RMRF congratulates the firm’s team of Shauna Finlay, Mike McCabe, QC and firm alumnus Victoria Merritt on its success before the Supreme Court of Canada in Chandos Construction Ltd. V. Deloitte Restructuring Inc. in its capacity as Trustee in Bankruptcy of Capital Steel Inc., a bankrupt, where they represented the Trustee Deloitte Restructuring Inc.
The matter was heard by the Supreme Court on January 20, 2020. The decision was released on October 2, 2020.
This is an important case in bankruptcy and insolvency in Canada and clarifies the law related to the anti-deprivation rule. This rule, which has been confirmed in other common law jurisdictions but which had never been squarely considered by the Supreme Court of Canada, prevents parties from contracting in such a way as to divert an insolvent debtor’s assets or value away from what would otherwise be captured in the pool of assets or value of an insolvency.
The decision in the Capital Steel case not only confirms that the anti-deprivation rule exists in the common law of Canada, but also that anti-deprivation is subject to an effects-based test and not a purpose-based test.
This decision will be significant for many players, including creditors and contractors.
Stay tuned for more in-depth information on the effects of this decision.