In Companies’ Creditors Arrangement Act proceedings, the debtor sought approval of a debtor-in-possession financing facility, an extension of the stay of proceedings, approval of a management incentive plan, and approval of the monitor’s actions.
Certain noteholders opposed the proposed financing and incentive plan and proposed an alternative short-term DIP facility intended to maintain the status quo pending negotiation of a restructuring plan.
The court held that the debtor’s board had exercised reasonable business judgment after a competitive process and that the proposed financing satisfied the statutory considerations under s. 11.2 of the CCAA.
The court rejected the argument that the DIP facility constituted a de facto plan of arrangement requiring creditor approval and found the alternative financing proposal tactical and inconsistent with market conditions.
The management incentive plan was also approved as reasonable and necessary to retain key personnel responsible for pursuing a significant international arbitration claim forming the debtor’s primary asset.