Companies' Creditors Arrangement Act

Companies' Creditors Arrangement Act
Companies' Creditors Arrangement Act
Citation RSC 1985, c. C-36[1]
Enacted by Parliament of Canada
Date assented to 1933

The Companies' Creditors Arrangement Act ("CCAA")[1] is a statute of the Parliament of Canada that allows insolvent corporations owing their creditors in excess of $5 million to restructure their business and financial affairs.


Proceedings under the CCAA


The scope of the CCAA is quite broad. It applies to any debtor company (or group of affiliated companies) that owes more than $5 million,[2] other than:

  • banks
  • insurance companies
  • trust and loan companies
  • railway and telegraph companies[3]


  • is either bankrupt or insolvent
  • has committed an act of bankruptcy under the Bankruptcy and Insolvency Act("BIA") or is deemed insolvent under the Winding-Up and Restructuring Act("WRA"), whether or not proceedings have been initiated under either of those Acts
  • has made an assignment, or has been made subject to a bankruptcy order, under the BIA, or
  • is being wound up under the WRA[4]

Application to the court

Any interested person may apply to the court for an order under the Act.[5] This is normally the debtor company, but a creditor can also do so.[6]The court having jurisdiction is the superior court for the province in which the company's head office or chief place of business in Canada, or, in the absence of that, where any of its assets are situated.[7]

Powers of the court

Where a compromise or arrangement has already been negotiated with the secured[8] or unsecured[9] creditors - essentially creating a pre-packaged insolvency - the court may summarily order that it proceed to be voted on by each class of creditors concerned, and, where necessary, by the shareholders as well. Whether a creditor is secured or unsecured is governed by the BIA.[10]

Where no such compromise or arrangement has been negotiated, the court, on application, may issue an order, lasting for 30 days,

  • staying,
  • restraining from continuing, or
  • prohibiting from commencing,

any proceedings against the debtor company, while negotiations are held to secure a compromise or arrangement with creditors and shareholders. The court may extend the protection for any period it sees fit. [11]

In addition, the court has broad discretion in administering any other issues that may arise.[12] As the Act says,

...the court, on the application of any person interested in the matter, may ... make any order that it considers appropriate in the circumstances.[13]

This has allowed for very creative applications for resolving difficult scenarios, including:

In addition, the court may order

  • the appointment of a monitor to report back on how the company's situation is progressing, and to advise the court appropriately[20][21]
  • the approval of arrangements similar to debtor-in-possession financing for sustaining the company's operations[22][23] (also known as a "DIP charge") which can be given priority over other claims and deemed trusts by the court where the order is properly worded[24]
  • suppliers to continue providing goods or services that are critical to the company's operation[25]
  • the removal of directors if they are unreasonably impairing (or likely to unreasonably impair) the possibility of a viable compromise or arrangement being made in respect of the company, or are acting (or likely to act) inappropriately as a director in the circumstances.[26]
  • recovery of amounts arising from fraudulent preferences and undervalue transactions[27]
  • the coordination of its proceedings with corresponding foreign proceedings[28]

Debtor protection

No person may terminate or amend — or claim an accelerated payment or forfeiture of the term under — any agreement, including a security agreement, with any debtor company subject to the CCAA by reason only that proceedings commenced under the CCAA or that the company is insolvent.[29]

Agreements can be assigned[30] or disclaimed[31] by the debtor company as a result of the proceeding, by following prescribed procedures.

Approval of the compromise or arrangement

Negotiated compromises and arrangements may deal with any matter, including claims against directors and amendments to the articles of incorporation or letters patent incorporating the company. When they have been approved by each participating class of creditors (by a two-thirds vote by value of the claims involved) the court may then approve it, and it will be binding on all persons, including trustees in bankruptcy.

They cannot be approved by the court if provision is not made for settling "super priority" claims (as they are known under the BIA) relating to:

  • compensation and reimbursement claims by employees other than officers and directors
  • pension plan contributions (except where agreement has been reached with the relevant pension regulator)
  • source deductions due on employee withholdings[32]

Comparison of CCAA with other bankruptcy protection proceedings

The CCAA has been described as being similar in nature to Chapter 11 proceedings in the United States and to administration proceedings and company voluntary arrangements ("CVAs") in the United Kingdom. Differences between the various proceedings include the following highlights:

Action CCAA (Canada) Chapter 11 (US)[33][34] Administration (UK)[35] CVA (UK)[36]
Applicable to Insolvent companies (or affiliated groups) with debts greater than $5 million Any debtor Any company that is or is likely to become unable to pay its debts Any company, whether insolvent or not
Initiated by Insolvent company (or creditor), upon application to the court Insolvent person, upon application to the court Company, its directors, or a holder of a floating charge (either unilaterally or on application to the court), or any other creditor (on application to the court) The directors of a company
Scope of plan Within the court's discretion As prescribed by law As proposed by the administrator and approved at a meeting of the company's creditors As proposed by the directors and approved at meetings of the company and of its creditors, and then approved by the court
Stay of proceedings Upon order of the court Automatic upon filing May be lifted in specific cases with consent of administrator or permission of the court If requested by the directors to the court
Debtor-in-possession financing Allowed Allowed Not available Not available

Notable CCAA proceedings

Relevant cases

Century Services Inc. v. Canada (Attorney General), 2010 SCC 60, (2010) 3 S.C.R. 379 (includes commentary on the history and scope of the CCAA)


  1. ^ "Companies' Creditors Arrangement Act (R.S.C., 1985, c. C-36)". Retrieved 2011-09-28. 
  2. ^ "CCAA, S. 3". 
  3. ^ "CCAA, S. 2, definition of "company"". 
  4. ^ "CCAA, S. 2, definition of "debtor company"". 
  5. ^ "CCAA, S. 11". 
  6. ^ Stephanie A.F. Grace (2009-12-02). "Creditor Initiated CCAA Proceedings". Aird & Berlis. Retrieved 2011-09-12. 
  7. ^ "CCAA, S. 9". 
  8. ^ "CCAA, S. 5". 
  9. ^ "CCAA, S. 4". 
  10. ^ Jackie Moher (2011-02-02). "SCC Holds No Priority for GST Claims in CCAA Proceedings". Blake, Cassels & Graydon. Retrieved 2011-09-28. 
  11. ^ "CCAA, S. 11.02". 
  12. ^ John Sandrelli (2005-09-15/16). "Jurisdiction of the court in CCAA proceedings: Inherent jurisdiction vs statutory discretion". Fraser Milner Casgrain. Retrieved 2011-09-12. 
  13. ^ "CCAA, S. 11". 
  14. ^ Philippe H. Bélanger, Geoff R. Hall, Kevin P. McElcheran and Mason Poplaw (2008-11-04). "Creativity in the Courts: Use of the CCAA to Address Asset-Backed Commercial Paper Crisis". McCarthy Tétrault. Retrieved 2011-09-12. 
  15. ^ Geoffrey Thompson (2009-07). "Limited Partnerships and the CCAA". Borden Ladner Gervais. Retrieved 2011-09-12. 
  16. ^ Michael Fitch and Kibben Jackson. "Face the Music: The A&B Sound CCAA Proceeding - A Stalking Horse of a Different Colour". Fraser Milner Casgrain. Retrieved 2011-09-12. 
  17. ^ Peter B. Farkas, John Sandrelli and Jordan Schultz. "The Role of Liquidating CCAAs". Fraser Milner Casgrain. Retrieved 2011-09-12. 
  18. ^ Michael MacNaughton and Geoffrey Thompson. "Restructuring without a plan". Borden Ladner Gervais. Retrieved 2011-09-12. 
  19. ^ Roger Jaipargas (2010-07). "Court Declines to Approve Sale of Assets as Part of Proposal Proceedings". Borden Ladner Gervais. Retrieved 2011-09-12. 
  20. ^ "CCAA, S. 11.7". 
  21. ^ "CCAA, S. 23". 
  22. ^ "CCAA, S. 11.4". 
  23. ^ Carole Hunter, Jonathan Levin and Edmund F.B. Lamek. "DIP financing strategies for distressed companies". Fasken Martineau. Retrieved 2011-09-12. 
  24. ^ "Ontario Court of Appeal: Pension Wind-Up Liabilities Are Subject to Deemed Trust". Blake, Cassels & Graydon. Retrieved 2011-09-28. 
  25. ^ "CCAA, s. 11.4". 
  26. ^ "CCAA, s. 11.5". 
  27. ^ "CCAA, s. 36.1". 
  28. ^ "CCAA, Part IV". 
  29. ^ "CCAA, s. 34(1)". 
  30. ^ "CCAA, S. 11.3". 
  31. ^ "CCAA, S. 32". 
  32. ^ "CCAA, S. 6". 
  33. ^ "Chapter 11, US Bankruptcy Code (from Cornell LII)". 
  34. ^ Sheryl E. Siegel (2011-09). "distinctions with a difference: comparison of restructurings under the CCAA with chapter 11 law and practice". McMillan LLP. Retrieved 2011-10-13. 
  35. ^ "Insolvency Act 1986 (UK), Sch B1". 
  36. ^ "Insolvency Act 1986 (UK), Part I". 

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