• Marginal note:Documents that must accompany initial application

  (2) An initial application must be accompanied by

  • (a) a statement indicating, on a weekly basis, the projected cash flow of the debtor company;

  • (b) a report containing the prescribed representations of the debtor company regarding the preparation of the cash-flow statement; and

  • (c) copies of all financial statements, audited or unaudited, prepared during the year before the application or, if no such statements were prepared in that year, a copy of the most recent such statement.

• Marginal note:Publication ban

  (3) The court may make an order prohibiting the release to the public of any cash-flow statement, or any part of a cash-flow statement, if it is satisfied that the release would unduly prejudice the debtor company and the making of the order would not unduly prejudice the company’s creditors, but the court may, in the order, direct that the cash-flow statement or any part of it be made available to any person specified in the order on any terms or conditions that the court considers appropriate.

Marginal note:General power of court

11. Despite anything in the Bankruptcy and Insolvency Act or the Winding-up and Restructuring Act, if an application is made under this Act in respect of a debtor company, the court, on the application of any person interested in the matter, may, subject to the restrictions set out in this Act, on notice to any other person or without notice as it may see fit, make any order that it considers appropriate in the circumstances.

Marginal note:Rights of suppliers

11.01 No order made under section 11 or 11.02 has the effect of

• (a) prohibiting a person from requiring immediate payment for goods, services, use of leased or licensed property or other valuable consideration provided after the order is made; or

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

Marginal note:Stays, etc. — initial application

• 11.02 (1) A court may, on an initial application in respect of a debtor company, make an order on any terms that it may impose, effective for the period that the court considers necessary, which period may not be more than 30 days,

  • (a) staying, until otherwise ordered by the court, all proceedings taken or that might be taken in respect of the company under the Bankruptcy and Insolvency Act or the Winding-up and Restructuring Act;

  • (b) restraining, until otherwise ordered by the court, further proceedings in any action, suit or proceeding against the company; and

  • (c) prohibiting, until otherwise ordered by the court, the commencement of any action, suit or proceeding against the company.

• Marginal note:Stays, etc. — other than initial application

  (2) A court may, on an application in respect of a debtor company other than an initial application, make an order, on any terms that it may impose,

  • (a) staying, until otherwise ordered by the court, for any period that the court considers necessary, all proceedings taken or that might be taken in respect of the company under an Act referred to in paragraph (1)(a);

  • (b) restraining, until otherwise ordered by the court, further proceedings in any action, suit or proceeding against the company; and

  • (c) prohibiting, until otherwise ordered by the court, the commencement of any action, suit or proceeding against the company.

• Marginal note:Burden of proof on application

  (3) The court shall not make the order unless

  • (a) the applicant satisfies the court that circumstances exist that make the order appropriate; and

  • (b) in the case of an order under subsection (2), the applicant also satisfies the court that the applicant has acted, and is acting, in good faith and with due diligence.

• Marginal note:Restriction

  (4) Orders doing anything referred to in subsection (1) or (2) may only be made under this section.

Marginal note:Stays — directors

• 11.03 (1) An order made under section 11.02 may provide that no person may commence or continue any action against a director of the company on any claim against directors that arose before the commencement of proceedings under this Act and that relates to obligations of the company if directors are under any law liable in their capacity as directors for the payment of those obligations, until a compromise or an arrangement in respect of the company, if one is filed, is sanctioned by the court or is refused by the creditors or the court.

• Marginal note:Exception

  (2) Subsection (1) does not apply in respect of an action against a director on a guarantee given by the director relating to the company’s obligations or an action seeking injunctive relief against a director in relation to the company.

• Marginal note:Persons deemed to be directors

  (3) If all of the directors have resigned or have been removed by the shareholders without replacement, any person who manages or supervises the management of the business and affairs of the company is deemed to be a director for the purposes of this section.

Marginal note:Persons obligated under letter of credit or guarantee

11.04 No order made under section 11.02 has affect on any action, suit or proceeding against a person, other than the company in respect of whom the order is made, who is obligated under a letter of credit or guarantee in relation to the company.

Marginal note:Eligible financial contracts

• 11.05 (1) No order may be made under section 11.02 staying or restraining the exercise of any right to terminate, amend or claim any accelerated payment, or a forfeiture of the term, under an eligible financial contract.

• Marginal note:Existing eligible financial contracts

  (2) For greater certainty, if an eligible financial contract entered into before an order is made under section 11.02 is terminated on or after the date of the order, the setting off of obligations between the company and the other parties to the eligible financial contract, in accordance with its provisions, is permitted and, if net termination values determined in accord­ance with the eligible financial contract 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 the net termination values.

• Marginal note:Definitions

  (3) The following definitions apply in this section.

  “eligible financial contract”

  « contrat financier admissible »

  “eligible financial contract” means

  • (a) a currency or interest rate swap agreement;

  • (b) a basis swap agreement;

  • (c) a spot, future, forward or other foreign exchange agreement;

  • (d) a cap, collar or floor transaction;

  • (e) a commodity swap;

  • (f) a forward rate agreement;

  • (g) a repurchase or reverse repurchase agreement;

  • (h) a spot, future, forward or other commodity contract;

  • (i) an agreement to buy, sell, borrow or lend securities, to clear or settle securities transactions or to act as a depository for securities;

  • (j) any derivative, combination or option in respect of, or agreement similar to, an agreement or contract referred to in paragraphs (a) to (i);

  • (k) any master agreement in respect of any agreement or contract referred to in paragraphs (a) to (j);

  • (l) any master agreement in respect of a master agreement referred to in paragraph (k);

  • (m) a guarantee of the liabilities under an agreement or contract referred to in paragraphs (a) to (l); or

  • (n) any agreement of a prescribed kind.

  “net termination value”

  « valeur nette due à la date de résiliation »

  “net termination value” means the net amount obtained after setting off the mutual obligations between the parties to an eligible financial contract in accordance with its provisions.

Marginal note:Member of the Canadian Payments Association

11.06 No order may be made under section 11.02 that has the effect of preventing a member of the Canadian Payments Association established by the Canadian Payments Act from ceasing to act as a clearing agent or group clearer for a company in accordance with that Act and the by-laws and rules of that Association.

Marginal note:Aircraft objects

11.07 No order may be made under section 11.02 that has the effect of preventing a creditor who holds security on aircraft objects — or a lessor of aircraft objects — under an agreement with a company from taking possession of the aircraft objects

• (a) if, after the commencement of proceedings under this Act, the company defaults in protecting or maintaining the aircraft objects in accordance with the agreement;

• (b) 60 days after the commencement of proceedings under this Act unless, during that period, the company

  • (i) remedied the default of every other obligation under the agreement, other than a default constituted by the commencement of proceedings under this Act or the breach of a provision in the agreement relating to the company’s financial condition,

  • (ii) agreed to perform the obligations under the agreement, other than an obligation not to become insolvent or an obligation relating to the company’s financial condition, until proceedings under this Act end, and

  • (iii) agreed to perform all the obligations arising under the agreement after the proceedings under this Act end; or

• (c) if, during the period that begins 60 days after the commencement of the proceedings under this Act and ends on the day on which proceedings under this Act end, the company defaults in performing an obligation under the agreement, other than an obligation not to become insolvent or an obligation relating to the company’s financial condition.

Marginal note:Restriction — certain powers, duties and functions

11.08 No order may be made under section 11.02 that affects

• (a) the exercise or performance by the Minister of Finance or the Superintendent of Financial Institutions of any power, duty or function assigned to them by the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act or the Trust and Loan Companies Act;

• (b) the exercise or performance by the Governor in Council, the Minister of Finance or the Canada Deposit Insurance Corporation of any power, duty or function assigned to them by the Canada Deposit Insurance Corporation Act; or

• (c) the exercise by the Attorney General of Canada of any power, assigned to him or her by the Winding-up and Restructuring Act.

Marginal note:Stay — Her Majesty

• 11.09 (1) An order made under section 11.02 may provide that

  • (a) Her Majesty in right of Canada may not exercise rights under subsection 224(1.2) of the Income Tax Act or any provision of the Canada Pension Plan or of the Employment Insurance Act that refers to subsection 224(1.2) of the Income Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, or an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, and of any related interest, penalties or other amounts, in respect of the company if the company is a tax debtor under that subsection or provision, for the period that the court considers appropriate but ending not later than

    • (i) the expiry of the order,

    • (ii) the refusal of a proposed compromise by the creditors or the court,

    • (iii) six months following the court sanction of a compromise or an arrangement,

    • (iv) the default by the company on any term of a compromise or an arrangement, or

    • (v) the performance of a compromise or an arrangement in respect of the company; and

  • (b) Her Majesty in right of a province may not exercise rights under any provision of provincial legislation in respect of the company if the company is a debtor under that legislation and the provision has a purpose similar to subsection 224(1.2) of the Income Tax Act, or refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, and the sum

    • (i) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or

    • (ii) is of the same nature as a contribution under the Canada Pension Plan if the province is a “province providing a comprehensive pension plan” as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a “provincial pension plan” as defined in that subsection,

    for the period that the court considers appropriate but ending not later than the occurrence or time referred to in whichever of subparagraphs (a)(i) to (v) that may apply.

• Marginal note:When order ceases to be in effect

  (2) The portions of an order made under section 11.02 that affect the exercise of rights of Her Majesty referred to in paragraph (1)(a) or (b) cease to be in effect if

  • (a) the company defaults on the payment of any amount that becomes due to Her Majesty after the order is made and could be subject to a demand under

    • (i) subsection 224(1.2) of the Income Tax Act,

    • (ii) any provision of the Canada Pension Plan or of the Employment Insurance Act that refers to subsection 224(1.2) of the Income Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, or an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, and of any related interest, penalties or other amounts, or

    • (iii) any provision of provincial legislation that has a purpose similar to subsection 224(1.2) of the Income Tax Act, or that refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, and the sum

      • (A) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or

      • (B) is of the same nature as a contribution under the Canada Pension Plan if the province is a “province providing a comprehensive pension plan” as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a “provincial pension plan” as defined in that subsection; or

  • (b) any other creditor is or becomes entitled to realize a security on any property that could be claimed by Her Majesty in exercising rights under

    • (i) subsection 224(1.2) of the Income Tax Act,

    • (ii) any provision of the Canada Pension Plan or of the Employment Insurance Act that refers to subsection 224(1.2) of the Income Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, or an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, and of any related interest, penalties or other amounts, or

    • (iii) any provision of provincial legislation that has a purpose similar to subsection 224(1.2) of the Income Tax Act, or that refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, and the sum

      • (A) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or

      • (B) is of the same nature as a contribution under the Canada Pension Plan if the province is a “province providing a comprehensive pension plan” as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a “provincial pension plan” as defined in that subsection.

• Marginal note:Operation of similar legislation

  (3) An order made under section 11.02, other than the portions of that order that affect the exercise of rights of Her Majesty referred to in paragraph (1)(a) or (b), does not affect the operation of

  • (a) subsections 224(1.2) and (1.3) of the Income Tax Act,

  • (b) any provision of the Canada Pension Plan or of the Employment Insurance Act that refers to subsection 224(1.2) of the Income Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, or an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, and of any related interest, penalties or other amounts, or

  • (c) any provision of provincial legislation that has a purpose similar to subsection 224(1.2) of the Income Tax Act, or that refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, and the sum

    • (i) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or

    • (ii) is of the same nature as a contribution under the Canada Pension Plan if the province is a “province providing a comprehensive pension plan” as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a “provincial pension plan” as defined in that subsection,

  and for the purpose of paragraph (c), the provision of provincial legislation is, despite any Act of Canada or of a province or any other law, deemed to have the same effect and scope against any creditor, however secured, as subsection 224(1.2) of the Income Tax Act in respect of a sum referred to in subparagraph (c)(i), or as subsection 23(2) of the Canada Pension Plan in respect of a sum referred to in subparagraph (c)(ii), and in respect of any related interest, penalties or other amounts.

Marginal note:Regulatory bodies

• 11.1 (1) Subject to subsection (3), no order made under section 11.02 affects the rights of a regulatory body with respect to any investigation in respect of the company or any action, suit or proceeding taken or to be taken by it against the company, except when it is seeking to enforce any of its rights as a secured creditor or an unsecured creditor.

• Marginal note:Declaration that regulatory body is acting as creditor

  (2) If there is a dispute as to whether a regulatory body is seeking to enforce any of its rights as a secured creditor or an unsecured creditor, the court may, on application made by the company with notice given to the regulatory body, make an order declaring that the regulatory body is or would be so seeking to enforce its rights.

• Marginal note:Exception — compromise or arrangement not viable

  (3) Subsection (1) does not apply in respect of any or all actions, suits or proceedings taken or to be taken by a regulatory body if the court, on application made by the company with notice given to the regulatory body, makes an order declaring that a viable compromise or arrangement could not be made in respect of the company if that subsection were to apply.

• Marginal note:Restriction

  (4) The court shall not make the declaration referred to in subsection (3) if it is of the opinion that it is in the public interest that the regulatory body not be affected by the order made under section 11.02.

• Meaning of “regulatory body”

  (5) In this section, “regulatory body” means any person or body who has powers, duties or functions relating to the enforcement or administration of any Act of Parliament or of the legislature of a province and includes any person or body prescribed to be a regulatory body for the purpose of this Act.

Marginal note:Interim financing

• 11.2 (1) A court may, on application by a debtor company, make an order, on any conditions that the court considers appropriate, declaring that the property of the company is subject to a security or charge in favour of any person specified in the order who agrees to lend to the company an amount that is approved by the court as being required by the company, having regard to its cash-flow statement,

  • (a) for the period of 30 days following the initial application in respect of the company if the order is made on the initial application in respect of the company; or

  • (b) for any period specified in the order if the order is made on any application in respect of a company other than the initial application and notice has been given to the secured creditors likely to be affected by the security or charge.

• Marginal note:Restriction

  (2) An order may be made under subsection (1) in respect of any period after the period of 30 days following the initial application in respect of the company only if the monitor has reported to the court under paragraph 23(1)(b) that the company’s cash-flow statement is reasonable.

• Marginal note:Rank

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

• Marginal note:Other orders

  (4) The court may specify in the order that the security or charge ranks 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

  (5) In deciding whether to make an order referred to in subsection (1), the court must 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 is to be governed during the proceedings;

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

  • (d) whether the loan will 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 assets; and

  • (f) whether any creditor will be materially prejudiced as a result of the company’s continued operations.

Marginal note:Assignments

• 11.3 (1) The court may, on the application of a debtor company, make an order assigning the rights and obligations of the company under any agreement to any person, to be specified by the court, who has agreed to the assignment.

• Marginal note:Notice

  (2) The applicant must give notice of the assignment in the prescribed manner to every party to the agreement.

• Marginal note:Exceptions

  (3) Subsection (1) does not apply in respect of rights and obligations

  • (a) under an eligible financial contract within the meaning of subsection 11.05(3);

  • (b) under a collective agreement; or

  • (c) that are not assignable by reason of their nature.

• Marginal note:Factors to be considered

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

  • (a) whether the person to whom the rights and obligations are to be assigned would be able to perform the obligations; and

  • (b) whether it would be appropriate to assign the rights and obligations to that person.

• Marginal note:Restriction

  (5) The court may not make an order assigning an agreement unless it is satisfied that all financial defaults in relation to the agreement will be remedied.

Marginal note:Critical supplier

• 11.4 (1) On application by a debtor company, the court may make an order declaring a person to be a critical supplier to the company if the court is satisfied that the person is a supplier of goods or services to the company and that those goods or services are critical to the company’s continued operation.

• Marginal note:Obligation to supply

  (2) If the court declares a person to be a critical supplier, the court may make an order requiring the person to supply any goods or services specified by the court to the company on any terms and conditions that are consistent with the supply relationship or that the court considers appropriate.

• Marginal note:Security or charge in favour of critical supplier

  (3) If the court makes an order under subsection (2), the court shall, in the order, declare that the property of the company is subject to a security or charge in favour of the person declared to be a critical supplier, in an amount equal to the value of the goods or services supplied under the terms of the order.

• Marginal note:Rank

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

Marginal note:Removal of directors

• 11.5 (1) The court may, on the application of any person interested in the matter, make an order removing from office any director of a debtor company in respect of which an order has been made under this Act if the court is satisfied that the director is unreasonably impairing or is likely to unreasonably impair the possibility of a viable compromise or arrangement being made in respect of the company or is acting or is likely to act inappropriately as a director in the circumstances.

• Marginal note:Filling vacancy

  (2) The court may, by order, fill any vacancy created under subsection (1).

Marginal note:Security or charge relating to director’s indemnification

• 11.51 (1) The court may, on the application of a debtor company, make an order declaring that the property of the company is subject to a security or charge, in an amount that the court considers appropriate, in favour of any director or officer of the company to indemnify the director or officer against obligations and liabilities that he or she may incur as a director or an officer of the company after the commencement of proceedings against the company under this Act.

• Marginal note:Rank

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

• Marginal note:Restriction — indemnification insurance

  (3) The court shall not make the order if, in its opinion, the company could obtain adequate indemnification insurance for the director or officer at a reasonable cost.

• Marginal note:Declaration in cases of gross negligence, etc.

  (4) The court shall make an order declaring that the security or charge does not apply in respect of a specific obligation or liability incurred by a director or an officer if it is of the opinion that the obligation or liability was incurred as a result of the director’s or officer’s gross negligence or wilful misconduct or, in the Province of Quebec, the director’s gross or intentional fault.

Marginal note:Court may order security or charge to cover certain costs

11.52 The court may make an order declaring that property of a debtor company is subject to a security or charge, in an amount that the court considers appropriate, in respect of

• (a) the costs of the monitor, including the remuneration and expenses of any financial, legal or other experts engaged by the monitor in the course of the monitor’s duties;

• (b) the remuneration and expenses of any financial, legal or other experts engaged by the company for the purpose of proceedings under this Act; and

• (c) the costs of any interested party in relation to the remuneration and expenses of any financial, legal or other experts engaged by it, if the court is satisfied that the incurring of those costs is necessary for the effective participation of the interested party in the proceedings under this Act.