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CBCA Restructurings

CBCA Restructurings
CBCA Restructurings

Previously reserved for Canada's insolvency statutes, plans of arrangement under the Canada Business Corporations Act (CBCA) and its provincial counterparts are increasingly being used to facilitate corporate debt restructurings and recapitalizations. A corporate plan of arrangement allows otherwise viable entities to restructure their balance sheets, including arranging rights of debtholders.  
The Blakes Restructuring & Insolvency group, in collaboration with our Financial Services and Capital Markets groups, has broad experience in workouts and restructurings using the CBCA and the provincial business corporation statutes, including advising distressed corporations and Canadian and international financial institutions.
Some of the recent engagements we have acted on in this regard are described below.

Recent Experience
  • Jupiter Resources Group (oil and gas) – Counsel  to Jupiter Resources Inc. and certain of its affiliates in all aspects of Tourmaline Oil Corp.'s strategic acquisition of Jupiter Resources Inc. for total consideration of approximately C$630-million, completed by way of a plan of arrangement under the CBCA.

  • Source Energy Group (oil and gas services) – Counsel to Bank of Montreal, as agent, on the CBCA restructuring of Source Energy Services Canada LP and its affiliates’ C$80-million credit facility and US$157-million secured notes. This resulted in a US$32.7-million reduction of principal obligations and reducing near-term cash interest expense as well as providing access to incremental liquidity in an initial principal amount of up to C$20-million.

  • Stuart Olson Inc. (construction) – Counsel to Toronto-Dominion Bank, as agent, on the C$96.5-million acquisition of Stuart Olson Inc. by Bird Construction, including payment of C$70-million in cash to the lenders in consideration of all outstanding bank debt.

  • Pengrowth Energy Corporation (oil and gas) – Counsel to Cona Resources Ltd. in all aspects of its approximately C$740-million acquisition of Pengrowth Energy Corporation, completed by way of plan of arrangement under the Business Corporations Act (Alberta). This was a particularly large and complicated transaction using a provincial corporate statute to effect a restructuring of a distressed enterprise in a coordinated, multidisciplinary manner.

  • Bellatrix Exploration Ltd. (oil and gas) – Counsel to National Bank of Canada, as the administrative agent, on behalf of the senior secured lending syndicate in Bellatrix’s C$619-million CBCA recapitalization transaction. This reduced Bellatrix's total outstanding debt by approximately C$110-million and addressed impending debt maturities.

  • Jupiter Resources Group (oil and gas) – Counsel to Jupiter Resources, Inc. and certain of its affiliates in a plan of arrangement pursuant to the CBCA, involving the applicants and holders of 8.5 per cent senior unsecured notes (Notes) issued by Jupiter pursuant to the indenture governing the Notes. The effect of the arrangement was the elimination of the principal amount of Jupiter’s Notes by US$1.1-billion and the associated annual cash interest payments of US$93.5-million.

  • Concordia Group (pharmaceuticals) – Counsel to Goldman Sachs, as agent, under a lending facility that provided for aggregate financing of US$1.3-billion and £500-million to the Concordia Group in its reorganization proceedings under the CBCA. The filing included a number of offshore entities. The CBCA plan was approved, and the recapitalization transaction was completed. This filing presented unique challenges to secured lenders as arrangements approved in these restructuring proceedings can have a long-term impact on commercial lending and workout strategies.

  • Tervita Corporation (environmental solutions) – Counsel to a syndicate of investment dealers that provided US$360-million of exit financing to Tervita Corporation, a leading environmental solutions provider in the oil and gas industry. Tervita implemented its court-approved plan of arrangement pursuant to the CBCA to effect a recapitalization transaction that resulted in a reduction of Tervita’s total debt from approximately US$3.6-billion to approximately US$475-million. The transaction was recognized by The M&A Advisor as 2017 Energy Deal of the Year (Over $1B).

  • Gateway Casinos & Entertainment Inc. (hospitality) – Counsel to Gateway Casinos & Entertainment Inc. on its C$1.5-billion CBCA recapitalization transaction pursuant to a plan of arrangement under the CBCA. The transaction involved an exchange of C$1-billion of debt for new equity, a replacement C$500-million term loan and new C$100-million facility.

  • MEGA Brands (toy manufacturing) – Counsel to a private investor in respect of the CBCA recapitalization transaction of MEGA Brands Inc. and certain of its affiliates, including a New Jersey corporation and Delaware limited partnership. The recapitalization transaction reduced MEGA Brands debt by approximately US$286.6-million. The CBCA plan of arrangement was recognized in the United States under Chapter 15 of the U.S. Bankruptcy Code.

  • Ainsworth Lumber Co. Ltd. (pulp and paper) – Counsel to Ainsworth Lumber Co. Ltd. on its US$1.2-billion CBCA recapitalization transaction. The transaction involved the exchange of US$824-million of debt for new equity and warrants and US$150-million of new senior unsecured notes and the issuance for cash of US$200-million of new senior unsecured notes. Concurrently, Ainsworth amended three credit facilities representing approximately US$175-million in senior secured and unsecured debt.

Awards & Recognition

Our members are consistently recognized by clients and peers as leaders in restructuring and insolvency law in the most recent editions of such leading publications and awards as:

  • Chambers Global: The World's Leading Lawyers for Business

  • IFLR1000: The Guide to the World's Leading Financial Law Firms

  • The Canadian Legal Lexpert Directory

  • The Lexpert/American Lawyer Guide to the Leading 500 Lawyers in Canada

  • The Lexpert Guide to the Leading US/Canada Cross-Border Corporate Lawyers in Canada

  • The Lexpert Guide to the Leading US/Canada Cross-Border Litigation Lawyers in Canada

  • Who's Who Legal

  • Who's Who Legal: Insolvency & Restructuring

  • Who’s Who Legal: Canada

  • Legal Media Group's Guide to the World's Leading Lawyers in Banking, Finance and Transactional Law

  • Legal Media Group’s Guide to the World’s Leading Women in Business Law

  • Benchmark Canada: The Definitive Guide to Canada's Leading Litigation Firms and Attorneys

  • The Best Lawyers in Canada

  • The Legal 500 Canada