On January 31, 2019, the Supreme Court of Canada (the
"SCC") rendered its decision in Orphan Well Association v. Grant Thornton
Ltd. (the "Decision").
Contrary to the court of first instance and the majority of the
Court of Appeal of Alberta, the majority of the SCC held that
end-of-life environmental remediation costs mandated by specific
Alberta legislation against a bankrupt oil and gas company must be
satisfied in priority to all claims (including secured claims) made
against the bankrupt.
Whether the Decision will have a chilling effect on financing
within Alberta's oil and gas sector, or other sectors more
broadly, remains to be seen.
Factual Background
Redwater Energy Corporation
("Redwater") was engaged in the
exploration and production of petroleum and natural gas in Western
Canada. Redwater was first granted a licence by the Alberta Energy
Regulator (the "Regulator") in 2009.
Under Alberta legislation, the Regulator can only grant a licence
to
