The remedy of substantive consolidation under the Companies' Creditors Arrangement Act : a closer examination of domestic and cross-border issues


University of British Columbia

Date Issued


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Master of Laws - LLM




This thesis is a study on the remedy of substantive consolidation under Canada‟s primary restructuring statute, the Companies’ Creditors Arrangement Act (“CCAA”). The objectives of the research are (i) to gain a deeper understanding of how substantive consolidation has evolved under the CCAA, (ii) to investigate whether the current legal landscape provides the most appropriate framework for dealing with the key issues relating to substantive consolidation in both the domestic and cross-border context, and (iii) consider how, if necessary, the position could be improved. The key issues that are the focus of this study are: (a) the factors supporting substantive consolidation, (b) the effect of substantive consolidation and (c) multiple issues relating to the application for an order such as persons permitted to apply, timing on an application, inclusion of a solvent group member and notice. The doctrinal analysis of the existing jurisprudence suggests there is a failure to carefully consider these key issues in depth. The judicial dialogue solely focuses on the factors supporting consolidation in the domestic context. There is little, if any, guidance on the issues that stem from an application for substantive consolidation or the various effects substantive consolidation can have on creditors‟ rights. Further, the use of substantive consolidation under the CCAA cross-border framework has yet to be considered at all. Therefore, this study looks towards the recent work of the United Nations Commission on International Trade Law Working Group V (Insolvency Law) on substantive consolidation in order to propose an array of policy options for the use of the remedy under the CCAA. In doing so, the study takes into account the scope of the CCAA, the balance between the need for flexibility and the demand for certainty in CCAA proceedings, what is desirable in practice and the nature of cross-border restructuring proceedings.

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