Shield and Shear Paradoxx of Canadian Insolvency Law: Dialectics in Insolvency Process - Reconciliation between 'Regulatory Car Wash' and 'Polluter-Pay Principle'

Abstract

The Canadian insolvency legislation has borne the shield and shear paradox: of advancing immovable force of environmental law or promoting unstoppable force of creditors' interests and the private relief afforded by bankruptcy. Or, manage the two by appropriate deference to the balance sought by the Canadian Parliament. This paper examines the issue in five parts.Part I walks through the introductory notions, principles and rules under the Bankruptcy and Insolvency Act, and Companies' Creditors Arrangement Act. In Part-II, the state of law is assessed through the prism of trilogy of cases (Bulora, Panamericana and Lamford) during 1990s leading to 1997 legislative amendments to culminate in Part-III. Part-III takes a resume of case law post-1997 amendments till Atibibowater case [2012 SCC 67, dated 2012-12-07]. Part-IV deals with critique and discussion of two post-1997 amendment principles of the abandonment rights and crown super-priority in the light of prevailing jurisprudence (General Chemical and Nortel). In conclusion, I have stated that the on-going stewardship obligations in the insolvency proceedings and historical obligation of the state to remediate environment have to operate like an organic living tree promoting the former while upholding the protection of the environment as a fundamental value in Canadian society; arrest the collision of the unstoppable force (shield) of corporate restructuring with the immovable object (shear) of the imperative of responsible environmental stewardship only possible with a principled and pragmatic perspective brought to bear on the appropriate deference to the balance sought by the legislators.