Simon's Megalomaniacal Legal Resources

Insolvency - BIA - 'Claim Provable in Bankruptcy'

. Bilodeau v. Her Majesty The Queen in the Right of Ontario

In Bilodeau v. Her Majesty The Queen in the Right of Ontario (Div Ct, 2022) the Divisional Court considered the nature of a 'claim provable in bankruptcy' under the BIA (and the CCAA), in the context of an environmental duty:

[71] In Newfoundland and Labrador v. AbitibiBowater Inc., 2012 SCC 67, [2012] 3 S.C.R. 443 the Supreme Court of Canada established a three part test for determining whether a regulatory order is a “provable claim”. Specifically,

(a) First, there must be a debt, a liability or an obligation to a creditor.

(b) Second, the debt or obligation must have been incurred before the debtor becomes bankrupt.

(c) Third, it must be possible to attach a monetary value to the debt, liability or obligation.

[72] In 2019 the Supreme Court expanded upon the above test in Orphan Well Association v. Grant Thornton Ltd., 2019 SCC 5, [2019] 1 S.C.R. 150 (also known as the Redwater case).

....

[74] In Redwater the Supreme Court expanded upon the third part of the AbitibiBowater test by recognizing that there are situations where an environmental duty “will ripen into a financial liability owed to a regulator”. In those situations, if the regulator is found to be a creditor, its claim against the bankrupt may be a “provable claim” even if the order itself does not include a monetary amount. As put by the Supreme Court at para. 140:

What a court must determine is whether there are sufficient facts indicating the existence of an environmental duty that will ripen into a financial liability owed to a regulator. In determining whether a non-monetary regulatory obligation of a bankrupt is too remote or too speculative to be included in the bankruptcy proceeding, the court must apply the general rules that apply to future or contingent claims. It must be sufficiently certain that the contingency will come to pass – in other words, that the regulator will enforce the obligation by performing the environmental work and seeking reimbursement.