COMMENTS FROM THE BENCH stop to consider. Is it the right recommendation, or is further work required before making a recommendation? (c)  “Conflicts” – Before you accept a mandate to act as monitor or receiver, stop to consider if your pre-filing involvement impacts your ability to act as an impartial officer of the Court. For example, it may prove difficult for creditors to accept the impartiality of a monitor who has been acting as a financial advisor to the debtor pre-filing. Similarly, involvement on behalf of a lender under a forbearance arrangement may taint a debtor’s acceptance of a later court-appointment as receiver. (d)  “Receiverships” – If a secured party elects to pursue a court- appointed receivership, make sure they understand that: a.  the receiver will be an officer of the Court with duties to all creditors and not their agent; b.  approval of any sales process will depend on what the Court thinks of the adequacy of the process and outcome – the opinion of the credit committee or special loans manager does not count; and c.  in most provinces, the secured party will need to demonstrate to the Court why the aid of the Court is necessary in order to obtain the appointment – it is not sufficient to show up in Court and simply state: “We want a Court appointment.” (e)  “Allocation of Costs” – In Court-appointed receiverships, remember that while pro rata may generally be appropriate, the test is what is fair and equitable in the circumstances. Some collateral may be high value, but very liquid. Other collateral may be more problematic to dispose of. It is up to you to keep proper track of costs and allocate them appropriately. One size does not necessarily fit all instances. (f)  “Reports and Releases” – A general observation, going back to my early days of practice, is that the number of qualifications in monitors’ and receivers’ reports seems to have grown proportionately with the length of retainer letters. Because I’m old, I remember when none of the law firms, and many accounting firms, had no template-retainer letters; and of course, most also had no General Counsel or Risk Management Committees, either. It was clearly a different time! Today in Canada, broad-based release language has become standard in CCAA and Receivership Orders. Courts are routinely asked to: •  approve the conduct, activities, and reports of monitors and receivers; •  grant general releases to receivers and monitors at the conclusion of their mandates; and •  include broad third-party releases in CCAA sanction orders. Broad release language in favour of multiple third parties is frequently making its way into draft Plans of Arrangement and Sanction Orders. If you are involved with one of these plans, it is important to keep in mind that a third-party release is appropriate only where it is logically connected to the restructuring and the relevant third party is giving up value to obtain the release. This must be addressed by you in your reporting to the Court. There is a bit of divide across Canada on the approval of receiver and monitor reports and activities and the granting of releases. Based on a Canada-wide survey of judges, who routinely hear commercial matters, conducted a couple of years ago, approximately 50% of responding judges believe the protections included in appointment orders and available under the BIA/CCAA are adequate. In their view, if a particular activity requires Court sanction, then the Court approval should be limited to that item and only matters specifically addressed to the Court should be approved. My advice on this issue is simply to be familiar with the practice of the Court in which you are appearing. In the interest of time, I will leave it there in terms of practice suggestions. I want to now return to where I started. Although the insolvency industry faces challenges, I believe the efficient functioning of Canada’s insolvency regime is a testament to the high standards of competence and professionalism that exist in the profession. In over 30 years as a practising lawyer and judge, my dealings and interactions with insolvency professionals have been predominately positive, and I have never been more dependent on their work product than I am now. I’ll leave with an example that comes to mind. I very recently terminated a CCAA stay on the basis of a monitor’s return to Court, well before the expiration of the most recent stay extension. I was informed sales projections were not being achieved, promised restructuring milestones were not being met, and in the monitor’s view, a successful restructuring was unlikely. The report was detailed and to the point. As is frequently the case in smaller CCAA’s in the Atlantic region, the monitor worked with limited assistance from counsel and personally appeared in Court to address his report. Debtor frustration with the monitor was apparent; the Court’s appreciation for a job well done was immense. This example is one of many I could cite. I believe it highlights in very practical terms the professionalism and competence of Canada’s Insolvency Professionals. RS Darrell Stephenson August 17, 2018 Charlottetown, Prince Edward Island Approval of any sales process will depend on what the Court thinks of the adequacy of the process and outcome – the opinion of the credit committee or special loans manager does not count. 54 Rebuilding Success Spring/Summer2019