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ARTICLE · 18 AUGUST 2026

Take Or Pay, Disclaim Or Stay: Alberta Clarifies Eligible Financial Contract Boundaries

Blake, Cassels & Graydon LLP
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Blake, Cassels & Graydon LLP

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When is a physical supply contract an eligible financial contract that cannot be disclaimed in CCAA proceedings? The Alberta Court of King's Bench provides detailed guidance on this recurring question for commodity suppliers, lenders and restructuring professionals, expressly disagreeing with earlier authority in a landmark decision involving natural gas supply agreements in Colombia.

GlobalInsolvency/Bankruptcy/Re-Structuring
Kelly Bourassa
Kelly Bourassa
Angad Bedi
Angad Bedi
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Eligible financial contracts (EFCs) cannot be disclaimed in proceedings under the Companies’ Creditors Arrangement Act (CCAA). For commodity suppliers, lenders and restructuring professionals, this raises a recurring question: when is a physical supply contract an EFC? No appellate court has yet interpreted the Eligible Financial Contract Regulations, enacted in 2007. In Canacol Energy Ltd (Re), Justice Feasby of the Court of King’s Bench of Alberta provided detailed guidance and expressly disagreed with earlier authority.

Background

Canacol Energy Ltd. and its subsidiaries (collectively, the Canacol Group) are in the business of exploration and development of natural gas in Colombia. They obtained relief under the CCAA after declining gas production left them unable to meet delivery obligations, resulting in charges for unutilized transportation capacity and penalties for non-delivery. The CCAA proceedings have been recognized in both the United States and Colombia.

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