Wearing The Mantle Of Environmental Obligations: Implications For Secured Lenders In Canada

INTRODUCTION

In a recent case involving Mantle Materials Group, Ltd. (2023 ABKB 488, "Mantle")¹, the intersection of environmental obligations and insolvency law in Canada has again come into sharp focus. It is the latest iteration of Alberta cases where the Court of King's Bench of Alberta has ruled that equipment assets of an insolvent company – Mantle Materials Group – are part of the debtor's assets for purposes of fulfilling provincial environmental obligations (in this case gravel operations over which there are environmental protection orders) in priority to secured lender recovery. This case raised unique arguments about the category of assets involved and how assets with no environmental obligations should be treated in the evolving priority debate of secured lenders and provincial environmental obligations. For further commentary on this topic, please see our previous article relating to an ongoing appeal in Qualex-Landmark Towers Inc v 12-10 Capital Corp