Conclusion

Twenty years after the introduction of section 11.01, it is clear this provision has failed to live up to the promise of Quintette. Section 11.01 has effectively been replaced by a model order regime. Neither adequately serve a debtors’ post-filing counterparties.

U.S. Steel and Essar Steel Algoma are merely the bellwether of these issues. Creative debtors and their counsel will continue to look for more post-filing obligations to stay. The standard imposed by the courts for this stay is so low as to almost be negligible. Debtors need only prove that they are suffering from a lack of liquidity that could be ameliorated by staying municipal taxes, or related party payments or whatever other payment is next proposed. But by their nature debtors almost always suffer from a lack of liquidity. And there seems to be little regard to the prejudice to the counterparties themselves. In Essar Steel Algoma, the ceased municipal taxes and related party payment would cut off