Bill C-5

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R.S., c. C-36; R.S., c. 27 (2nd Supp.); 1990, c. 17; 1992, c. 27; 1993, cc. 28, 34	COMPANIES' CREDITORS ARRANGEMENT ACT
1993, c. 34, s. 52	*120. The definition ``company'' in section 2 of the English version of the Companies' Creditors Arrangement Act* is replaced by the following:**
``company'' « compagnie »	``company'' means any company, corporation or legal person incorporated by or under an Act of Parliament or of the legislature of any province and any incorporated company having assets or doing business in Canada, wherever incorporated, except banks, railway or telegraph companies, insurance companies and companies to which the Trust and Loan Companies Act applies;
	121. Section 3 of the Act is replaced by the following:
Application	3. This Act applies in respect of a debtor company where the total of claims, within the meaning of section 12, against the debtor company exceeds ten million dollars.
	122. The Act is amended by adding the following after section 5:
Claims against directors - compromise	5.1 (1) A compromise or arrangement made in respect of a debtor company may include in its terms provision for the compromise of claims against directors of the company that arose before the commencement of proceedings under this Act and that relate to the obligations of the company where the directors are by law liable in their capacity as directors for the payment of such obligations.
Exception	(2) A provision for the compromise of claims against directors may not include claims that
	(a) relate to contractual rights of one or more creditors; or
	(b) are based on allegations of misrepresentations made by directors to creditors or of wrongful or oppressive conduct by directors.
Powers of court	(3) The court may declare that a claim against directors shall not be compromised if it is satisfied that the compromise would not be fair and reasonable in the circumstances.
	123. The portion of section 6 of the Act before paragraph (a) is replaced by the following:
Compromises to be sanctioned by court	6. Where a majority in number representing two-thirds in value of the creditors, or class of creditors, as the case may be, present and voting either in person or by proxy at the meeting or meetings thereof respectively held pursuant to sections 4 and 5, or either of those sections, agree to any compromise or arrangement either as proposed or as altered or modified at the meeting or meetings, the compromise or arrangement may be sanctioned by the court, and if so sanctioned is binding
1992, c. 27, para. 90(1)(f)	124. Section 11 of the Act is replaced by the following:
Powers of court	11. (1) Notwithstanding anything in the Bankruptcy and Insolvency Act or the Winding-up Act, where an application is made under this Act in respect of a company, the court, on the application of any person interested in the matter, may, subject to this Act, on notice to any other person or without notice as it may see fit, make an order under this section.
Initial application	(2) An application made for the first time under this section in respect of a company, in this section referred to as an ``initial application'', shall be accompanied by a statement indicating the projected cash flow of the company and copies of all financial statements, audited or unaudited, prepared during the year prior to the application, or where no such statements were prepared in the prior year, a copy of the most recent such statement.
Initial application court orders	(3) A court may, on an initial application in respect of a company, make an order on such terms as it may impose, effective for such period as the court deems necessary not exceeding thirty days,
	(a) staying, until otherwise ordered by the court, all proceedings taken or that might be taken in respect of the company under an Act referred to in subsection (1);
	(b) restraining, until otherwise ordered by the court, further proceedings in any action, suit or proceeding against the company; and
	(c) prohibiting, until otherwise ordered by the court, the commencement of or proceeding with any other action, suit or proceeding against the company.
Other than initial application court orders	(4) A court may, on an application in respect of a company other than an initial application, make an order on such terms as it may impose,
	(a) staying, until otherwise ordered by the court, for such period as the court deems necessary, all proceedings taken or that might be taken in respect of the company under an Act referred to in subsection (1);
	(b) restraining, until otherwise ordered by the court, further proceedings in any action, suit or proceeding against the company; and
	(c) prohibiting, until otherwise ordered by the court, the commencement of or proceeding with any other action, suit or proceeding against the company.
Notice of orders	(5) Except as otherwise ordered by the court, the monitor appointed under section 11.7 shall send a copy of any order made under subsection (3), within ten days after the order is made, to every known creditor who has a claim against the company of more than two hundred and fifty dollars.
Burden of proof on application	(6) The court shall not make an order under subsection (3) or (4) unless
	(a) the applicant satisfies the court that circumstances exist that make such an order appropriate; and
	(b) in the case of an order under subsection (4), the applicant also satisfies the court that
	(i) the applicant has acted, and is acting, in good faith and with due diligence,
	(ii) a viable compromise or arrangement could likely be made in respect of the company if the order being applied for were made, and
	(iii) no creditor would be materially prejudiced if the order being applied for were made.
Definitions	11.1 (1) In this section,
``eligible financial contract'' « contrat financier admissible »	``eligible financial contract'' means
	(a) a currency or interest rate swap agreement,
	(b) a basis swap agreement,
	(c) a spot, future, forward or other foreign exchange agreement,
	(d) a cap, collar or floor transaction,
	(e) a commodity swap,
	(f) a forward rate agreement,
	(g) a repurchase or reverse repurchase agreement,
	(h) a spot, future, forward or other commodity contract,
	(i) an agreement to buy, sell, borrow or lend securities, to clear or settle securities transactions or to act as a depository for securities,
	(j) any derivative, combination or option in respect of, or agreement similar to, an agreement or contract referred to in paragraphs (a) to (i),
	(k) any master agreement in respect of any agreement or contract referred to in paragraphs (a) to (j),
	(l) any master agreement in respect of a master agreement referred to in paragraph (k),
	(m) a guarantee of the liabilities under an agreement or contract referred to in paragraphs (a) to (l), or
	(n) any agreement of a kind prescribed;
``net termination value'' « valeurs nettes dues à la date de résiliation »	``net termination value'' means the net amount obtained after setting off the mutual obligations between the parties to an eligible financial contract in accordance with its provisions.
No stay, etc., in certain cases	(2) No order may be made under this Act staying or restraining the exercise of any right to terminate, amend or claim any accelerated payment under an eligible financial contract or preventing a member of the Canadian Payments Association established by the Canadian Payments Association Act from ceasing to act as a clearing agent or group clearer for a company in accordance with that Act and the by-laws and rules of that Association.
Existing eligible financial contracts	(3) For greater certainty, where an eligible financial contract entered into before an order is made under section 11 is terminated on or after the date of the order, the setting off of obligations between the company and the other parties to the eligible financial contract, in accordance with its provisions, is permitted, and if net termination values determined in accordance with the eligible financial contract are owed by the company to another party to the eligible financial contract, that other party shall be deemed to be a creditor of the company with a claim against the company in respect of the net termination values.
No stay, etc. in certain cases	11.2 No order may be made under section 11 staying or restraining any action, suit or proceeding against a person, other than a debtor company in respect of which an application has been made under this Act, who is obligated under a letter of credit or guarantee in relation to the company.
Effect of order	11.3 No order made under section 11 shall have the effect of
	(a) prohibiting a person from requiring immediate payment for goods, services, use of leased or licensed property or other valuable consideration provided after the order is made; or
	(b) requiring the further advance of money or credit.
Her Majesty affected	11.4 (1) An order made under section 11 may provide that Her Majesty in right of Canada may not exercise rights under subsection 224(1.2) of the Income Tax Act in respect of the company where the company is a tax debtor under that subsection and Her Majesty in right of a province may not exercise rights under provincial legislation substantially similar to that subsection in respect of the company where the company is a tax debtor under the provincial legislation for such period as the court considers appropriate but ending not later than
	(a) the expiration of the order;
	(b) the refusal of a proposed compromise by the creditors or the court;
	(c) six months following the court sanction of a compromise or arrangement;
	(d) the default by the company on any term of a compromise or arrangement; or
	(e) the performance of a compromise or arrangement in respect of the company.
When order ceases to have effect	(2) An order referred to in subsection (1) ceases to be in effect if
	(a) the company defaults on payment of any amount that could be subject to a demand under subsection 224(1.2) of the Income Tax Act or under any substantially similar provincial legislation and that becomes due to Her Majesty after the order is made; or
	(b) any other creditor is or becomes entitled to realize a security on any property that could be claimed by Her Majesty in exercising rights under subsection 224(1.2) of the Income Tax Act or under similar provincial legislation.
Effect on provincial laws	(3) An order made under section 11, other than an order referred to in subsection (1) of this section, does not affect the operation of any provision of provincial legislation that is substantially similar to subsection 224(1.2) of the Income Tax Act.
Stay of proceed- ings - directors	11.5 (1) An order made under section 11 may provide that no person may commence or continue any action against a director of the debtor company on any claim against directors that arose before the commencement of proceedings under this Act and that relates to obligations of the company where directors are under any law liable in their capacity as directors for the payment of such obligations, until a compromise or arrangement in respect of the company, if one is filed, is sanctioned by the court or is refused by the creditors or the court.
Exception	(2) Subsection (1) does not apply in respect of an action against a director on a guarantee given by the director relating to the company's obligations or an action seeking injunctive relief against a director in relation to the company.
Bankruptcy and Insolvency Act matters	11.6 Notwithstanding the Bankruptcy and Insolvency Act,
	(a) proceedings commenced under Part III of the Bankruptcy and Insolvency Act may be taken up and continued under this Act only if a proposal within the meaning of the Bankruptcy and Insolvency Act has not been filed under that Part; and
	(b) an application under this Act by a bankrupt may only be made with the consent of inspectors referred to in section 116 of the Bankruptcy and Insolvency Act but no application may be made under this Act by a bankrupt whose bankruptcy has resulted from
	(i) the operation of subsection 50.4(8) of the Bankruptcy and Insolvency Act, or
	(ii) the refusal or deemed refusal by the creditors or the court, or the annulment, of a proposal under the Bankruptcy and Insolvency Act.
Court to appoint monitor	11.7 (1) When an order is made in respect of a company by the court under section 11, the court shall at the same time appoint a person, in this section and in section 11.8 referred to as ``the monitor'', to monitor the business and financial affairs of the company while the order remains in effect.
Auditor may be monitor	(2) Except as may be otherwise directed by the court, the auditor of the company may be appointed as the monitor.
Functions of monitor	(3) The monitor shall
	(a) for the purposes of monitoring the company's business and financial affairs, have access to and examine the company's property, including the premises, books, records, data, including data in electronic form, and other financial documents of the company to the extent necessary to adequately assess the company's business and financial affairs;
	(b) file a report with the court on the state of the company's business and financial affairs, containing prescribed information,
	(i) forthwith after ascertaining any material adverse change in the company's projected cash-flow or financial circumstances,
	(ii) at least seven days before any meeting of creditors under section 4 or 5, or
	(iii) at such other times as the court may order;
	(c) advise the creditors of the filing of the report referred to in paragraph (b) in any notice of a meeting of creditors referred to in section 4 or 5; and
	(d) carry out such other functions in relation to the company as the court may direct.
Assistance to be provided	(4) The debtor company shall
	(a) provide such assistance to the monitor as is necessary to enable the monitor to adequately carry out the monitor's functions; and
	(b) perform such duties set out in section 158 of the Bankruptcy and Insolvency Act as are appropriate and applicable in the circumstances.
Non-liability in respect of certain matters	11.8 (1) Notwithstanding anything in any federal or provincial law, where a monitor carries on in that position the business of a debtor company or continues the employment of the company's employees, the monitor is not by reason of that fact personally liable in respect of any claim against the company or related to a requirement imposed on the company to pay an amount where the claim arose before or upon the monitor's appointment.
Status of claim ranking	(2) A claim referred to in subsection (1) shall not rank as costs of administration.
Liability in respect of environ- mental matters	(3) Notwithstanding anything in any federal or provincial law, a monitor is not personally liable in that position for any environmental condition that arose or environmental damage that occurred

Bill C-5

COMPANIES' CREDITORS ARRANGEMENT ACT