Top 5 Key Takeaways from “A Panel Discussion about the CCAA”
On June 17, 2021, McCarthy Tétrault virtually hosted A Panel Discussion about the CCAA with Partners Heather Meredith, Jacques Rousse, and Awanish Sinha. The discussion focused on the Companies’ Creditors Arrangement Act (“CCAA”), reasons why organizations use the CCAA, and particular insights about the Laurentian University CCAA proceeding.
The following are some key takeaways from the panel:
- The CCAA is a federal statute that prioritizes restructuring a company and avoiding the social and economic costs of liquidating a business. It has numerous tools, like a stay of proceedings and interim financing charges as well as the potential to disclaim or assign contracts, that can facilitate the restructuring of a company in financial distress.
- The CCAA can be accessed by a qualifying “debtor company”, which is broadly defined and has in the past been found to include various non-profit organizations and charities. The Laurentian University CCAA filing confirmed that universities may also be considered “debtor companies” and have access to the CCAA.
- In materials filed by Laurentian University in its CCAA proceedings, Laurentian described its various financial challenges. The steps taken in the Laurentian University CCAA proceedings to date demonstrate how the CCAA process and tools can be used to help to address issues that affect the financial viability of a debtor company and reflect the flexibility of the CCAA process to address the unique circumstances of each case.
- Labour and employment issues are often central to a CCAA restructuring, particularly when dealing with a debtor company such as Laurentian University. The CCAA reflects underlying policy choices relating to labour and employment issues, including that the general disclaimer regime in the CCAA does not apply to collective agreements.
- The Laurentian University CCAA filing has impacted the education sector and raised questions from various stakeholders, including whether it is appropriate to employ the CCAA in the education sector. It is useful to understand the CCAA and its underlying purpose when considering this question. It is also useful to consider the alternatives for a university facing financial challenges if it did not have access to the CCAA and its powerful tools to assist in restructuring and avoiding a liquidation. Such discussions also include considering whether increased government intervention would be a positive development in the education sector as well as the role of university governance more generally.