Focus on Insolvency and Environment: Newfoundland and Labrador v. AbitibiBowater Inc., 2012 SCC 67 (the “Abitibi case”): Clean-Up Orders and the CCAA

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The Supreme Court of Canada (the “SCC”) recently released an important decision relating to how provincial clean up orders against corporations may be treated when that corporation enters creditor protection proceedings. In the Abitibi case, the decision of the majority (7-2), written by Deschamps J., was to uphold the lower courts’ findings that the remedial orders issued by the Province of Newfoundland and Labrador against AbitibiBowater Inc. et al. (“Abitibi”) were “claims” subject to the stay provisions of the Companies’ Creditors Arrangement Act (“CCAA”). According to one set of interveners, this decision paves the way for corporations to avoid responsibility for environmental liabilities through insolvency protection proceedings. However, a close read of the factual context and background to this case make it apparent that the result in this decision may not be so easily replicated in other cases.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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