The Expanded Use Of The CBCA In Debt Restructurings

I. — INTRODUCTION

Section 192, the plan of arrangement provision in the Canada Business Corporations Act (CBCA),¹ is an increasingly popular means of facilitating corporate debt restructurings and recapitalizations. The attraction to the CBCA is in part due to the flexible interpretation ascribed to section 192 and the broad discretion granted to courts thereunder, which has allowed stressed and distressed companies to effect significant debt restructurings outside of insolvency statutes. While this was likely not the initial intention of the CBCA arrangement provision, it has now become a common occurrence. And, within these debt restructurings, companies are incorporating novel insolvency-type relief and utilizing the provisions in circumstances previously thought to be reserved for insolvency statutes.