Need to Know

Changes to the obligations of a surety in the context of the restructuring of an insolvent construction company

Download this publication in PDF document

In 2002, the Québec Court of Appeal acknowledged the importance of sureties in a dispute between a construction company and a supplier. The Court noted that the construction company's losses had been exacerbated by the withdrawal of its surety facility.

More recently, the Québec Superior Court established that the active participation of a surety in the restructuring of a company under the Canadian Companies’ Creditors Arrangement Act was critical to determining whether a surety’s obligations could be reduced under the terms of an arrangement. Accordingly, in Charles-Auguste Fortier inc. (Arrangement relatif à), the Court approved an arrangement under the CCAA, which provided for a partial release of claims against the surety of the debtor company.

Back to the publications list