Monitor under the Companies' Creditors Arrangement Act (CCAA)
Monitor under the Companies' Creditors Arrangement Act (CCAA)
Monitor under the Companies' Creditors Arrangement Act (CCAA)
- The CCAA is a Federal Statute that is available to design and implement the restructuring of a qualifying corporation, under the supervision of the Court. This Court-driven restructuring process is led by a Monitor (who must be a Licensed Insolvency Trustee). It is usually instigated by the debtor but can be instigated by a secured creditor. Frequently used on large construction projects including multi-family residences. Needs at least $5 million in debts of a company or group of companies.
- We act as a Monitor to assist Companies operating under the protection of this statute to reorganize their affairs and implement a suitable plan of arrangement with their creditors.
- The CCAA can be applied by a debtor corporation or by its creditor(s) and features a stay of proceedings and features wide discretion of the court to approve proposed courses of action during the restructuring process.
- Debtor company usually continues to operate with same management, with the Monitor in a supervisory role such as co-signing cheques and approving expenditures.
- If a Debtor's management team is not cooperative, the Monitor can be granted expanded powers similar to those of a Receiver and Manager. The Monitor can be granted Conduct of Sale to sell the property/assets. Court has significant flexibility in what it can order.
- "Debtor in Possession Financing" (DIP) - emergency financing that allows the debtor company to continues operations, that is given priority to pre-existing secured creditors.
- Can be useful in dealing with builders' liens, particularly if significant; Court can give DIP financing and mortgages a priority over existing builders' liens. Can also give priority to Monitor's Borrowings.
- CCAA proceedings can be useful in dealing with issues such as builders' liens and preserve pre-sale real estate contracts.
