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You snooze, you lose: court refuses to unwind improperly approved arrangement post-closing

A recent decision, Taiga Gold Corp. v. Munday,[1] provides a harsh warning for anyone seeking to challenge a plan of arrangement: it will be very difficult to unwind a transaction that has closed — even if it should never have been approved by the court in the first place. 


In late 2021, Taiga Gold Corp. (“Taiga”) sought court approval of a plan of arrangement by which SGO Mining Inc. would acquire all of the outstanding shares, warrants, and options of Taiga. As is typically the case for plans of arrangement under Canadian corporate statutes, Taiga obtained an interim order from the Court specifying terms for, among other things, the calling of a special meeting of its shareholders and their voting on the proposed arrangement.

Warrant holders not allowed a vote 

Taiga’s warrant holders opposed the arrangement and contested the “fairness hearing” where Taiga sought a final order approving the plan of arrangement. They argued that the arrangement should not be approved because a meeting of warrant holders was not held, contrary to the Alberta Business Corporations Act (“ABCA”).

The Alberta Court of King’s Bench agreed that the ABCA required a meeting of warrant holders to be held because their legal rights were affected by the proposed arrangement. But the Court held that the arrangement could still be approved because the warrant holder vote would not have changed the outcome at any meeting: even if all the warrant holders voted against the arrangement, there would have been more than enough shareholder support. As such, the Court determined that Taiga’s failure to call a meeting of warrant holders did not preclude the Court’s approval of the arrangement, which was fair and reasonable.

The transaction closed.

Post-closing litigation

The warrant holders appealed and argued that the lower court judge should not have approved the arrangement. The Alberta Court of Appeal agreed, holding that because the warrant holders’ legal rights would be affected by the arrangement, the ABCA required the holding of a meeting of warrant holders. The lower court judge had no authority to approve the arrangement without such a meeting. Even if the vote was a foregone conclusion, the Court of Appeal noted that the “democratic process was enshrined in the statute”[2] — the warrant holders were entitled to a meeting and a vote, no matter the likely outcome.

Since the transaction had closed, the warrant holders sought two remedies: (1) dissent rights to be paid the full value of their warrants, or (2) the right to sue the new amalgamated company (which was precluded by a term in the arrangement).

The Court of Appeal refused to grant either “exceptional” remedy. It held that it was “far from clear”[3] that the ABCA conferred on the Court the authority to unwind an arrangement which has already closed. The Court also reasoned that it was unwilling to alter the terms of the parties’ agreement (which it viewed as substantively fair and reasonable) after the transaction had already closed. As the Court explained:

[40] … We also have no way of determining whether the transaction would have proceeded had either of the requested changes been made prior to its completion, and we are not willing to change terms that may have been critical to the agreement.

[41] If the appellants had wanted to preserve their ability to receive an effective remedy on appeal, it would have been wise to apply to the chambers judge or a justice of this Court for a stay pending appeal, regardless of the tight timelines involved.

[42] Although there was an error in approving the arrangement, the transaction has been completed. We are unwilling to amend the transaction documents as the appellants requested particularly when, on this record, we share the chambers judge’s view that the proposed arrangement was fair and reasonable.

Key Takeaways

Taiga offers three important lessons for stakeholders affected by proposed plans of arrangement.

First, statutory requirements for proposed arrangements must be faithfully adhered to. Courts have no discretionary authority to approve a proposed arrangement which is not statutorily compliant — regardless of the practical effect of that non-compliance.

Second, an appellate court will not unwind an arrangement approved in error which has already closed. Any effective remedy would require interfering with the bargain underlying the arrangement.

Third, if a stakeholder believes their rights are not adequately provided for in an interim order, they should seek amendments to that order rather than challenging its terms at the fairness hearing. Also, if a stakeholder wants to appeal the court’s approval of a plan of arrangement, they should seek a stay pending an expedited appeal.  

Because many other Canadian corporate statutes, including the Canada Business Corporations Act and the Ontario Business Corporations Act, are similar to ABCA, the Court of Appeal’s reasoning in Taiga should be viewed as broadly applicable across Canada.


[1] Taiga Gold Corp v Munday, 2023 ABCA 12.

[2] Taiga Gold Corp v Munday, 2023 ABCA 12, at para. 28.

[3] Taiga Gold Corp v Munday, 2023 ABCA 12, at para. 40.



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