Creditors over environment: Alberta Court of Appeal upholds Redwater Energy decision

In a 2-1 decision, a Alberta Court of Appeal has inspected a Redwater Energy preference that gave cumulative creditors priority over environmental clean-up in a box of an appetite bankruptcy.

The box centred on a tiny appetite association called Redwater Energy, which went into receivership in 201, overdue $5 million to ATB Financial, a financial establishment owned by a range of Alberta. At a time of a bankruptcy, Redwater had few producing oil and gas wells, as good as many some-more resources that were not producing and would need to be reclaimed.

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Alberta appetite regulations contend that producing wells would have to be sole to compensate a environmental clean-up costs of a non-producing wells or other assets. 

Insolvency wins a day

The receiver for a ruined association — accounting organisation Grant Thornton — along with ATB Financial, instead wanted to sell a producing wells to compensate off a debt to ATB and leave a non-producing wells to be spotless adult by a Orphan Well Association, that is saved by industry.

The box went to a reduce justice that was tasked with deciding which has priority: sovereign penury law, or provincial appetite regulations. Two courts have now decided penury law wins a day and Grant Thornton is in a routine of offered a producing assets. 

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This box has implications that strech distant over one tiny appetite company. British Columbia and Saskatchewan both participated in a appeal in support of a Alberta Energy Regulator since a box could act as a fashion in other provinces.

Costs and benefits

There are some benefits, pronounced Kathleen Shannon, a counsel with Field Law.

“Lenders will still feel secure in their creditor positions, so they’re expected to continue lending to a oil and gas industry. If a preference had been reversed, there would have been some-more hesitation from financial institutions.”

Shannon forked out that a a AER will have some work to do to safeguard it has adequate confidence opposite a environmental obligations of appetite companies. It also has a choice to serve appeal.

“I consider a fact that there’s gainsay means that potentially there will be another interest to a Supreme Court of Canada,” she said.

Article source: http://www.cbc.ca/news/canada/calgary/redwater-energy-appeal-dismissed-alberta-bankruptcy-environment-creditors-1.4083474?cmp=rss