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

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

• 11.51 (1) On application by a debtor company and on notice to the secured creditors who are likely to be affected by the security or charge, the court may make an order declaring that all or part of 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 they may incur as a director or officer of the company after the commencement of proceedings under this Act.

• Marginal note:Priority

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

• Marginal note:Restriction — indemnification insurance

  (3) The court may 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:Negligence, misconduct or fault

  (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 officer if in its opinion the obligation or liability was incurred as a result of the director’s or officer’s gross negligence or wilful misconduct or, in Quebec, the director’s or officer’s gross or intentional fault.

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

• 11.52 (1) On notice to the secured creditors who are likely to be affected by the security or charge, the court may make an order declaring that all or part of the property of a debtor company is subject to a security or charge — in an amount that the court considers appropriate — in respect of the fees and expenses of

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

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

  • (c) any financial, legal or other experts engaged by any other interested person if the court is satisfied that the security or charge is necessary for their effective participation in proceedings under this Act.

• Marginal note:Priority

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

Marginal note:Bankruptcy and Insolvency Act matters

11.6 Notwithstanding the Bankruptcy and Insolvency Act,

• (a) proceedings commenced under Part III of the Bankruptcy and Insolvency Act may be taken up and continued under this Act only if a proposal within the meaning of the Bankruptcy and Insolvency Act has not been filed under that Part; and

• (b) an application under this Act by a bankrupt may only be made with the consent of inspectors referred to in section 116 of the Bankruptcy and Insolvency Act but no application may be made under this Act by a bankrupt whose bankruptcy has resulted from

  • (i) the operation of subsection 50.4(8) of the Bankruptcy and Insolvency Act, or

  • (ii) the refusal or deemed refusal by the creditors or the court, or the annulment, of a proposal under the Bankruptcy and Insolvency Act.

Marginal note:Court to appoint monitor

• 11.7 (1) When an order is made on the initial application in respect of a debtor company, the court shall at the same time appoint a person to monitor the business and financial affairs of the company. The person so appointed must be a trustee, within the meaning of subsection 2(1) of the Bankruptcy and Insolvency Act.

• Marginal note:Restrictions on who may be monitor

  (2) Except with the permission of the court and on any conditions that the court may impose, no trustee may be appointed as monitor in relation to a company

  • (a) if the trustee is or, at any time during the two preceding years, was

    • (i) a director, an officer or an employee of the company,

    • (ii) related to the company or to any director or officer of the company, or

    • (iii) the auditor, accountant or legal counsel, or a partner or an employee of the auditor, accountant or legal counsel, of the company; or

  • (b) if the trustee is

    • (i) the trustee under a trust indenture issued by the company or any person related to the company, or the holder of a power of attorney under an act constituting a hypothec within the meaning of the Civil Code of Quebec that is granted by the company or any person related to the company, or

    • (ii) related to the trustee, or the holder of a power of attorney, referred to in subparagraph (i).

• Marginal note:Court may replace monitor

  (3) On application by a creditor of the company, the court may, if it considers it appropriate in the circumstances, replace the monitor by appointing another trustee, within the meaning of subsection 2(1) of the Bankruptcy and Insolvency Act, to monitor the business and financial affairs of the company.

Marginal note:No personal liability in respect of matters before appointment

• 11.8 (1) Despite anything in federal or provincial law, if a monitor, in that position, carries on the business of a debtor company or continues the employment of a debtor company’s employees, the monitor is not by reason of that fact personally liable in respect of a liability, including one as a successor employer,

  • (a) that is in respect of the employees or former employees of the company or a predecessor of the company or in respect of a pension plan for the benefit of those employees; and

  • (b) that exists before the monitor is appointed or that is calculated by reference to a period before the appointment.

• Marginal note:Status of liability

  (2) A liability referred to in subsection (1) shall not rank as costs of administration.

• Marginal note:Liability of other successor employers

  (2.1) Subsection (1) does not affect the liability of a successor employer other than the monitor.

• Marginal note:Liability in respect of environmental matters

  (3) Notwithstanding anything in any federal or provincial law, a monitor is not personally liable in that position for any environmental condition that arose or environmental damage that occurred

  • (a) before the monitor’s appointment; or

  • (b) after the monitor’s appointment unless it is established that the condition arose or the damage occurred as a result of the monitor’s gross negligence or wilful misconduct.

• Marginal note:Reports, etc., still required

  (4) Nothing in subsection (3) exempts a monitor from any duty to report or make disclosure imposed by a law referred to in that subsection.

• Marginal note:Non-liability re certain orders

  (5) Notwithstanding anything in any federal or provincial law but subject to subsection (3), where an order is made which has the effect of requiring a monitor to remedy any environmental condition or environmental damage affecting property involved in a proceeding under this Act, the monitor is not personally liable for failure to comply with the order, and is not personally liable for any costs that are or would be incurred by any person in carrying out the terms of the order,

  • (a) if, within such time as is specified in the order, within ten days after the order is made if no time is so specified, within ten days after the appointment of the monitor, if the order is in effect when the monitor is appointed or during the period of the stay referred to in paragraph (b), the monitor

    • (i) complies with the order, or

    • (ii) on notice to the person who issued the order, abandons, disposes of or otherwise releases any interest in any real property affected by the condition or damage;

  • (b) during the period of a stay of the order granted, on application made within the time specified in the order referred to in paragraph (a) or within ten days after the order is made or within ten days after the appointment of the monitor, if the order is in effect when the monitor is appointed, by

    • (i) the court or body having jurisdiction under the law pursuant to which the order was made to enable the monitor to contest the order, or

    • (ii) the court having jurisdiction under this Act for the purposes of assessing the economic viability of complying with the order; or

  • (c) if the monitor had, before the order was made, abandoned or renounced any interest in any real property affected by the condition or damage.

• Marginal note:Stay may be granted

  (6) The court may grant a stay of the order referred to in subsection (5) on such notice and for such period as the court deems necessary for the purpose of enabling the monitor to assess the economic viability of complying with the order.

• Marginal note:Costs for remedying not costs of administration

  (7) Where the monitor has abandoned or renounced any interest in real property affected by the environmental condition or environmental damage, claims for costs of remedying the condition or damage shall not rank as costs of administration.

• Marginal note:Priority of claims

  (8) Any claim by Her Majesty in right of Canada or a province against a debtor company in respect of which proceedings have been commenced under this Act for costs of remedying any environmental condition or environmental damage affecting real property of the company is secured by a charge on the real property and on any other real property of the company that is contiguous thereto and that is related to the activity that caused the environmental condition or environmental damage, and the charge

  • (a) is enforceable in accordance with the law of the jurisdiction in which the real property is located, in the same way as a mortgage, hypothec or other security on real property; and

  • (b) ranks above any other claim, right or charge against the property, notwithstanding any other provision of this Act or anything in any other federal or provincial law.

• Marginal note:Claim for clean-up costs

  (9) A claim against a debtor company for costs of remedying any environmental condition or environmental damage affecting real property of the company shall be a claim under this Act, whether the condition arose or the damage occurred before or after the date on which proceedings under this Act were commenced.