Critical supplier (CCAA)

A supplier or buyer meets the term in a restructuring under the CCAA when the debtor needs certain goods or services to keep operating. The court can declare a supplier critical and order it to keep supplying on terms. See buying a company in liquidation or insolvency, and the monitor who reports in a CCAA case.

What section 11.4 provides

Under section 11.4(1), on application by a debtor company and on notice to the secured creditors likely to be affected by the security or charge, the court may declare a person a critical supplier if satisfied that the person supplies goods or services to the company and that they are critical to its continued operation. Under 11.4(2) it may require supply on terms consistent with the supply relationship or that the court considers appropriate. Under 11.4(3), if it does, it shall declare a security or charge on all or part of the company’s property in the supplier’s favour, in an amount equal to the value supplied under the order. Under 11.4(4) the court may rank that charge ahead of any secured creditor’s claim.

What to ask

• Whether an order has been made, and whom it names
• If a supplier is named, whether its contract terms still apply
• Which secured creditors received notice of the application