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ARTICLE · 14 NOVEMBER 2020

Restructuring Companies Or Restructuring Contracts: Lessons From Chandos Construction Ltd v Deloitte Restructuring Inc.

Burnet, Duckworth & Palmer LLP
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In Chandos Construction Ltd v Deloitte Restructuring Inc., 2020 SCC 25, the Supreme Court of Canada affirmed the common law anti-deprivation rule.

CanadaInsolvency/Bankruptcy/Re-Structuring
David De Groot
David De Groot
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In Chandos Construction Ltd v Deloitte Restructuring Inc., 2020 SCC 25, the Supreme Court of Canada affirmed the common law anti-deprivation rule. This rule prevents parties from agreeing to contractual provisions that, upon insolvency, remove property that would otherwise vest in the trustee of a bankrupt's estate. The Decision from the Supreme Court acts as a reminder to construction contractors of the importance of ensuring their contracts are properly structured.

Background

Chandos Construction Ltd. (Chandos, referred to as Contractor in the Subcontract), the general contractor, entered into a subcontract (the Subcontract) with Capital Steel Inc. (Subcontractor) valued at approximately $1.37M, which contained the following clause:

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