24 | LEXPERT • December 2016 | www.lexpert.ca
INSOLVENCY
ARE TRADITIONAL CANADIAN financial institutions displaying more patience
with companies in financial straits? It depends who you're talking to. "Many traditional banks
… are hoping that things get better and holding on," says Jane Dietrich of Cassels Brock &
Blackwell LLP in Toronto. "People are also starting to understand how expensive Companies'
Creditors Arrangement Act [CCCA] proceedings are, so they're trying to address insolvency
issues by other means, including internal corporate reorganizations."
So much so that pre-litigation counsel is becoming a staple of insolvency and restructuring
practice. "Pre-litigation matters — often corporate-type banking work where companies have
to deal with their balance sheet, renegotiate bonds and long-term debt, or raise equity — are
often becoming the biggest part of a case," says Kenneth Lenz of Bennett Jones LLP in Calgary.
"That's legal work that is not publicly visible until the press release is issued."
Canadian lenders, it seems, are getting downright creative in some cases. "I'm currently deal-
ing with a case where the lender is doing some things like taking back equity, which is some-
thing you might have expected from a US lender, but never a Canadian lender," Lenz says.
Still, the leash may be getting shorter, especially in the oil and gas sector. "Once oil got to $50,
some lenders who didn't want to force the issue at $30 have developed a fear of the price drop-
ping again, and have become more aggressive," Lenz says. Evidence that this is happening can
be found in the courts. "Judges are telling us that the insolvency lists are fully booked, that there
are lots of last-minute filings and applications, and that they're seeing four or five briefs a day."
Sandra Abitan of Osler, Hoskin & Harcourt LLP in Montréal is also expecting more tradi-
tional activity on the insolvency and restructuring fronts. "Companies have been selling assets,
avoiding fire sales and keeping the lights on, but they may not be able to continue that for much
longer," she says.
Cross-border recognition
proceedings have become a staple
for the insolvency Bar. North
of the border, meanwhile,
a controversial ruling
has taken pressure off
distressed energy developers
by Julius Melnitzer
PHOTO:
SHUTTERSTOCK
AND DISTRESSED ENERGY
RECOGNITION
