J. L. Wall

During CCAA proceedings involving an aerospace manufacturer, former directors and officers sought an interlocutory injunction restraining the provincial environmental regulator from issuing a Director’s Order under the Environmental Protection Act pending determination of a related motion concerning adjudicative procedures for claims in the CCAA process.

The moving party argued that a “status quo” exception permitted injunctive relief against the Crown to preserve the court’s process.

The court held that the Proceedings Against the Crown Act generally bars injunctions against the Crown and that the asserted status quo exception did not apply because there was no government wrongdoing and the Environmental Protection Act provides a complete statutory scheme for issuing and appealing environmental orders.

The court further held that the moving party failed to meet the RJR‑Macdonald test, including establishing a serious issue to be tried or irreparable harm.

The motion was dismissed.

In CCAA restructuring proceedings, the applicants sought approval of an asset sale transaction and related vesting order.

The provincial environmental regulator opposed the transaction and argued that a pre‑filing environmental remediation order was regulatory in nature and not subject to the CCAA stay.

The court held that where an insolvent debtor with no ongoing operations would necessarily incur financial obligations to comply with the environmental order, the order effectively enforced a payment obligation and was therefore stayed.

The court further held that the regulator could file a claim for remediation costs but could not use regulatory orders to create a super‑priority inconsistent with the CCAA priority scheme.

The proposed asset sale was approved as the result of a comprehensive marketing process and in the best interests of stakeholders.