The Companies' Creditors Arrangement Act[1] (CCAA; French: Loi sur les arrangements avec les créanciers des compagnies) is a statute of the Parliament of Canada that allows insolvent corporations owing their creditors in excess of $5 million to restructure their businesses and financial affairs.
Almost inevitably liquidation destroyed the shareholders' investment, yielded little by way of recovery to the creditors, and exacerbated the social evil of devastating levels of unemployment.
Recent legislative amendments of the BIA and CCAA have served to harmonize key aspects, such as the use of single proceedings, a common priority of claims structure, and encouraging reorganization over liquidation.
The legislation is remedial in the purest sense in that it provides a means whereby the devastating social and economic effects of bankruptcy or creditor initiated termination of ongoing business operations can be avoided while a court-supervised attempt to reorganize the financial affairs of the debtor company is made.This is noted together with s. 11 of the CCAA, which states that a court may, "subject to the restrictions set out in this Act, .
In the case at bar, the order fostered a harmonious transition between reorganization and liquidation while meeting the objective of a single collective proceeding that is common to both statutes.The scope of the CCAA is quite broad.
These provisions extend beyond being used only within restructuring plans,[11] and the courts have held that there is "no reason…why the same analysis cannot apply during a sale process that requires the business to be carried as a going concern",[12] In that regard:[13] Negotiated compromises and arrangements may deal with any matter, including claims against directors and amendments to the articles of incorporation or letters patent incorporating the company.
[30] Where a petition for CCAA relief appears to be more like a defensive tactic than a bona fide attempt to restructure, it may prefer to order receivership instead.
[4]This has allowed for very creative applications for resolving difficult scenarios, including: In order to assure that the company's operations will continue during the proceedings, the court has the power to declare that the assets of the company are subject to a security or charge with respect to certain matters, and may further order that such charges rank ahead of those of secured creditors.