What is the test for a CCAA plan of reorganization?

Ontario, Canada


The following excerpt is from Noma Co. (Bankruptcy), Re, 2004 CanLII 45450 (ON SC):

At p. 124 the court stated that once the creditors, the company and the court have agreed to the plan of reorganization, the company must be able to carry on business free of the burden of the creditors’ claims except as the creditors have agreed to in approving the plan. In obtaining the creditors’ agreement, the creditors will have agreed to compromise their claims. It would be unfair to them if a dissident or absent creditor cold remain outside the plan and assert its full claim. The purpose of the CCAA is to avoid such a result. Those who participate in CCAA proceedings must be assured that there are no other creditors waiting outside the process for a mistake to be made of which they can take advantage or that an oversight or inadvertence in complying with court orders, will result in some claims remaining outside the system. The certainty of court orders must be assured. See Lindsay v. Transtec at pp. 125 and 129.

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