Insolvency 2025

CANADA Law and Practice Contributed by: Clifton Prophet, David F W Cohen, Virginie Gauthier, Thomas Gertner and Kate Yurkovich, Gowling WLG

• creditors in respect of certain types of companies; • shareholders; and • the Attorney General of Canada in respect of financial institutions over which the Office of the Superintendent of Financial Institutions (OSFI) has taken control. Specific Statutory Restructuring and Insolvency Regimes The restructuring and insolvency regime applicable to banks regulated under Canadian law is governed by both the Bank Act and the WURA. Generally, follow - ing the exercise of control over a bank by OSFI under the Bank Act, the Attorney General, at the request of OSFI, will seek the appointment of a liquidator and the making of a winding-up order under the WURA. Other financial institutions such as credit unions, insurance companies, loan and trust companies and related businesses are subject to the WURA and their home statutes (eg, the Insurance Companies Act, the Trust and Loan Companies Act, and the Cooperative Credit Associations Act) with respect to substantive or regulatory matters relevant to winding up under the WURA. Part XII of the BIA applies to the insolvency of “securi - ties firms”. Historically, railway companies have been subject to specific restructuring and insolvency regimes pre - scribed under their statutes of incorporation; however, in limited circumstances, they can apply under the CCAA. On 20 June 2024, Bill C-59, the Fall Economic State - ment Implementation Act 2023 received Royal Assent. The Act will amend the BIA and CCAA to exclude public post-secondary educational institutions from becoming subject to proceedings under either statute. These amendments will come into force in June 2026. 1.3 Statutory Officers One of the hallmarks of Canadian bankruptcy and insolvency proceedings is the requirement that a licensed insolvency trustee (LIT) be involved in a supervisory or advisory role, depending on the pro - ceedings.

LITs are insolvency specialists licensed by the OSB. Types of Officers Trustees in bankruptcy In a bankruptcy proceeding, the debtor’s property vests in a trustee in bankruptcy, subject to the rights of secured creditors, and the debtor ceases to have control over its affairs. The trustee replaces the man - agement of the corporation and assumes control over the debtor’s assets. Trustees are licensed by the OSB to carry out the administration of all aspects of a bankruptcy proceed - ing. The trustee administers the estate for the benefit of the bankrupt’s unsecured creditors. Secured credi - tors retain their right to enforce on their security. As a court officer, the trustee must act fairly, equitably and impartially. Trustees are court officers and act as fiduciaries for the benefit of the bankrupt’s creditors. The BIA imposes numerous statutory duties on trus - tees, many of which are administrative in nature. The BIA also confers broad powers that a trustee can exer - cise with the permission of the inspectors appointed in the bankruptcy. Monitors A monitor oversees CCAA proceedings, reports to the court on the debtor’s business and financial affairs, and assists the debtor with the formulation of its plan, if any. The monitor does not displace the debtor, which continues to be in control of its property. The monitor also has many duties that are administra - tive in nature, such as publishing orders and reports and filing prescribed documents with the OSB. In addition, the monitor has duties that are substantive in nature such as reviewing the debtor’s cash-flow statements filed with the court and commenting on them, advising on the reasonableness and fairness of a proposed plan, if any, and reporting to the court on developments or changes in the proceedings. The CCAA imposes an obligation on the monitor to act honestly and in good faith. In addition to statutory obligations, the CCAA’s initial order and ensuing orders may require the monitor to

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