A recent decision of the British Columbia Court of Appeal has rationalized the approach to be taken by Courts in considering appeals in CCAA cases.
Readers with experience in CCAA cases appreciate that, traditionally, CCAA proceedings have been "appeal-free" because of the requirement in the CCAA that orders cannot be appealed without leave of the Court of Appeal. A number of Courts in Canadian CCAA cases have proceeded on the view that leave to appeal an Order made in a CCAA case should rarely be given. The rationale is that CCAA cases involve “real time litigation” in which the presiding judge must deal with a rapidly evolving and generally fluid situation with a myriad of points of view and contrasting positions. This can be a sound theory where the case involves a wide range of potentially-disruptive issues where the progress and successful outcome of a CCAA reorganization might be jeopardized by the delays for appeal proceedings during the course of the reorganization.
What the Courts have not generally done is recognize that not all CCAA Orders are made in the context of a dynamic reorganization with fast-moving and evolving developments. An Order made in a CCAA case after the debtor's Plan of Reorganization has been confirmed, for example, does not have the same time sensitivity as an Order made in connection with procedures to be followed to approve disclosure statements or classify creditors into classes for purposes of the plan. The British Columbia Court of Appeal has now recognized this distinction and, in so doing, may have set a new standard for appellate proceedings under the CCAA.
The Court of Appeal, in the context of a claims dispute by a creditor after the Plan had been approved by the Court, ruled that the usual considerations as to discouraging CCAA appeals did not apply. It ruled that the CCAA judge in determining the creditor's claim was deciding questions of law and was not exercising his discretion and that, because the Plan of Reorganization had been implemented, an appeal by the creditor would not delay or jeopardize the reorganization. On an analysis of the criteria applicable to appeals in CCAA cases, the Court of Appeal concluded that "there was no reason to give substantial deference to the CCAA judge".
The Court of Appeal's decision is a refreshing acknowledgment of the distinction between Orders made in the thick of a CCAA reorganization and Orders made that have no effect on the reorganization at all. Prior to the Court of Appeal's decision, the weight of authority was on treating appeals in each of those categories on exactly the same basis and discouraging all appeals. The decision adds a welcoming element of rationality to judicial approaches to appeals under the CCAA by recognizing that there are differences between orders made where an appeal will negatively affect the debtor’s intended reorganization and orders made where an appeal will have absolutely no effect on the proceedings at all. The distinction drawn by the British Columbia Court of Appeal in the case is a welcome refinement and rationalization of what had been a complex and troubled area.