Canada’s insolvency and restructuring landscape is undergoing a dramatic shift. The pandemic-era leniency that once defined lender behaviour has faded, replaced by a climate of creditor assertiveness and mounting urgency for distressed companies. In this Lexpert Special Edition, we spotlight the top-ranked lawyers at the forefront of these changes and distill the key trends shaping the field for Canadian businesses.
Creditor assertiveness and early action
Across the country, insolvency lawyers are seeing a clear change in tone. “While there may not be an increased level of filings since 2024, we’ve definitely seen an uptick,” says Robyn Gurofsky of Fasken Martineau DuMoulin LLP. The era of “pandemic patience” is over, with lenders less willing to wait and more likely to use legal tools or cut back on lending. Gurofsky’s advice is blunt: “The earlier you are in touch with your creditors, the better. If you wait until you can’t make your next payroll, your optionality becomes extremely limited.”
The scale of insolvency files is also growing. “We are dealing more frequently with enterprises carrying indebtedness in the hundreds of millions,” says Hugo Babos-Marchand of McCarthy Tétrault LLP. Lenders, he notes, are “far less patient than they were during the pandemic.” His message: “Being proactive is essential, and waiting until liquidity is exhausted may foreclose restructuring altogether.”
New tools and evolving strategies
This new era is marked by a rise in creditor-driven restructurings and the use of innovative tools. “We are seeing a steady increase in court-supervised restructurings, particularly under the CCAA, and receivership activity is also up,” says Natasha MacParland of Davies Ward Phillips & Vineberg LLP. The distinction between debtor-driven and creditor-driven proceedings is blurring, with creditors “driving results, not waiting for debtors to act.”
Reverse vesting orders (RVOs) have become more common, though their growing use is sparking debate. “There’s a concern by some that RVOs and the use of RVOs [have] become too prevalent, and that there are not enough protections in place,” says Peter Rubin of Blake, Cassels & Graydon LLP. Courts are responding with clearer guidelines, but further legislative action may be coming.
Cross-border complexity and high stakes
Cross-border restructurings are also evolving, with some companies eyeing Canada for legal advantages unavailable in the US. As Lance Williams of McCarthy Tétrault LLP puts it, Canada’s flexible statutes allow courts to “really customize for the situation.”
Behind these legal trends are real-world consequences. The award-winning turnaround of Tacora Resources Inc., steered by Lee Nicholson at Stikeman Elliott LLP, highlights what’s at stake for businesses and communities. “The goal of the case was to preserve Tacora as a going concern and get that new investment that it needed to try to ramp up production,” Nicholson says.
The bottom line: move early, move smart
Across the board, the message is clear: the window for inaction is closing. As Gabriel Lavery Lepage of Blake, Cassels & Graydon LLP advises, “At the first signs of cash flow issues, engage advisers. The conventional wisdom is the earlier, the better – and it’s absolutely true.”
In the Lexpert Special Edition on Insolvency and Restructuring, we profile the lawyers and firms leading Canadian businesses in this new era, where expertise, agility, and early action are more critical than ever.