Warm Reception for Foreign Freezing Orders under the BIA

In Pelletier (Re), 2020 ABQB 540, the Court of Queen’s Bench of Alberta provided guidance on the requirements that must be met for a Canadian court to recognize a freezing order from a foreign jurisdiction. In doing so, Justice Neufeld relied on landmark decisions by the Supreme Court of Canada to recognize a freezing order from the Cayman Islands.


Richard Pelletier (the “Respondent”, and together with Olga Pelletier, the "Respondents”) was subject to a claim arising from the 2014 sale of his and his wholly-owned company’s interests in a construction company, Pacer Construction Holdings Corporation (“Pacer”). In 2019, an arbitral panel awarded approximately $33 million in favour of Pacer, which was converted into a series of ABQB judgments later that year.

The Respondent had taken a series of steps prior to the arbitration panel’s ruling that meant neither he nor his holding company had assets available in Canada for execution. Pacer subsequently petitioned the Grand Court of the Cayman Islands (the “Cayman Court”) to find the Respondent bankrupt. Pacer brought a similar application against the Respondent’s holding company in Alberta.

In November 2019, the Cayman Court granted an Interim Order adjudging the Respondent a bankrupt and ordering his affairs be wound up and his property administered. A Continuation Order was granted in Canada affirming the Interim Order. Also in November 2019, the Alberta Court of Queen’s Bench granted Pacer’s application to have the Respondent’s wholly-owned company placed into bankruptcy. Further, a Supplemental Order was made recognizing two Ancillary Orders of the Cayman Court.

In January 2020, the Cayman Court granted a Freezing Order against the Respondents (“Cayman Freezing Order”). The Cayman Freezing Order prohibits the dissipation of assets in the Cayman Islands and elsewhere up to a value of $20 million (CDN). It further authorized the Trustees to seek similar orders in Singapore and Canada. In March 20, 2020, Justice Kawaley of the Cayman Court granted an Order Absolute (“Cayman Order Absolute”), affirming that the Cayman Islands was the Respondents Centre of Main Interest.

The Agents of the Trustee in Bankruptcy of Richard Paul Joseph Pelletier (the “Applicants”) applied to the ABQB for the recognition  of the Cayman Order Absolute. This Recognition Order was granted as the logical continuation of the previous recognition of the Cayman Proceeding. As part of the broader proceeding, the Applicants also applied to have the Cayman Freezing Order recognized pursuant to s. 272 of the Bankruptcy and Insolvency Act (the “BIA”). This post focuses on the recognition of this freezing order. 

Section 272(1) of the BIA

The Applicants relied on s. 272(1) of the BIA to advance the application, which states:

272(1) If an order recognizing a foreign proceeding is made, the court may, on application by the foreign representative who applied for the order, if the court is satisfied that it is necessary for the protection of the debtor’s property or the interests of a creditor or creditors, make any order that it considers appropriate, including an order…[1] 

Back to First Principles

Justice Neufeld’s analysis begins with two overarching observations. First, he noted that s. 272(1) provides Canadian courts with broad authority to make orders deemed necessary to protect the interests of creditors or the debtor’s property. Second, he found it necessary to work from first principles due to the paucity of case law surrounding s. 272(1) of the BIA.

In Justice Neufeld’s view, the guiding questions for a court when deciding to recognize a foreign order under s. 272 of the BIA are:

  • Whether the order fits within the scheme of the BIA, such that it can be said to fulfill at least one of the statute’s objectives;
  • Whether the order satisfies the requirements of the common law precedent applicable to the enforcement of foreign non-monetary judgments, namely Pro Swing Inc. v Elta Golf Inc., 2006 SCC 52; and
  • In the case of an injunctive order, whether the Court is satisfied that Canadian requirements for injunctive relief as set out in RJR-MacDonald v Canada (AG), [1994] 1 SCR 311 have been met.[2]

Justice Neufeld then applied the principles to the Trustee’s application. He found that the Cayman Freezing Order both falls within the scope of activities permitted under the BIA and is consistent with the scheme and policy framework underlying the statute. He also held that the order falls within the express criteria of s. 272(1).[3]

Justice Neufeld next applied the set of considerations articulated by the Supreme Court of Canada in Pro Swing that must be considered when determining whether to enforce foreign non-monetary judgments. The following must be determined:

  • Are the foreign order’s terms clear and specific?
  • Is the foreign order appropriately limited in scope?
  • Is enforcement of the foreign order the least burdensome remedy in Canada?
  • Would the foreign order expose the Respondent to unforeseen obligations?
  • Would third parties be affected by recognition of the foreign order?
  • Is enforcement of the order consistent with remedies available in domestic Canadian courts?[4]

He found that the first four criteria were satisfied by the Cayman Freezing Order and that the fifth criteria could be satisfied with appropriate conditions.

Justice Neufeld then turned to the final criterion of consistency with available Canadian remedies. As a form of injunctive relief, freezing orders must satisfy the three-part RJR-MacDonald test:

  1. Has the Applicant established a strong prima facie case?
  2. Does the balance of convenience favour granting an injunction?
  3. Will the Applicant suffer irreparable harm if the order is not granted?[5]

Justice Neufeld concluded that the Trustees had established a strong prima facie case. He also found that the balance of convenience favoured granting an injunction once appropriate accommodations were made for the Respondents. Finally, Justice Neufeld found that the Respondents’ conduct to date demonstrated a real risk that the assets would be dissipated through the movement of wealth using sophisticated financial structures. He granted the application on this basis and recognized the Cayman Freezing Order. 


Pelletier (Re) provides guidance on the recognition of foreign freezing orders and has its foundation in well-established case law. Justice Neufeld applied Pro Swing and RJR-MacDonald in tandem to this application, recognizing the non-pecuniary and injunctive qualities of freezing orders. Further, Justice Neufeld made it clear that such orders are well within the scheme of the BIA, which confers broad authority to the courts to recognize foreign orders when doing so will preserve the Respondent’s property and protect creditors’ interests.

McCarthy Tétrault has one of the largest bankruptcy & restructuring groups in Canada, with extensive experience in all areas of the practice. We regularly represent debtors as well as major financial institutions and other capital providers, large corporate creditors and court-appointed monitors, receivers and trustees. Please contact James D. Gage, Walker W. MacLeod, Barbara J. Boake or Heather Meredith if you have any questions or for assistance.

[1] RSC, 1985, c B-3 [BIA].
[2] Pelletier (Re), 2020 ABQB 540 at paras 44 – 47.
[3] Ibid, at para 52.
[4] Ibid, at para 53.
[5] Ibid, at para 62.

Bankruptcy and Insolvency Act freezing order



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