The long-running conflict between insolvency professionals and the Alberta Energy Regulator (AER) that was clarified by the Court of Queen’s Bench of Alberta decision in Redwater Energy Corp. was previously analyzed in a blog post here. The decision in Redwater confirmed that a receiver is entitled to disclaim a debtor’s interest in a portion of the debtor’s AER licensed properties, including licensed properties and facilities that have negative value due to the fact of abandonment and reclamation obligations, and to thereafter vend the assets that the receiver remained in possession and control of. In a subsequent decision that is discussed here, a majority of the Court of Appeal upheld the lower court ruling in Redwater.
Subsequent to the decision in Redwater, the Court of Queen’s Bench of Alberta issued receivership orders in Northpoint Resources Ltd. and LGX Oil + Gas Inc. that altered paragraph 3(a) of the template receivership order on account of the Redwater decision. Paragraph 3(a) of the template receivership order provides that the receiver is authorized and empowered, but not obligated, to take possession and control of a debtor’s property. In both Northpoint and LGX the phrase “…and the Receiver shall be entitled to disclaim, abandon or renounce the Debtor’s interest in any of the Property” was added to paragraph 3(a). The submission of the AER that section 195 of the Bankruptcy and Insolvency Act (Canada) (BIA) stayed the operation of Redwater pending the resolution of the appeal was rejected in Northpoint because it constituted a separate and unrelated proceeding.