The BIA and the CCAA deal only with voting on a plan by creditors, and do not make any provision in respect of shareholders. The CCAA provides that the provisions of the Act may be applied together with the provisions of any federal or provincial legislation that authorizes or makes provisions for the sanction of compromises or arrangements between a company and its shareholders.91The BIA does not contain a comparable provision. Both the CCAA and the BIA provide that a court may order that the constating instrument be amended to reflect any change that can be lawfully made under federal or provincial law.92The restructuring plan may involve a sale of substantially all the assets to a purchaser. The corporate law that governs the debtor corporation may provide that shareholder approval is required before the transaction can be completed. Alternatively, the restructuring plan may involve a change to the articles of incorporation, an amalgamation, or some other fundamental change that requires the approval of the shareholders. The question that arises is whether shareholder approval is needed to implement the restructuring plan.
If shareholder approval is needed, the shareholders will generally be able to receive some consideration or maintain some participation in the restructured corporation as the price for obtaining their consent to the transaction. If shareholder approval is not needed, the restructuring may eliminate their claims on the basis that they are of no economic value. The latter approach is the one that has been embraced by the courts.
Many of the Canadian corporation statutes, such as the Canada Business Corporations Act,93provide that a court may make an order
amending a corporation’s articles of incorporation in connection with a restructuring under the CCAA or the BIA. The legislation further provides that shareholders do not have a right of dissent. This permits a court to cancel the existing shares in respect of the restructured company.94Other corporation statutes do not contain similar provisions, and courts have been called upon to decide whether the provisions of the corporation legislation that require shareholder approval of fundamental changes must be satisfied. In Re Loewen Group Inc.,95 the court held that the provisions of the corporations statute requiring shareholder approval are inapplicable in cases...