Protagonists of company reorganisation: A history of the Companies' Creditors Arrangement Act (Canada) and the role of large secured creditors

In 1933 Canada enacted the Companies’ Creditors Arrangement Act with little consultation. Parliament described the CCAA as federal ‘bankruptcy and insolvency law’ but the Act provoked constitutional controversy because it could compulsorily bind secured claims, which fell under provincial jurisdiction. Even after the Supreme Court of Canada upheld the CCAA, the intended beneficiaries of the Act preferred not to use it. In the 1950s the Act fell out of use, and by the 1970s commentators considered it a ‘dead letter.’ But during the 1980s and 1990s recessions, courts ‘revived’ the CCAA through progressive interpretations of its few ‘enabling’ provisions. This helped justify debtor-in-possession reorganisation as a policy objective of Canadian bankruptcy and insolvency law. This thesis attempts to understand why this occurred.

This study provides a theorised interpretation of CCAA history. I rely on concepts such as path dependence, interest groups and institutions to shed light on periods of stability and change in CCAA law over time. I bolster this with a socio-legal analysis that takes account of gradual changes in practice that often preceded and gave shape to formal reforms.

This thesis shows that large secured creditors have been major drivers and beneficiaries of CCAA law. The Act originally extended provincial receivership reorganisations into federal law. In the 1980s-1990s courts facilitated ongoing access to the CCAA by recasting it as a debtor-remedy. In both instances the solvency of large secureds (financial institutions) highlighted the necessity of restructuring corporate borrowers, and prevailing social, economic, and political factors influenced the substance and mechanisms of legal changes. Despite its public stature as a ‘debtor-remedy,’ CCAA law continues to advance the interests of large secured creditors.