Although the Companies’ Creditors Arrangement Act (“CCAA”) provides scant guidance, it is a well established procedure in a CCAA proceeding for the Court to order a claims process and to delegate powers to review creditors claims to a CCAA Monitor. Recognizing the gaps in the legislation, the Nova Scotia Supreme Court recently reviewed and clarified the basis of a Monitor’s authority to conduct a claims bar process in the CCAA restructuring of ScoZinc Ltd.
In ScoZinc, the Monitor brought a motion seeking directions as to whether it had the necessary authority to allow a revision of a proof of claim after the court-ordered claims bar date had passed, but before the date set for the Monitor to complete its assessment of claims.
The motion was required when three significant ScoZinc creditors sought to file revised proofs of claim subsequent to the claims bar date. Among other things, the new proofs of claim corrected errors in the initial filings which, in some case, significantly understated the creditors’ total claims.
In considering how the Monitor should carry out its duties and responsibilities under the applicable Claims Procedure Order, the Court first noted a Monitor is an Officer of the Court and is obliged to ensure that the interest of all stakeholders are considered. Recognizing that Monitors, like Courts, are engaged in dispensing justice, the Court took a broad and flexible approach to the Monitor’s authority to receive additional claims process evidence and submissions on its own initiative or at the instance of a claimant.
Considering the issue further, the Court noted that while a Monitor’s revisions might normally be to reduce a proof of claim, there is nothing in the standard claims procedure order that should so restrict the Monitor’s authority. In dispensing justice a Monitor may also recognize that certain claims are properly subject to increase.
Further, a claims process by its very nature contemplates that the Monitor is to carry out an assessment of such claims as are submitted. An assessment involves an exchange of information between the Monitor, the company, and a creditor. It follows that the Monitor should be able to act to revise proofs of claim already submitted in order to conform with evidence elicited by the monitor, or submitted by the creditor.
In the end, the Court concluded that the Monitor had all necessary authority to allow post-claims bar date revisions to proofs of claim, both with respect to classification (i.e. – secured or unsecured) and dollar amount.