The conventional view of the difference between CCAA and BIA restruc-turing proceedings is that the former has a much higher degree of court involvement and a greater degree of judicial discretion or "flexibility." The BIA is characterized as being more rule-driven and correspondingly less able to be adapted in larger and more complex restructurings. This view will likely need to be modified in light of the legislative amendments that have been made to both regimes.
The amendments to the commercial proposal provisions of the BIA give the courts the same kinds of powers as those that have been available to the courts under the CCAA. These include:
· the power to authorize DIP financing and to create charges securing such loans ranking in priority over secured creditors;52· the power to authorize the creation of a directors’ and officers’ charge ranking in priority over secured creditors;53· the power to authorize the creation of an administrative charge ranking in priority over secured creditors;54· the power to review the disclaimer of contracts by the debtor;55· the power to authorize the assignment of contracts;56· the power to authorize the sale of assets outside the ordinary course of business of the debtor;57and
· the power to impose a stay of proceedings in respect of regulatory proceedings.58In addition to these new powers, the court in BIA restructuring proceedings continues to exercise a critical role in granting extensions in time,59terminating proceedings,60lifting the stay,61and approving the proposal after creditors have approved it.62Because of these changes, the court will exercise a role that is much closer to that being undertaken by courts in CCAA proceedings. Therefore, the discussion of the court’s role that has developed largely under CCAA jurisprudence should, in principle, be applicable to bankruptcy courts in the exercise of their new powers in BIA restructuring proceedings.
A court that supervises restructuring proceedings undertakes a role that is significantly different from that exercised in ordinary commercial litigation. Commercial litigation looks backward into the past whereas litigation in restructuring proceedings involves a review of proposed transactions and ongoing conduct. Justice Farley has described the former as "autopsy litigation" and the latter as "real time litigation."63
There are a number of different aspects to the courts’ supervisory role in restructuring proceedings. The first element concerns judicial case management of the restructuring proceedings. The litigation is iterative and cannot be separated into discrete parcels that can be decided by different judges. It is therefore important that the same supervising judge be involved in the various court applications. The complexities and the time constraints are such that it would be highly inefficient to have a succession of different judges involved in the restructuring. However, the case management approach is not simply driven by considerations of judicial economy. The supervising judge must be familiar with the immediate past history and future trajectory of the proceedings in order to assess the progress that is being made and to identify the source of difficulties if there is a lack of progress or loss of momentum.
The second element involves judicial specialization. In some jurisdictions, such as Ontario and Quebec, this is achieved on a formal and
institutionalized basis through the use of a Commercial List. In others such, as British Columbia and Alberta, it is achieved on an informal basis by assigning supervision of restructuring proceedings to judges who have had past experience in these kinds of proceedings.
The third element involves timing and access to the court. Since the litigation generally involves the review of proposed transactions or directions on a host of interim matters, there is a pronounced need for speedy access to the courts. Significant delay on time-sensitive matters threatens the success of the restructuring. Supervising courts have introduced case management approaches that provide speedy access to courts.
The fourth element involves the use of negotiation and dispute resolution as an integral part of the judicial role. Justice Farley has described this as involving an adherence to the "3Cs" of communication, cooperation, and common sense. It is characterized in part by a reluctance to permit the restructuring proceedings to be sidetracked by procedural wrangling...