DATE: 20050208

DOCKET: M32171 & M32172

COURT OF APPEAL FOR ONTARIO

RE:

IN THE MATTER OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT, R.S.C. 1985, C. c-36, AS AMENDED AND IN THE MATTER OF ANDROSCOGGIN ENERGY LLC (Applicant)

BEFORE:

FELDMAN J.A. (In Chambers)

COUNSEL:

Justin R. Fogarty and Renée Brosseau for Pengrowth Corporation and Canadian Forest Oil Ltd.

Robert Frank for AltaGas Ltd.

Joseph M. Steiner, Steven G. Golick and Nancy Roberts for Androscoggin Energy LLC

Ashley John Taylor for KPMG Inc, the Information Officer

Justin de Vries for the intervenor ISDA

HEARD:

February 8, 2005

E N D O R S E M E N T

[1] The decision under appeal involves the interpretation and application of the term “eligible financial contract” under s. 11.1(2) of the CCAA. Farley J. determined that the gas purchase agreements that are the subject of the proceeding are not “eligible financial contracts” under the Act. In so doing, he disagreed with the Alberta Court of Appeal decision in Re Blue Range, [2000] A.J. 1032 that has governed the issue since it was decided.

[2] The appellant on this motion seeks an order that the leave to appeal motion be scheduled before a panel of this court on an expedited basis, and that the appeal be heard by the same panel at the same hearing if leave is granted. The reason for the urgency is that this insolvency is the subject of a Chapter 11 proceeding in the United States, and the date of February 22, 2005 has been scheduled in the bankruptcy court in the U.S. for a motion to deal with all matters in the insolvency.

[3] The respondent opposes the motion on the basis that there is no urgency to the hearing of the appeal because the issue is an academic one in this proceeding. The respondent says that whether or not the contracts are eligible financial contracts under the CCAA does not affect the appellant’s rights in the U.S. or in the Canadian proceedings. The motion was argued on that issue.

[4] What does appear clear is that if the appeal proceedings are not expedited, the appeal will be moot for these parties after February 22, if the U.S. court makes an order on that date that allows the contracts to be assigned.

[5] In his reasons, Farley J. appears to have accepted the respondent’s argument that because of the wording of the rights of the appellants in their contracts, if those contracts are eligible financial contracts within the meaning of the CCAA, that would have no effect in these proceedings and would give them no further rights or advantages.

[6] However, in a conference call on January 6, 2005, Farley J. did not decline to hear the motion on the basis that it was academic to the parties, but instead agreed to hear it, and the U.S. bankruptcy judge also agreed that it was appropriate to hear it as a matter of procedural fairness before the return of the U.S. proceedings on February 22, 2005. The appellants say that they will use a favourable ruling from this court as part of the argument respecting the rights and expectations of the appellants in the U.S. bankruptcy proceedings, and that they may be able to bring an application in an Alberta Court as well. Although it is at best unclear how it will assist the appellants in these proceedings to have the benefit of s. 11.1(2), what is clear is that if there is a benefit, it will only assist if the determination is made before February 22, 2005.

[7] As a further procedural complication, the International Swaps and Derivatives Association Inc. appeared on the motion to advise the court that it would be seeking intervenor status if leave to appeal is granted, and that it would seek to file affidavit material to assist the court with the effect of the decision on the relevant industry. Counsel advised that they would co-operate with any timetable issues in order to accommodate the court and all parties.

[8] In my view, the appellants should be entitled to seek leave to appeal to this court. In light of the February 22nd U.S. motion date, in order to have an effective application, it is appropriate that the application be expedited. Therefore the leave application will be scheduled to be heard by the panel on Monday, February 14, 2005, and if leave is granted, the appeal will be heard on that date as well.

[9] The proposed intervenor may file its notice of motion for leave to intervene on the appeal, and that motion will also be heard by the panel hearing the leave to appeal motion. The motion is to be filed forthwith with all proposed supporting material. If any party wishes to oppose the intervention, that party should file a factum as advised, and if any party wishes to cross-examine on the affidavits, such cross-examinations must be conducted and the transcripts filed by Friday, February 11, 2005. The panel will decide all issues regarding the proposed intervention including whether leave to intervene is granted, if so, what material will form part of the record on the appeal and the costs of the intervention motion.

[10] For purposes of efficiency, the parties are each to file one set of all records including one factum to be used both on the leave to appeal application and on the appeal if leave is granted.

[11] The costs of this motion are reserved to the panel.

“K. Feldman J.A.”