SCC Decision Opens Doors To Litigation Funding In Insolvency Proceedings

On January 23, 2020, the Supreme Court of Canada unanimously allowed the appeal from the Québec Court of Appeal's decision in 9354-9186 Québec Inc. et al. v. Callidus Capital Corporation, et al., opening the doors to third-party litigation funding in insolvency proceedings in Canada.

Background

The appeal concerned insolvent entity  Bluberi's attempt to fund a $200-million lawsuit against its secured creditor, Callidus Capital Corporation (Callidus), in a Companies' Creditors Arrangement Act (CCAA) proceeding. At issue was whether a CCAA debtor, whose only asset was a litigation claim against Callidus, was required to obtain creditor approval for the litigation funding as part of a plan of arrangement to be filed in Bluberi's CCAA proceedings.