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ARTICLE · 29 SEPTEMBER 2016

Replacing An Insolvent Operator – Court Upholds Capl "Immediate Replacement" Right

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In Bank of Montreal v Bumper Development Corporation Ltd, 2016 ABQB 363, the Alberta Court of Queen's Bench enforced the "immediate replacement" provision in the Canadian Association of Petroleum Landmen 2007 Operating Procedure...

CanadaEnergy and Natural Resources
Matti Lemmens
Matti Lemmens
Steven Bodi
Steven Bodi
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In Bank of Montreal v Bumper Development Corporation Ltd, 2016 ABQB 363 ("Bumper"), the Alberta Court of Queen's Bench enforced the "immediate replacement" provision in the Canadian Association of Petroleum Landmen ("CAPL") 2007 Operating Procedure ("CAPL 2007") for an insolvent operator. This provision provides for immediate replacement of an operator upon the occurrence of certain specified events, including the commencement of insolvency proceedings. Notably, the Court enforced this right notwithstanding the fact that the non-operating party did not act immediately to enforce its rights and prevented conveyance of operatorship with the sale of the operator's assets. Further, the Court acknowledged it would have lifted the stay of proceedings against the insolvent operator to allow the non-operating partner to replace the insolvent operator.

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