Catch and Release: Class Actions and Solvent Third Parties Under the Ccaa

• Author: Lauren Pearce
• Pages: 171-199

171

CATCH AND RELEASE: CLASS

ACTIONS AND SOLVENT THIRD

PARTIES UNDER THE

CCA A

Lauren Pearce

Abstract: Solvent parties, other than the debtor company, are

increasingly being released from liability for legitimate class

claims against them pursuant to restructuring arrangements

under the Companies’ Creditors Arrangement Act (CCAA). This

paper considers a number of the imp ortant policy issues rais ed

by third party releases, part icularly where they purport to

foreclose or settle tenable class act ions. The fact that CCAA

releases f‌inally determine liability on a non-opt-out basis,

coupled with the remedial purpose of the CCA A in facilitat-

ing swift and effective corporate restructurings, suggest that

class action defendant s will be strongly incentivized to have

the claims against them resolved in thi s manner. Third party

releases are clearly here to stay.

While the settlement and release of class claims under

the CCA A may disproportionately benef‌it parties who are or

may become class action defendants, plaintiffs’ counsel can

and should use this process to strategically leverage larger,

faster settlements for the classes they represent. This paper

offers specif‌ic, practic al lessons for plaintiffs’ counsel s eeking

to realize favourable outcomes under t he CCAA. To the extent

class counsel are able to swiftly and inexpensively negotiate

fair and meani ngful class settlements within the ambit of the

CCAA , the important objectives of access to justice, judicial

economy, and behaviour modif‌ication will continue to be

served.

ccar 11-2.indb 171 3/8/2016 2:27:20 PM

ccar 11-2.indb 172 3/8/2016 2:27:20 PM