Government Environmental Clean-Up Orders Subject to CCAA Debt Restructuring

Copyright 2010, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on Environmental Law/ Restructuring & Insolvency, April 2010

On March 31, 2010, the Superior Court of Québec (Court), in Re AbitibiBowater Inc., issued an important decision on when a government regulatory order may be treated as a creditor claim in proceedings under the federal Companies' Creditors Arrangement Act (CCAA). The Court ruled that a number of environmental cleanup orders issued by the Government of Newfoundland and Labrador (Newfoundland Government) against a group of Abitibi and Bowater companies (Abitibi) were really claims for the payment of money. As a result, the Court held that the claims were subject to the stay of proceedings that had been issued in Abitibi's CCAA debt restructuring case and subject to being compromised.