  • Marginal note:Obligation to duties set out in section 158 of the Bankruptcy and Insolvency Act

    (2) A debtor company shall perform the duties set out in section 158 of the Bankruptcy and Insolvency Act that are appropriate and applicable in the circumstances.

  • 2005, c. 47, s. 131.
Marginal note:Restriction on disposition of business assets
  •  (1) A debtor company in respect of which an order has been made under this Act may not sell or otherwise dispose of assets outside the ordinary course of business unless authorized to do so by a court. Despite any requirement for shareholder approval, including one under federal or provincial law, the court may authorize the sale or disposition even if shareholder approval was not obtained.

  • Marginal note:Notice to creditors

    (2) A company that applies to the court for an authorization is to give notice of the application to the secured creditors who are likely to be affected by the proposed sale or disposition.

  • Marginal note:Factors to be considered

    (3) In deciding whether to grant the authorization, the court is to consider, among other things,

    • (a) whether the process leading to the proposed sale or disposition was reasonable in the circumstances;

    • (b) whether the monitor approved the process leading to the proposed sale or disposition;

    • (c) whether the monitor filed with the court a report stating that in their opinion the sale or disposition would be more beneficial to the creditors than a sale or disposition under a bankruptcy;

    • (d) the extent to which the creditors were consulted;

    • (e) the effects of the proposed sale or disposition on the creditors and other interested parties; and

    • (f) whether the consideration to be received for the assets is reasonable and fair, taking into account their market value.

  • Marginal note:Additional factors — related persons

    (4) If the proposed sale or disposition is to a person who is related to the company, the court may, after considering the factors referred to in subsection (3), grant the authorization only if it is satisfied that

    • (a) good faith efforts were made to sell or otherwise dispose of the assets to persons who are not related to the company; and

    • (b) the consideration to be received is superior to the consideration that would be received under any other offer made in accordance with the process leading to the proposed sale or disposition.

  • Marginal note:Related persons

    (5) For the purpose of subsection (4), a person who is related to the company includes

    • (a) a director or officer of the company;

    • (b) a person who has or has had, directly or indirectly, control in fact of the company; and

    • (c) a person who is related to a person described in paragraph (a) or (b).

  • Marginal note:Assets may be disposed of free and clear

    (6) The court may authorize a sale or disposition free and clear of any security, charge or other restriction and, if it does, it shall also order that other assets of the company or the proceeds of the sale or disposition be subject to a security, charge or other restriction in favour of the creditor whose security, charge or other restriction is to be affected by the order.

  • Marginal note:Restriction — employers

    (7) The court may grant the authorization only if the court is satisfied that the company can and will make the payments that would have been required under paragraphs 6(4)(a) and (5)(a) if the court had sanctioned the compromise or arrangement.

  • 2005, c. 47, s. 131;
  • 2007, c. 36, s. 78.
 
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