SemCanada Crude Co. et al., Re, (2009) 457 A.R. 225 (CA)

• Judge: Rowbotham, J.A.
• Court: Court of Appeal (Alberta)
• Case Date: June 23, 2009
• Citations: (2009), 457 A.R. 225 (CA);2009 ABCA 244

SemCan. Crude Co., Re (2009), 457 A.R. 225 (CA);

      457 W.A.C. 225

MLB headnote and full text

Temp. Cite: [2009] A.R. TBEd. JL.011

In The Matter Of the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, as Amended;

And In The Matter Of a Plan of Compromise or Arrangement of SemCanada Crude Company, SemCAMS ULC, SemCanada Energy Company, A.E. Sharp Ltd., CEG Energy Options, Inc., 3191278 Nova Scotia Company and 1380331 Alberta ULC.

ARC Resources Ltd., City of Medicine Hat, Avenir Trading Corp., Wolf Coulee Resources Inc., Profound Energy Inc., Orleans Energy Ltd., Daylight Energy Ltd., Trilogy Energy, Nexen Marketing, EPCOR Merchant and Capital, L.P., and Enterra Energy Trust (applicants) v. SemCanada Crude Company, SemCAMS ULC, SemCanada Energy Company, A.E. Sharp Ltd., GEG Energy Options, Inc., 3191278 Nova Scotia Company, and 1380331 Alberta ULC (respondents) v. Bank of America, N.A. (respondents)

(0901-0063-AC; 2009 ABCA 244)

Indexed As: SemCanada Crude Co. et al., Re

Alberta Court of Appeal

Rowbotham, J.A.

June 29, 2009.

Summary:

Debtors who were granted protection under the Companies' Creditors Arrangement Act (the CCAA debtors) had provided a guarantee in favour of the Bank of America (the Agent) and other lenders. The CCAA debtors brought an application to authorize an interim distribution to the Agent. The applicants, unsecured creditors of the CCAA debtors, opposed the interim distribution. The chambers judge rejected the applicants' argument. The applicants sought leave to appeal pursuant to ss. 13 and 14 of the CCAA from the portion of the chambers judge's reasons which determined that: (i) s. 2(f) of the guarantee did not limit the liability of each individual guarantor to its net asset value on certain relevant dates; and (ii) there was no reason arising from s. 2(f) of the guarantee to require further financial information from the CCAA debtors.

The Alberta Court of Appeal, per Rowbotham, J.A., denied leave to appeal.

Creditors and Debtors - Topic 8599

Debtors' relief legislation - Companies' creditors arrangement legislation - Appeals (incl. leave to appeal) - Debtors who were granted protection under the Companies' Creditors Arrangement Act (the CCAA debtors) had provided a guarantee in favour of the Bank of America (the Agent) and other lenders - The CCAA debtors brought an application to authorize an interim distribution to the Agent - The applicants, unsecured creditors of the CCAA debtors, opposed the interim distribution - The chambers judge rejected the applicants' argument - The applicants sought leave to appeal pursuant to ss. 13 and 14 of the CCAA from the portion of the chambers judge's reasons which determined that: (i) s. 2(f) of the guarantee did not limit the liability of each individual guarantor to its net asset value on certain relevant dates; and (ii) there was no reason arising from s. 2(f) of the guarantee to require further financial information from the CCAA debtors - The Alberta Court of Appeal, per Rowbotham, J.A., denied leave to appeal - The points raised in the appeal were not of significance to the practice - The chambers judge considered the interpretation of one provision in a guarantee - She concluded that the provision was designed to address an issue in American law relating to the inability of a corporation to grant a guarantee if it caused the guarantor to become insolvent - She noted that while historically there had been similar insolvency tests in Canadian corporate law, these provisions had been repealed, and the same issue did not exist under current Canadian law - She also considered and rejected the applicants' arguments which related to issues of the interpretation of the guarantee and its related agreements - They were not of such significance to the insolvency practice so as to warrant leave - Moreover, the ultimate decision (whether the CCAA debtors were required to provide further financial information or respond to undertakings given at a cross-examination) was entitled to deference and should only be interfered with in clear cases - See paragraphs 9 to 11.

Practice - Topic 8983

Appeals - When appeal available - From reasons for judgment - [See Practice - Topic 8984 ].

Practice - Topic 8984

Appeals - When appeal available - From final judgment or order - Debtors who were granted protection under the Companies' Creditors Arrangement Act (the CCAA debtors) had provided a guarantee in favour of the Bank of America (the Agent) and other lenders - The CCAA debtors brought an application to authorize an interim distribution to the Agent - The applicants, unsecured creditors of the CCAA debtors, opposed the interim distribution - The chambers judge rejected the applicants' argument - The applicants sought leave to appeal pursuant to ss. 13 and 14 of the CCAA from the portion of the chambers judge's reasons which determined that: (i) s. 2(f) of the guarantee did not limit the liability of each individual guarantor to its net asset value on certain relevant dates; and (ii) there was no reason arising from s. 2(f) of the guarantee to require further financial information from the CCAA debtors - The Alberta Court of Appeal, per Rowbotham, J.A., stated that "The notice of motion which seeks leave to appeal from 'reasons' was filed without the benefit of the formal order. Paragraph 2 of the order arose as a result of the chambers judge's decision regarding s. 2(f) of the guarantee. Given her conclusion as to the interpretation of s. 2(f) of the guarantee, there was no need for the CCAA debtors to provide the further financial information. Accordingly, I conclude that this is an application for leave to appeal her order, and not simply an attempt to appeal the reasons, and this court has jurisdiction to hear the application" - See paragraphs 7 to 8.

Cases Noticed:

Bearcat Exploration Ltd. (Bankrupt), Re (2003), 339 A.R. 376; 312 W.A.C. 376; 2003 ABCA 365, refd to. [para. 7].

Belland v. Belland, [2008] A.R. Uned. 221; 2008 ABCA 309, refd to. [para. 7].

Multitech Warehouse Direct Inc., Re (1995), 32 Alta. L.R.(3d) 62 (C.A.), refd to. [para. 9].

Liberty Oil & Gas Ltd., Re, [2003] A.R. Uned. 179; 44 C.B.R.(4th) 96; 2003 ABCA 158, refd to. [para. 9].

Canadian Airlines Corp., Re (2000), 261 A.R. 120; 225 W.A.C. 120; 2000 ABCA 149, refd to. [para. 9].

Luscar Ltd. et al. v. Smoky River Coal Ltd. et al. (1999), 237 A.R. 83; 197 W.A.C. 83; 86 A.C.W.S.(3d) 476, 1999 ABCA 62, refd to. [para. 9].

Canadian Airlines Corp., Re (2000), 266 A.R. 131; 228 W.A.C. 131; 2000 ABCA 238, refd to. [para. 9].

Kenroc Building Materials Co. v. Kerr Interior Systems Ltd. et al., [2008] A.R. Uned. 138; 2008 ABCA 291, refd to. [para. 10].

Kerr Interior Systems Ltd, Re - see Kenroc Building Materials Co. v. Kerr Interior Systems Ltd. et al.

Smoky River Coal Ltd. et al., Re (1999), 237 A.R. 326; 197 W.A.C. 326; 175 D.L.R.(4th) 703; 1999 ABCA 179 (C.A.), refd to. [para. 11].

Counsel:

T.A. Batty, for the applicant, ARC Resources et al.;

R.J. Kennedy, for the applicant, Nexen Marketing et al.;

A.R. Anderson, Q.C., and D. Schweitzer, for the respondent, SemCanada Crude Company et al.;

P.F.C. Howard, for the respondent, Bank of America, N.A.

This application for leave to appeal was heard on June 23, 2009, before Rowbotham, J.A., of the Alberta Court of Appeal, who filed the following reasons for decision on June 29, 2009.