Inquiry of Companies' Creditors Arrangement Act (CCAA) Cases

INTRODUCTION

Industry Canada is pleased to provide the results of a recent inquiry of CCAA proceedings conducted since the last amendments to the CCAA in 1997. The information used in this inquiry was voluntarily provided by several firms that have acted as monitor in CCAA proceedings during that period. Industry Canada would like to thank Ernst & Young Inc., Pricewaterhouse Coopers Inc., Deloitte & Touche Inc., KPMG Inc., Richter & Partners Inc. and Zwaig Consulting Inc. for their assistance.

This inquiry represents the first effort at capturing data on CCAA filings. To date, CCAA information is scattered across the country in various court files, without any centralized recording. Accordingly, it has been impossible to provide anything other than anecdotal reports as to how many cases there are, where they take place etc. While this survey is intended to start addressing these questions, it must be noted that there is no way of ensuring that all cases have been reported to us. For that reason, these results cannot be considered comprehensive or exhaustive, however, in discussion with stakeholders it appears that the majority of cases have been reported and we believe that the sample we have obtained is representative of the whole. We will continue to try and expand on these results by identifying cases which have not yet been reported to us. We welcome your assistance in identifying any cases which do not appear on the list at the end of this document.

To encourage a high response rate Industry Canada requested that the monitors provide approximations where data was not readily available, thus figures such as how long it takes to complete the average filing are approximate. It is also important to note that any compilation or interpretation of the data from individual files was done by Industry Canada and not by the monitors. For example, the classification of a filing as successful or unsuccessful was done by Industry Canada, based on the response to several of the questions in the survey. This should not be considered as a positive or negative judgement on the outcome of a specific filing. Some may have achieved effective results outside of the CCAA proceeding. It is simply intended to differentiate between files which did and did not achieve an effective remedy through the CCAA.

We plan to update this information as more filings become available to us. The updated results will be available on our website at http://strategis.ic.gc.ca/cilpd .

If you have any comments on this inquiryor on other insolvency related issues, please contact the Corporate and Insolvency Law Policy Directorate of Industry Canada at (613) 952-2099 or by email at Blanchard.Mireille-France@ic.gc.ca

A)     TOTAL     79

 

1997          2

1998        11

1999        11

2000        16

2001        28

2002        11

B)     Where Did They File?

 

Ontario                  39

BC                        12

Quebec                 10

Alberta                    7

Manitoba                 1

New Brunswick       1

Newfoundland         1

Not Reported          8

C)     What Was the Outcome in These Cases?

Cases have been classified as successful, unsuccessful and ongoing. These determinations have been made by Industry Canada based on whether the case having obtained approval of creditors and the court, without subsequent default or bankruptcy. Cases that are ongoing are those which are still part of a proceeding which is still in progress under the CCAA. Categorization of cases as unsuccessful included all others. While some of these "unsuccessful" cases may have otherwise successfully been resolved, it was not within the parameters of a CCAA reorganization.

     Successful         29

     Unsuccessful     36

     Ongoing            14

A)   Average Time to Completion     14.28 months

B)   Sales and Pre-Packs

3 were identified as both a sale and a pre-pack

7 were identified as a sale only

6 were identified as a pre-pack only

11 were identified as neither a sale or a pre-pack

No information was reported for two cases

C)   DIP Financing

12 were authorized DIP financing

16 did not ask to DIP

No information was reported for 1 case

D)   Foreign Proceedings

6 filings also involved foreign proceedings

22 filings did not

No information was reported for 1 case

E)   Interim Receiver

1 involved an interim receiver

27 did not

No information was reported for 1 case

A)   How Far Did They Go?

19 entered bankruptcy before filing a plan

8 filed a plan (5 of these later entered bankruptcy)

7 were abandoned or did not specify (1 transferred to the BIA process)

1 defaulted

Only 1 indicated it reached approval at the fairness hearing

It should be noted that some of these, such as the filing that transferred to the BIA may have achieved some form of resolution outside the CCAA.

A)   Assets were indicated as having a range of $800,000 to $6.75 billion, with 8 filings in excess of a billion dollars.

B)   Liabilities ranged from $5 million to $5.1 billion, with 9 filings in excess of a billion dollars.

C)   60 filings reported debt to secured creditors

       67 filings reported debt to unsecured creditors

       29 filings reported debt to the Crown (reports in this category ranged from $13,000.00 to $25 million)

NOTE: Data on size of the filings has been used only as an overview to provide a sense of the magnitude of these filings. Different reporting formats, such as book value vs. value if sold and foreign currency, make it difficult to provide a more detailed analysis at this time.

Because successful files are the only ones which have completed the entire process, they were used to determine how long it takes to move through the process of reorganization. The following statistics emerged.

Average time from initial stay to final plan approval:

7.28 months    (based on 27 responses)

Average time from final plan approval to the plan being carried out

7.00 months    (based on 29 responses)

Total average time from initial stay to the plan being carried out 14.28 months. Note that 2 responses included only the time to completion, not from the stay to approval.

When broken down according to whether the filings had a foreign component:

Average time from initial stay to final plan approval

11.92 months with foreign proceedings (based on 6 responses)

5.95 months without foreign proceedings (based on 21 responses)

Average time from final plan approval to the plan being carried out

2.25 months with foreign proceedings (based 6 responses)

8.59 months without foreign proceedings (based on 22 responses)

Total average time from initial stay to the plan being carried out

14.17 months with foreign proceedings

14.54 months without foreign proceedings

Of interest is that the filings with foreign involvement actually took less time to complete on average. While that difference was slight, there was a very distinct difference in what part of the process was occupying the time. Foreign filings appear to be much slower to develop and approve a plan, but quicker at putting it into place, purely domestic filings are the reverse.

Notes:

1) One successful filing did not indicate whether it had involved foreign proceedings or not.

2) The small sample for foreign filings may make the numbers less reliable as an average, for example, there are two ongoing filings with foreign components that if successful, would greatly increase the results for filings with a foreign component and for the combined results.

A)   Of the entire population of 79 filings:

30 filings had DIP financing authorized

43 did not

No information was reported in 6 cases

B)   Of the 30 which had DIP authorized

12 were successful

10 were unsuccessful

8 are ongoing

C)   Of the 43 which did not have DIP financing authorized

16 were successful

21 were unsuccessful

6 are ongoing

D)   Average amount authorized:   $33.52 million

E)   Adjusted average amount authorized: $12.53 million (This adjustment has been included as a result of two filings which greatly affect the overall average. While the overall average is correct, consideration of this factor may be significant.)

F)   The smallest amount authorized: $250,000.00

       The largest amount authorized: $250,000,000.00

G)   In 17 cases existing lenders were primed

       In 8 cases they were not

       No information was reported in 5 cases

Note: Although DIP may have been authorized, it may not have been used.

   Including both successful and ongoing filings (43 responses)

3 indicate that the filing is both a sale and a pre-pack (all successful)

14 indicate that they are only a sale (7 successful and 7 ongoing)

7 indicate that they are only a pre-pack (6 successful and 1 ongoing)

15 were neither ( 11 successful and 4 ongoing)

No information was reported in 4 cases (2 successful and 2 ongoing)

     Of the 79 total filings:

A)   22 filings involved foreign proceedings

6 were successful

6 were unsuccessful

10 are ongoing

B)   56 did not involve foreign proceedings

22 were successful

30 were unsuccessful

4 are ongoing

No information was reported in 1 case

     Of the 79 total filings:

A)   27 involved the auditor acting as monitor

10 were successful

9 were unsuccessful

8 are ongoing

B)   51 did not involve the auditor acting as monitor

18 were successful

27 were unsuccessful

6 are ongoing

1 successful filing did not indicate whether the monitor acted as auditor.

CASES INCLUDED IN THE INQUIRY