A change in approach to interim approvals?

Canacol Energy Ltd. (Re), 2026 ABKB 654 
Are interim approvals of a monitor's activities appropriate?

Summary: The Alberta Court of King’s Bench has clarified the limits of routine court approval of a monitor’s activities in CCAA proceedings, ruling that while such approvals serve important purposes, including transparency, accountability and protection for court officers, courts must take care not to inadvertently determine disputed issues that have not been adjudicated. The issue arose after CoreX Energy SAS ESP objected to approval of the Ninth Report of the Monitor in Canacol Energy Ltd.’s CCAA proceedings, arguing that the report addressed disputed matters that could become the subject of litigation in Canada or Colombia. The Court approved the report and the Monitor’s conduct, finding no allegation that the Monitor had acted improperly, but included limiting language confirming that the approval did not prejudice the positions of the parties on unresolved allegations. The Court also encouraged monitors and affected parties to proactively identify disputed issues and propose appropriate limiting language where necessary.

Canacol Energy Ltd. (Canacol) and the other applicants (Canacol Group) entered protection under the Companies’ Creditors Arrangement Act on November 18, 2025. On July 9, 2026, the Canacol Group sought an order: (1) extending the stay of proceedings under the amended and restated initial order under the CCAA; (2) sealing an agreement; and (3) approving the Ninth Report of the Monitor and the actions, conduct and activities of the Monitor set out in the Ninth Report. The Monitor, as a court officer, had regularly provided reports to the Court and periodically sought to have its actions, conduct and activities, as set out in those reports, approved by the Court.

CoreX Energy SAS ESP (CoreX) objected to the approval of the Ninth Report and the actions, conduct and activities set out therein, arguing that approval was premature or, alternatively, that specific language restricting the effect of the approval should be included in the form of order because the Ninth Report included disputed matters that had not been adjudicated and which may be the subject of litigation in these proceedings or related proceedings in Colombia. The Canacol Group and the Monitor argued that approval was appropriate and should be granted as per the ordinary practice, without limiting language.

This issue raises the question of when and how court approval of court officer conduct and activities should be handled where the subject report sets out disputed matters that have not yet been resolved, and where there are related international insolvency proceedings. Applications to approve court officer conduct and activities are routine in Canadian bankruptcy and insolvency proceedings. They are a regular feature of CCAA proceedings, and are often granted unopposed. There are good policy and practical reasons for regular approval of monitor (or other court officer) activities. Approval of court officer activities promotes “transparency, problem solving, accountability, efficiencies, and protection”. It allows the court officer to bring its activities before the court and presents an opportunity to address concerns of stakeholders, while enabling the court to satisfy itself that the court officer’s activities have been conducted in a prudent and diligent manner.

In CCAA proceedings, approval:

1. allows monitors to move forward with the next steps in the CCAA proceedings;

2. brings monitor activities before the Court;

3. allows an opportunity for the concerns of the stakeholders to be addressed, and any problems to be rectified;

4. enables the Court to satisfy itself that the monitor’s activities have been conducted in a prudent and diligent manner;

5. provides protection for the monitor not otherwise provided by the CCAA; and

6. protects the creditors from the delay in distribution that would be caused by (i) re-litigation of steps taken to date, and (ii) potential indemnity claims by the monitor.

Generalized approval applications require caution to be exercised to avoid a broad or unintended application of res judicata and related doctrines. To address that concern, in Target Canada, Justice Morawetz approved additional language to be included in the form of order for a general approval, namely: “provided, however, that only the Monitor, in its personal capacity and only with respect to its own personal liability, shall be entitled to rely upon or utilize in any way such approval.” This limiting language means that the approval of the Monitor’s activities does “not constitute approval of the activities of parties other than the Monitor”.

Where a court officer provides its opinion or findings about a disputed issue, based on the court officer’s (and its legal counsel’s) factual or legal analysis, a generalized approval could be taken to be an approval of those opinions and findings even where that is not intended or has not clearly been put before the court for adjudication. In this regard, it is important to remember the role of court officers. Generally, a monitor must account to the court, provide independent observations, and act honestly, transparently, and fairly with all stakeholders. Further, in the context of foreign proceedings, an unlimited general approval could, through language or legal translation, be misconstrued as a binding approval of disputed matters that were not the subject of a fair adjudication on the merits. This could unduly complicate other litigation and give rise to unintended consequences.

Court officers, interested parties, or those potentially affected by a proposed court officer report and activities approval, should be alive to potential issues with a generalized form of approval. To foster transparency and avoid unintended consequences, court officers should proactively flag potential issues with the court and interested parties, and propose or negotiate appropriate limiting language where possible. Further, if a court officer or applicant intends to have the court finally resolve a known disputed matter materially addressed in a court officer’s report, this must be made reasonably clear in the application materials so that other parties, if necessary, may respond accordingly. Taking such steps allows a court to clarify its order to ensure it is not inadvertently prejudicing rights.

Here, the Court agreed that there was no reason to delay approval of the Ninth Report, which was an appropriate routine step. The Court was satisfied that the Monitor had acted honestly and in good faith, and that its opinions, analysis and conclusions set out in the Ninth Report reflected its honestly held opinions, analysis and conclusions. There was no allegation that the Monitor’s conduct was impugned. Accordingly, an approval of the Ninth Report, and the Monitor’s actions, conduct and activities reflected therein, was appropriate. There was nothing objectionable about the Monitor simply reporting the facts, namely that certain letters were sent by certain parties on specified dates.

In addition to the limiting language provided in Target Canada, the Court added the following further limiting language: “This approval is without prejudice to the positions of the Canacol Group, the Monitor, CoreX, or any other interested party, with respect to Cerro Matoso’s allegations of discriminatory gas supply restrictions causing Cerro Matoso’s partial plant shutdown.”

Judge: 

Professionals involved include:

• Kelsey Meyer, KC, Raj Sahni and Chyna Brown of Bennett Jones for the Monitor, KPMG Inc.

• Clifton Prophet and Katherine Yurkovich of Gowling WLG for the Canacol Group

• Jeffrey Oliver of Cassels for the Interim Lenders and Ad Hoc Committee of Senior Noteholders

• Christopher Keliher of McMillan for CoreX Energy S.A.S. E.S.P.