Yukon Zinc: Reining In The Ability To Disclaim Contracts And Priority For Environmental Liabilities

We previously discussed the Court's decision in Yukon (Government of) v Yukon Zinc Corporation, 2020 YKSC 16, which opened the door to partial termination of agreements in a receivership, an action generally considered to not be permitted in the past. The effect of which on the facts before the Court, was to provide the receiver with access to certain equipment for the purpose of carrying out environmental reclamation at a zinc-silver-lead mine known as the Wolverine Mine at a cost less than required under the lease agreement.

On March 5, 2021, the Court of Appeal issued a unanimous decision overturning the decision permitting the partial termination and made other findings which have provided some clarity regarding the priority of environmental obligations in a receivership.