On January 31, 2018, the Supreme Court of Canada (the
"SCC") released its much anticipated
decision, Orphan Well Association v. Grant Thornton Ltd., 2019
SCC 5 (the "Redwater Decision").
The SCC, in a 5-2 split decision, concluded that provincial
end-of-life environmental abandonment and reclamation obligations,
that are not claims provable in bankruptcy, must be satisfied by
the bankrupt estate notwithstanding the impact that may have on
secured creditor recovery in an insolvency proceeding.
While this decision rests in part on the provincial oil and gas
well licensing framework, it takes a broader view of what has been
called the "untidy intersection"1 of
environmental and insolvency law, which view will not likely be
confined to the oil and gas regulatory regime. The majority held
"Bankruptcy is not a licence to ignore rules" while the
minority commented that the majority decision would effectively
displace "the 'polluter pays' principle enacted by
Parliament in
