Stewart McKelvey

CCAA Proceedings Beware when Acting for Debtor Companies By Maurice Chiasson, Q.C. A ("CCAA"). recent decision from the New Bruns- wick Court of Queen's Bench should be required reading for all counsel in- volved in proceedings under the Com- panies' Creditors Arrangement Act The companion decisions of Justice Lucie A. LaVigne in Re Tepper Holdings Inc. 2011 NBQB 311 and 2011 NBQB 336 serve as stark re- minders of the obligations of counsel involved in CCAA proceedings and particularly for those act- ing on behalf of the debtor. Tepper Holdings Inc. and various related com- panies sought and obtained a stay of proceedings under the CCAA in late June 2011. The initial or- der provided for the usual relief (a stay of proceed- ings and an administrative charge to cover the fees and expenses of the professionals representing the debtors, including their counsel). The initial appli- 2 SPRING 2012 DOING BUSINESS IN ATLANTIC CANADA cation also provided for debtor-in-possession (DIP) financing of up to 1 million. The application for the initial order was made without notice to the secured creditors of the debt- ors. It appears from the decision that counsel for the debtors failed to alert the court to recent amendments to the CCAA which require notice to secured parties whose interests may be affected by DIP financing. As a result of the objection of the secured creditors, the initial order was varied shortly after it was issued to greatly reduce the ex- tent of permitted DIP financing and also to reduce the extent of the administrative charge and related retainer provided to counsel for the debtors. It later came to the attention of the various par- ties that counsel for the debtors charged legal fees (including disbursements and taxes) in excess of $500,000 in the first three months of the proceed-

• Cover