Who gets to drive a restructuring? Until May 2026, the answer in Canada was almost always the debtor, occasionally a secured creditor, and very rarely other interested parties. The Alberta Court of Appeal’s decision in Angus A2A GP Inc. v. Alvarez & Marsal Canada Inc. marked the first instance in which shareholders, took the lead in initiating the restructuring process. “We have here a case that tests the reach of third-party-led CCAA processes, which has been a trend of late,” says Bogdan-Alexandru Dobrota, a partner at Woods LLP. “It’s the first time ever in Canadian case law that a court allowed or granted an initial order brought by an equity holder with respect to a corporation — but the facts are very, very specific.”
The facts of a first in Canadian insolvency law
Angus A2A involves real estate projects in Ontario and Texas. Canadian investors had purchased interests in trusts, which in turn held investments in those projects, a cross-border structure that would ultimately land the matter before an Alberta court.
When the companies ran into financial difficulty, CCAA proceedings were initiated by the shareholders of the trusts themselves.
“Insolvency proceedings are brought, in the vast majority of the time, by the debtor; around 94% of the time, as related in the trial decision,” says Jérôme Coderre, a lawyer at Woods. “In some rare instances — and we see it more and more these days — they’re brought by the secured creditor, at 4,5%, with about1% brought by other interested parties.”
The court granted the initial order and, significantly, appointed a monitor with expanded powers, what practitioners call a “super monitor”. It was vested with broad control over the conduct of the business and the proceedings themselves, including the authority to pursue third-party claims in the U.S.
The central legal question was whether equity holders could initiate CCAA proceedings at all. The court, even on appeal, held that they can qualify as “interested persons” under s. 11 of the Companies' Creditors Arrangement Act. To be granted an initial order by the Court, the equity holder must show a reasonable possibility that the restructuring outcome will generate a recovery for them.
That threshold hinges on a distinction the CCAA imports from the Bankruptcy and Insolvency Act: cash flow insolvency, where a company cannot pay debts when due, but assets could still exceed liabilities, versus balance sheet insolvency, where assets are insufficient to cover all debts. With the former, there is a reasonable possibility that once creditors are repaid through the restructuring process, shareholders may still recover something — whether as a distribution or retained equity value. Only in that scenario do shareholders retain viable economic interest.
The question of shareholder economic interest is not entirely new to Canadian courts: typically, at the tail end of a restructuring when a plan of arrangement comes before a court for sanction, shareholders have been barred from contesting it on the basis that they hold no economic interest in the outcome. At that stage, courts have consistently given more weight to market valuation than to expert reports or a company’s own books. No such market test had yet occurred in Angus A2A.
“What’s groundbreaking is holding, so early in the process prior to any sale or investment process, that the equity holders have a reasonable possibility of an economic interest, and on that basis allowing them to initiate the restructuring process,” says Dobrota. “Not only that, the court handed them the keys to name a super monitor with the powers of the board.”
But the decision comes with a significant caveat. In Angus A2A, all parties agreed no secured creditors existed. Any unsecured claims were insignificant relative to both the asset value and the shareholders’ stake, making equity holders by far the most economically significant party in the proceeding. That’s one of the reasons the court held as it did, Dobrota notes.
“This case does not in any way overturn the state of the law, which places shareholders at the very bottom of the order of priority, as it should be,” he says.
Moving beyond the first secured lender
Angus A2A sits within a broader trend: the rise of third-party-driven CCAA proceedings. Historically initiated almost exclusively by debtors, it’s becoming more common for secured creditors to commence them instead. The increase is particularly common in Quebec construction files, both Dobrota and Coderre have observed.
What’s driving that upward tick is that when a secured lender loses confidence in management but holds security over only some of the assets or shares a complicated lending landscape with multiple other secured parties, receivership becomes unwieldy. CCAA offers a broader stay of proceedings with centralized control and reach over assets that receivership cannot always match. The result is a growing preference among secured lenders for CCAA as a restructuring tool — and with it, a willingness to initiate proceedings themselves rather than wait for the debtor to act.
Angus A2A pushes that trend into new territory. Here it was not a secured lender at the helm but the shareholders themselves, parties who in the traditional CCAA model would have no standing to initiate at all.
That shift is where the fulcrum stakeholder concept becomes central. The concept of fulcrum stakeholders, which emerged largely from U.S. case law over the past five years, describes the stakeholders which sit in the order of priority at the precise point where the company value “breaks” and the funds to satisfy the claims runs out. The fulcrum stakeholders are generally the only class of stakeholders that can expect partial payment only: those ahead will likely be repaid in full; those behind will likely lose everything.
The facts of the Angus A2A case made the court’s determination straightforward, since the equity holders were incontestably the fulcrum stakeholders. But what happens when the fulcrum stakeholder is not as self-evident? With multiple parties jockeying for that status, future cases will be far less clear cut.
“I don’t think a court will hand over the keys to the shareholders if there is a doubt that the creditors might be out of their money,” Dobrota notes.
The concept may also have repercussions beyond shareholders, in files where the fulcrum is a second or subordinated secured lender and the position is genuinely contested.
“When you have a full landscape of various positions — secured lenders, senior, subordinated, equity holders — how will anyone who claims to be a fulcrum stakeholder provide evidence to support that position, especially so early in the process?” asks Dobrota. “That's really key here.”
Who will be the next third parties?
Neither lawyer expects a wave of shareholder-driven filings to follow Angus A2A. The more likely downstream effect is subordinated or second-ranking secured creditors invoking the fulcrum stakeholder concept to seek control of a restructuring on the basis that they are the party most exposed to the outcome.
“This decision confirms that legally, shareholders are interested persons that can initiate CCAA proceedings,” says Coderre. “The question remains as to how often shareholders will have the necessary arguments to present a plan to the court that will allow them to drive the proceedings.”
The bar to initiate is high: an applicant must present a germ of a plan, meaning a credible early framework for the restructuring. Debtors have that information by definition.
“It’s difficult for third parties to have the same information to present a credible plan to the court," he adds. “And I would say it’s even more difficult for shareholders to present a plan that would allow them to get repaid and to repay those before them in the waterfall.”
For now, both lawyers caution against reading too much into a single decision. The case is one tree, Dobrota says. The forest may not be far behind, but nobody can say that with certainty yet.
“The market should take notice of this case to see whether it can lay the foundation for a broader extension of this relatively new phenomenon of third-party-led CCAA proceedings, and who will be the next third parties, other than the classic secured lenders, who may follow in its footsteps.”
This article was produced in partnership with Woods LLP