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Notable developments in insolvency law: Flexible tools for challenging times

Author(s): Marc Wasserman, Kathryn Esaw, Jacqueline Code

Dec 8, 2020

Along with a tense election south of the border, 2020 brought COVID-19 and its attendant devastating loss of life and far-ranging economic implications, both positive and negative. The world now looks to 2021 with significant uncertainty with respect to what comes next. Certain sectors of the economy, in particular, may be irreparably damaged. Many people are anticipating that restructuring and insolvency law will loom large in 2021 and beyond, and that creative solutions will be required to address the myriad issues that financially distressed businesses face. We have distilled some notable themes in restructuring law that we believe will continue to apply and evolve in both the near and long term.

Debt restructurings under the CBCA: A flexible tool to address market disruption

For over-leveraged companies looking to avoid the time, costs and reputational implications associated with an insolvency filing, a “balance sheet restructuring” under the Canada Business Corporations Act (CBCA) or a provincial equivalent provides a valuable alternative. CBCA debt restructurings continue to gain popularity as flexible tools for reducing total indebtedness and preserving going-concern value, although they are usually not the right choice where a company needs operational restructuring (i.e., to address supplier, customer, employee, pension or environmental issues)...

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