Scott Bomhof has joined Davies Ward Phillips & Vineberg as a partner in its Toronto financial restructuring and insolvency practice, ending a 25-year tenure at Torys. A leading Canadian insolvency practitioner, Bomhof has advised on some of the country's largest and most complex commercial and cross-border restructurings, including the landmark tobacco settlement. He talked to us about what prompted his move to Davies, how he sees his experience fitting into the firm's restructuring practice, the outlook for Canadian insolvency activity in 2027, and emerging trends that could reshape the industry.

1. After 25 years at Torys, you've made the move to Davies. What prompted the decision, and what attracted you to the firm?

I believe there are incredible opportunities at Davies. Davies holds a strong position in the market and is committed to growing its presence in the restructuring field, building on an already strong foundation in Toronto and Montréal. I was very impressed by the team’s depth of knowledge and dedication, as well as the platform Davies offers.

2. Davies has an established financial restructuring and insolvency practice in Toronto and Montréal. How do you see your experience complementing the work the team is already doing?

I look forward to working with the incredible team in Toronto and Montréal and contributing my experience advising on large commercial and cross-border restructurings.

3. Your practice has focused on large, complex commercial and cross-border restructurings, while Davies has considerable expertise in M&A, finance and other transactional areas. How do you see your practice evolving at Davies, particularly when it comes to distressed investments, acquisitions and special situations?

I think the practices are complementary. Many of the cross-border restructurings I have worked on, including GNC, Red Lobster and Li-Cycle, involved complex M&A transactions. Davies has a proven track record in leading large insolvency mandates and advising on distressed M&A transactions, with work involving Baffinland, Victoria Gold, Simply Green, Aldo and The Body Shop Canada. I see an opportunity to work with the firm’s M&A and finance teams on distressed investments and acquisitions.

4. Looking ahead to 2027, Canadian businesses continue to face economic uncertainty, elevated borrowing costs and refinancing challenges. Where do you see the restructuring and insolvency market headed over the next 12 to 18 months, and which sectors do you expect will experience the greatest pressure?

The key drivers of general financial distress for large Canadian businesses right now are external market conditions: tariffs, export and import restrictions and supply chain disruptions. Some industries, such as steel, aluminum and automotive, are being hit the hardest, although no industry is fully insulated.

These issues are largely outside the control of individual businesses. Various government supports are being made available to try to minimize the disruptions caused by these events, but much of that support involves low-cost borrowing, which will add to the long-term debt obligations of the impacted businesses. These pressures will continue until there is a resolution of the trade uncertainty and a normalization of supply routes and oil prices.

There are also ongoing sectoral pressures unrelated to these global issues, including a downturn in the housing market that has particularly affected companies involved in condominium development and construction.

5. You've been involved in some of Canada's largest and most complex restructurings, including the recent tobacco settlement. How has the nature of major commercial restructurings changed over your career, and what developments have had the greatest impact on the practice?

I have witnessed both expansions and contractions in the scope of judicial discretion in insolvency proceedings. Early in my career, the CCAA was largely judge-made law, and the term “inherent jurisdiction” was used to continually push the boundaries of what could be done. Then there was an effort to codify various judge-made concepts, such as DIP financing, disclaimer of contracts and sales of assets outside a plan, into a rules-based model. This coincided with an effort to move toward “statutory discretion,” which limits the exercise of discretion to remedies that further the purposes of the relevant statute.

In recent years, statutory discretion has been liberally interpreted to support the use of reverse vesting orders, broad third-party releases outside a plan and similar remedies not expressly contemplated by the insolvency statutes. However, there appears to be some pushback against these developments, with more recent jurisprudence applying additional judicial constraints on the use of these remedies, along with recently proposed legislation to limit judicial interpretation of the Wage Earner Protection Program Act in reverse vesting order scenarios.

Another major development has been the use of model orders, which were first introduced for receivership proceedings in Ontario in 2004. Since that time, most Canadian jurisdictions have adopted model orders for receivership and CCAA proceedings, and the Insolvency Institute of Canada will soon be introducing a proposed national model CCAA initial order. This development has led to greater consistency in the way insolvency proceedings are handled across Canada and has streamlined the process for judges to grapple with requests for extraordinary relief that is not provided for in the relevant model order.

6. The U.S. restructuring market has seen growing use of liability management transactions and other out-of-court restructuring strategies. Do you expect these approaches to become more prevalent in Canada?

I do not expect these procedures to become commonplace in Canada. The scope of directors’ liabilities, together with Canadian corporate laws, including the oppression remedy, makes these out-of-court procedures difficult to implement in Canada. In addition, Canadian corporations have access to the arrangement provisions in the CBCA and other governing corporate statutes. These provisions allow solvent companies to carry out transactions with a similar outcome to a liability management transaction under court supervision and to seek judicial approval for the transaction.

7. As you begin this new chapter at Davies, what are you most excited about, both in terms of the opportunities ahead for the firm and the direction of your own practice?

I am excited to work with the amazing team at Davies. I think that the profile and broad scope of expertise at Davies, in both the Toronto and Montréal offices, will create opportunities to build on the firm’s domestic and cross-border restructuring work.