Flexibility and creativity have long been regarded as hallmarks of Canada’s main corporate restructuring statute, the Companies’ Creditors Arrangement Act (the “CCAA”). The CCAA is a facilitative statute applied flexibly to permit Canada’s most complex corporate restructurings. The CCAA, however, is not the only option for implementing creative restructuring solutions. The arrangement provisions of the Canada Business Corporations Act (the “CBCA”), and its provincial equivalents, can also provide a flexible mechanism for completing transactions, reorganizations, or other fundamental corporate changes. These provisions have primarily been used to deal with reorganizations of equity and corporate structures, but have recently also gained in popularity as efficient alternatives for certain debt restructurings. Although the CBCA is not able to facilitate a comprehensive operational restructuring for a distressed corporation, corporate arrangements have proven an expedient and cost-effective tool that allows overleveraged companies with a viable underlying business to conduct a targeted restructuring of their balance sheet.
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