The debtor company in CCAA proceedings brought a motion seeking a declaration that two Occupational Health and Safety Act prosecutions commenced by the provincial labour ministry were stayed by the CCAA initial order, or alternatively that the proceedings should be stayed under s. 11.1(4) of the Companies’ Creditors Arrangement Act.
The debtor argued that any conviction would result only in monetary fines, rendering the ministry a creditor whose claim should be addressed within the insolvency process.
The court held that regulatory prosecutions are not equivalent to creditor enforcement where no monetary obligation has yet crystallized and the regulator is acting in a prosecutorial capacity.
Applying the Supreme Court’s test for regulatory claims under insolvency legislation, the court concluded that the ministry was not acting as a creditor and that the proceedings remained regulatory in nature.
The motion to declare the prosecutions stayed was therefore dismissed.
