When the claims against an insolvent company include
environmental remediation orders, a clear question of public
priorities arises. Which comes first: the public-interest concern
for environmental protection or the need of a well-regulated
economy to protect the interests of lenders?
In two recent cases, lenders' interests won out over
remediation orders issued by provincial regulators, but with a
caveat.
Abitibi
In AbitibiBowater, the Province of Newfoundland and
Labrador argued that its remediation orders on five properties were
non-monetary in nature and therefore could not be stayed by the
court overseeing the insolvency or relegated to the status of
unsecured debts, subject to compromise under the insolvency
process. The Supreme Court of Canada disagreed. The court
articulated a three-part test to determine whether regulatory
orders constitute monetary claims subject to compromise:
