How the Restructuring of CMHA Vancouver–Fraser Preserved Essential Care

As part of the inaugural Canadian Insolvency Awards, the Social Interest Restructuring of the Year Award recognizes restructurings where insolvency tools are used to achieve outcomes that matter beyond the financial result. The emphasis is on public impact, careful execution, and the protection of vulnerable communities where disruption would carry real societal consequences.

The restructuring of the Canadian Mental Health Association, Vancouver–Fraser Branch (CMHA-VF) exemplified that purpose.

Financial distress in a service-critical organization

CMHA-VF was a long-standing non-profit delivering mental health, housing, and employment support services across the Lower Mainland. Each year, its programs supported more than 4,000 individuals, many of whom relied on uninterrupted access to care and stable housing.

Like many non-profits, CMHA-VF faced growing financial pressure amid broader economic uncertainty. A sustained decline in unrestricted donations, insufficient to cover the growing administrative and operational costs, left the organization unable to fund core administrative and overhead functions that could not be covered by restricted program funding, despite continued demand for services.

Without intervention, the risk was not only insolvency, but the sudden disruption of essential programs serving vulnerable individuals.

A restructuring built around continuity

Working closely with the Canadian Mental Health Association, BC Division (CMHA BC), CMHA-VF initiated formal restructuring proceedings, filing an NOI in April 2025 and appointing MNP Ltd. as proposal trustee. Interim funding was provided by CMHA BC to stabilize operations during the process.

The NOI framework provided the breathing room necessary to assess CMHA-VF’s operations and distinguish between services and contracts that were essential to continuity of care and those that were not. Throughout the restructuring, continuity of service was treated as a primary restructuring objective rather than a secondary consideration.

Given the nature of the organization, the restructuring required a more active role from the proposal trustee and counsel for both the proposal trustee and the debtor than in a typical commercial file. CMHA-VF was governed by a volunteer board and operated with limited internal restructuring capacity, requiring advisors to take a hands-on approach to operational, contractual, and governance issues while ensuring decisions remained focused on preserving essential services.

“It was essential for us to step back at the outset of the file to ensure that all stakeholders’ priorities were aligned and that the right people were at the table,” said Holly Palmer of MNP Ltd. “This collaborative approach allowed us to work toward a solution that achieved the best possible outcome for creditors while minimizing harm to individuals already vulnerable due to mental health and addiction challenges.”

Transitioning services, not disrupting them

During the proceedings, CMHA-VF disclaimed contracts and leases related to non-core or unsustainable services, while preserving and restructuring those tied directly to frontline mental health and housing support. Certain leases for essential residential and program facilities were assumed, while others were terminated to reduce ongoing financial strain.

The restructuring also involved the orderly transition of housing assets. Two residential properties owned by CMHA-VF, both fully occupied by transitional housing participants, were addressed through court-approved transactions that preserved tenancies and ensured continued housing stability for residents. One property was sold with mortgage debt repaid, while obligations related to BC Housing on the other were assumed as part of the broader transition.

In parallel, CMHA-VF, CMHA BC, the proposal trustee, and counsel worked closely with health authorities and funders to assign or replace service contracts, ensuring uninterrupted delivery of programs funded by Vancouver Coastal Health, Fraser Health, and BC Housing.

Court approval was obtained in July 2025 for a restructuring that transitioned essential programs, assets, and staff to a newly formed entity, Canadian Mental Health Association, Lower Mainland Branch. Most employees were offered continuing employment, allowing programs to operate without interruption. As of August 1, 2025, CMHA-VF wound down operations, with services continuing seamlessly under CMHA Lower Mainland.

For clients, the transition was designed to involve minimal disruption, preserving access to care at a moment of significant organizational change.

“The interests of social stakeholders were at the heart of this restructuring,” said Baylee Hunt of Lawson Lundell LLP. “It was remarkable to see so many parties work quickly and collaboratively to achieve a balanced result for creditors and the many individuals receiving essential community services through CMHA-VF.”

Implications for future public-interest restructurings

As economic pressures continue to affect non-profits, charities, and service providers, restructurings of this nature are likely to become more frequent. The CMHA-VF proceeding offers a practical example of how formal insolvency processes can be used not only to address financial distress, but to actively protect service continuity, housing stability, and public trust.

In that sense, the case stood out not only for its outcome, but for what it demonstrated about the adaptability, judgment, and responsibility of insolvency practice in service-critical environments.

Professionals Involved

• Proposal Trustee:

  • Holly Palmer, MNP Ltd.

  • Jason Eckford, MNP Ltd.

• Debtor’s Counsel:

  • Baylee Hunt, Lawson Lundell LLP

  • William Roberts, Lawson Lundell LLP

• Proposal Trustee’s Counsel:

  • Katie Mak, Norton Rose Fulbright Canada LLP

• Supporting Organization and Interim Funder:

  • Canadian Mental Health Association, BC Division

About the Canadian Insolvency Awards

The Canadian Insolvency Awards recognize exceptional restructuring cases, initiatives, and contributions across the insolvency and restructuring profession. Recipients are selected by an independent judging panel based on execution, outcomes, and broader impact, with a focus on cases and team efforts rather than individual recognition.

The restructuring of the Canadian Mental Health Association, Vancouver–Fraser Branch was recognized as Social Interest Restructuring of the Year at the inaugural Canadian Insolvency Awards Gala on February 5, 2026.