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ARTICLE · 02 DECEMBER 2013

Lift Stay Motion More Likely To Succeed In A Liquidating CCAA

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In a recent decision, the Court of Queen's Bench of Manitoba considered when a stay of proceedings under the Companies' Creditors Arrangement Act ("CCAA") should be lifted to allow parties to bring claims against an insolvent company outside of the CCAA proceeding.

CanadaLitigation, Mediation & Arbitration
Jeffrey Levine
Jeffrey Levine
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Co-author: Stephen Brown-Okruhlik, student at law

In a recent decision, the Court of Queen's Bench of Manitoba considered when a stay of proceedings under the Companies' Creditors Arrangement Act ("CCAA") should be lifted to allow parties to bring claims against an insolvent company outside of the CCAA proceeding.1 The case provides new guidance to litigants as to when it is appropriate to lift the stay. It also serves as a reminder that special considerations may apply to companies doing business while insolvent and when restructuring proceedings are contemplated.

The Facts

Puratone ran a commercial hog production business. It sought protection under the CCAA and the initial order included standard stay provisions, including a stay of existing proceedings as well as further actions against the company without leave of the court. Also, actions against directors and officers for existing claims could not be commenced or continued until a compromise

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