Restructuring proceedings under the CCAA are commenced through an application to a court for an initial order.19The application may be made to a court in the province within which the company has its head office or chief place of business.20If the company has neither, then the application may be made in the province within which any of the assets of the company are situated.21Although the statute does not require that the debtor company bring the application,22it is nearly always the case that the debtor company will initiate the proceedings.
An application for an initial order under the CCAA can be made on an ex parte basis.23This may be useful if there is a real prospect that creditors will attempt to exercise their enforcement remedies against the debtor’s assets before the court hears the matter. Sometimes the initial application is made only with notice to the major creditors if it is impracticable to identify and notify all the creditors.24A projected cash-flow statement and copies of financial statements prepared in the prior year must be submitted with an application for an initial order.25
The initial application will usually request an order that does the following things:
· abridges service of notice of the application;
· declares the debtor company to be one to which the CCAA applies;
· authorizes the debtor company to continue its business operations and continue in possession of its property;
· stays proceedings against the debtor company;
· appoints a monitor;
· authorizes the debtor company to obtain interim financing (DIP financing);
· requires the debtor company to indemnify its directors and officers for any liability that they incur following the date of the initial order;
· creates charges against the property that secure the administrative expenses, the interim financing, and the indemnification of directors and officers, and that gives the charges priority over all other security interests and encumbrances;
· authorizes the debtor company to file a plan of arrangement; and
· permits interested parties to apply to the court for variation or amendment of the order (a "comeback" clause).
The stay of proceedings provided for in the initial order cannot exceed thirty days. The applicant will therefore need to bring a subsequent application before the court for a stay of proceedings of a longer duration.26This permits parties affected by the initial order to have an opportunity to express their views concerning the eligibility of the debtor or the appropriateness of the order. The monitor must notify every known creditor who has a claim of more than $1,000 against the company and advise them of the order.27
There are two routes through which restructuring proceedings under the BIA can be initiated. Unlike the CCAA, neither route requires the...