Powers of the court

Any interested person may apply to the court for an order under the Act.^[4] This is normally the debtor company, but a creditor can also do so.^[23] The court having jurisdiction is the superior court for the province in which the company's head office or chief place of business in Canada, or, in the absence of that, where any of its assets are situated.^[24]
When the application is made, the court is required to appoint a monitor with respect to the business and financial affairs of the company, who must be a trustee in bankruptcy under the Bankruptcy and Insolvency Act.^[25] The monitor is required to investigate and report back to the court on the company, advise the court with respect to any actions that need to be taken, and to carry out any other functions in relation to the company that the court may direct.^[26]
Where a compromise or arrangement has already been negotiated with the secured^[27] or unsecured^[28] creditors — essentially creating a pre-packaged insolvency — the court may summarily order that it proceed to be voted on by each class of creditors concerned, and, where necessary, by the shareholders as well. Whether a creditor is secured or unsecured is governed by the BIA.^[29]
However, the court is not bound to accept an application under the Act, and it can terminate previously granted orders (and even declare them to have been void ab initio) where an applicant has not made full and fair disclosure of all material facts.^[30] Where a petition for CCAA relief appears to be more like a defensive tactic than a bona fide attempt to restructure, it may prefer to order receivership instead.^[31]

Stay of proceedings

Where no such compromise or arrangement has been negotiated, the court, on application, may issue an order, lasting for 30 days,

• staying,
• restraining from continuing, or
• prohibiting from commencing,

any proceedings against the debtor company, while negotiations are held to secure a compromise or arrangement with creditors and shareholders. The court may extend the protection for any period it sees fit.^[32] A stay may be lifted upon application to the court, but only in very restricted circumstances:

• it will be difficult for a secured party to obtain relief where the effect of doing so would be to prevent the debtor from continuing to carry on business^[33]
• however, lifting a stay may be more possible in a liquidating CCAA proceeding, having regard for the need to balance stakeholder interests^[34]

Provision is made for such stays not affecting investigations undertaken by any regulatory body (other than with respect to any payment that may be ordered), but the court can order the cancellation of such exemption where:

• a viable compromise or arrangement could not otherwise be made in respect of the company, and
• it is not contrary to the public interest that the regulatory body be affected by such order^[35]

However, as noted in Newfoundland and Labrador v. AbitibiBowater Inc., not all payments required under regulatory orders constitute claims under the CCAA and are thus subject to stay. Subsequent jurisprudence suggests that determining the status of such orders will be case-specific.^[36]