Alberta Court of Appeal backs investor-led CCAA proceeding

Angus A2A GP Inc v Alvarez & Marsal Canada Inc, 2026 ABCA 156
Can equity investors commence CCAA proceedings?

Summary: In a follow up on our newsletter last week, the Alberta Court of Appeal has confirmed that equity investors can commence CCAA proceedings. The Court dismissed an appeal in which two appellant groups challenged a novel CCAA initial order obtained by Canadian equity investors to stop the imminent sale of the Angus Manor lands and bring the project entities under Court-supervised control, confirming that equity investors can be “interested persons” capable of commencing CCAA proceedings in appropriate circumstances, including where there is a reasonable possibility that value remains available to them after non-equity claims are addressed. The Court accepted that the Angus Manor proceeding was unusual, noting that CCAA cases are usually commenced by debtor companies or secured creditors, but held that the statute’s remedial objectives can extend to equity investors with a real financial stake in the outcome. It drew an important distinction between using the CCAA solely to gather information, which is not a proper standalone purpose, and authorizing a monitor’s investigation as a necessary step toward legitimate CCAA objectives, including identifying assets, preserving value and enabling a fair distribution process. On the facts, the Court found that secured creditor claims appeared to be absent and other creditor claims insubstantial, meaning the Canadian investors could plausibly be “fulcrum” stakeholders with value at risk, and it upheld the initial order despite the appellants’ objections to the investors’ standing, the investigative purpose of the proceeding and the fairness of the process.

Two appellant groups—consisting of two Texas corporations that acquired and developed the Fossil Creek, Windridge, and Angus Manor project lands and were involved in raising investment for their development, and Canadian entities that formed part of a complex structure set up to secure investment from Canadian investors—appealed the decision of the lower Court to grant an initial order under the Companies’ Creditors Arrangement Act, effectively on a without-notice basis, in respect of the appellants.

The CCAA proceedings were started by “equity investors” rather than by a debtor company or a creditor, for, among other reasons, the purpose of stopping an imminent sale of Angus Manor land in Ontario and enabling the gathering of information. They represented a very small proportion of the investors, dollarwise and numerically.

The chambers judge rejected the argument that the “equity investors” could not commence CCAA proceedings because they were not “creditors” in the traditional sense. The Initial Order gave the Monitor wide powers of management over the relevant entities including the appellants. The anticipated outcome of the CCAA proceedings is the liquidation of the entities’ assets and the distribution of the proceeds to investors and creditors through a claims process, not the survival of the business in a restructured form.

There is no known Canadian precedent for a court granting an initial order on application by an equity investor. Nothing in the CCAA addresses specifically whether an equity investor can commence CCAA proceedings. CCAA proceedings are usually commenced by the insolvent debtor company. When the debtor company does not initiate proceedings, a secured creditor typically applies. The question is whether equity investors are “interested persons” or “person[s] interested” under the CCAA.

An equity investor can be an “interested person” in appropriate circumstances. The CCAA has various broad remedial objectives: (1) resolving a debtor’s insolvency efficiently and impartially; (2) preserving and maximizing the value of the debtor’s assets; (3) treating claims against a debtor fairly and equitably; (4) protecting the public interest; and (5) balancing the costs and benefits of restructuring or liquidation. The phrases “any person interested” and “interested person” should be interpreted in a manner consistent with those objectives.

Allowing a person with no financial interest in CCAA proceedings to commence them will rarely be an effective way to further the relevant objectives. To further the CCAA’s remedial objectives, the term “interested person” should, at a minimum, be read as referring to someone with a financial interest in the outcome of the proceedings. For an equity investor to be an “interested person”, they must at least have the potential to share in the payment of funds from a successful compromise or arrangement. Whether that is so will depend on the financial situation of the debtor company.

When a debtor company is “cash flow” insolvent at the time of the initial application, equity investors may have a financial interest in the outcome of the CCAA proceedings because they could potentially receive payment under a compromise or arrangement, despite ranking below creditors in priority under s 6(8). In a liquidity crisis, equity investors may have a significant financial interest in the debtor company. On the other hand, where the debtor company is “balance sheet” insolvent at the time of the initial application, it does not have sufficient assets to satisfy creditors’ claims, and equity investors usually have no financial interest in the outcome of proceedings given their priority ranking.

It is impractical to expect an equity investor to prove a debtor company is cash flow insolvent and its assets exceed the value of the creditors’ claims at the initial application stage. Applicants rarely have an exhaustive list of all the debtor company’s assets and liabilities at that stage. The most that can be expected is for an equity investor to show there is a reasonable possibility that the value of the assets exceeds the value of non-equity claims.

In this case, there was little information about whether the appellants were cash flow insolvent, balance sheet insolvent, or both. The Monitor’s reports made clear that there are no known secured creditors, and the Monitor advised the Court during the appeal hearing that creditor claims are insubstantial. The investors described themselves as “fulcrum” stakeholders, by which they meant that there is value in the appellant entities available to them. In the circumstances, the Court of Appeal agreed with the lower court that the applicant Canadian investors, and the investors at large, were “interested persons” who could apply for the Initial Order.

Next, the Court of Appeal agreed with the appellants that initial orders should not be granted for the sole purpose of gathering information about debtor companies as that is not among the remedial objectives of the CCAA. However, the Court held that this had not happened in this case. Here, conducting an investigation was a necessary step to achieving other legitimate objectives of CCAA proceedings. The purpose of authorizing the Monitor to investigate the debtor companies and affiliated entities was to determine whether they held assets that the Monitor might gain control of and distribute fairly among the investors and other stakeholders, both of which were valid objectives under the CCAA. The CCAA proceedings were commenced for proper purposes underlying the legislative scheme and not for the sole purpose of investigating the debtor companies’ affairs.

The court below made no reviewable error in concluding that the CCAA proceedings were fair to the majority of investors and that the transaction documents establishing investors’ rights did not preclude recourse to CCAA proceedings.

For these and other reasons, the appeals were dismissed.

Judges: The Honourable Chief Justice Ritu Khullar*, The Honourable Justice William T. de Wit, The Honourable Justice Karan M. Shaner

*Chief Justice Khullar did not participate in the final disposition of the judgment.

Professionals involved:

• Robyn Gurofsky and Kaitlyn Wong of Fasken for the Canadian Investors

• Howard Gorman, KC and Daniel Stethem of Norton Rose Fulbright for the Offshore Investors

• Jeffrey Oliver and Danielle Marechal of Cassels for Alvarez & Marsal Canada Inc. as monitor

• Kyle Kashuba of Torys for Pillar Capital Corp., the Interim Lender

• Jeffrey Oliver, Danielle Marechal, Danica Jorgenson and Natalie Thompson for Alvarez & Marsal as Monitor

• Kelsey Meyer, Luc Rollingson and Chyna Brown of Bennett Jones (student-at-law) for Fossil Creek A2A Developments, LLC et al.

• Daniel Jukes of Miles Davidson for Angus A2A GP Inc. et al.