In late 2020, the Companies' Creditors Arrangement Act (CCAA) was leveraged to effect the restructuring of an automotive parts supplier and the acquisition of its shares by a strategic partner without the court-approved sale process typically required of a sale transaction in formal restructuring and insolvency proceedings in Canada.
Instead, the purchaser 'sponsored' a Part I CCAA plan of compromise, arrangement (and reorganization) that was near unanimously approved by the affected creditors, sanctioned by the court, and implemented in under 100 days from the commencement of the CCAA proceedings. It's a simple and compelling story for a few reasons:
- The creditors actively approved the transaction
- The market disruption and general uncertainty of the restructuring proceedings was minimized
- The overall cost of the process was managed by speed of completion and coordination amongst stakeholders
- The parts supplier emerged from court proceedings as a viable supply channel for its customers.
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