Debtor In-Possession Financing: The Dark Lending Hole

Article by I. Berl Nadler and Karine De Champlain

INTRODUCTION

The two principal Canadian restructuring statutes are the Bankruptcy and Insolvency Act¹ (the "BIA") and the Companies’ Creditors Arrangement Act² (the "CCAA"). The CCAA, which will be the focus of this article, was originally enacted by Parliament in 1932- 33 in the midst of the Great Depression, with the intention of providing an alternative to the liquidation of companies in financial difficulty and providing a structured environment for the negotiation of compromises between a company and its creditors.

The CCAA fell into significant disuse between the years of the Great Depression and the 1980s when it was revived for use in a modern setting. One of the challenges presented in the adaptation of the CCAA for modern purposes was the absence of any express provisions therein for the financing of restructuring expenses. Accordingly, applicants who filed under the CCAA found it necessary to set aside significant "war