When U.S. asbestos claimants appeared before the Quebec Superior Court earlier this year and argued that the Canadian claims process should look more like the one they were used to at home, the court’s answer was unambiguous: it doesn’t have to.
“Just because you do it a certain way on your side of the border doesn’t mean we will necessarily do it in the same fashion in Canada,” Bernard Boucher, a restructuring and insolvency lawyer at LCM Attorneys Inc., says of the judge’s reply.
“He told them, essentially, while dealing with a claim process that had been already put in place by the Court that since this process presented some advantages over a Trust Distribution Procedures (TDP) set up pursuant to the US Bankruptcy Code, such CCAA claim process should be enforced even if some US claimants pretended that it suffered from some flaws.”
The June 2026 ruling in the matter of Asbestos Corporation Limited (ACL) — a Quebec mining company that stopped extracting asbestos decades ago but has spent years managing the flood of U.S. damage claims that followed — is an example of the tension Boucher has spent four decades managing: what happens when two deeply integrated legal systems meet in an insolvency proceeding and discover they’re not as alike as either side assumed?
The court draws a line
ACL extracted asbestos from the Quebec mining town of Thetford Mines for decades before ceasing operations, leaving in its wake thousands of U.S. claims from people who alleged they’d been harmed by exposure to the company’s product. The mechanism used to manage those claims was familiar from other mass torts litigation: the establishment of court-supervised trust funds, funded primarily by insurers under product liability policies, designed to compensate claimants without the chaos of individual litigation.
Since 1988, more than 60 such funds have been established south of the border to handle asbestos-related claims alone, paying out more than US$17.5 billion, but not without problems.
“It was argued before the Court in Asbestos that here have been several cases of fraud in the U.S. where people have claimed on numerous occasions for the same damages against various different trust funds,” Boucher says.
It was against that backdrop that U.S. claimants challenged the claims process Justice Jean-François Émond had designed for ACL under the Companies’ Creditors Arrangement Act (CCAA). The claimants retained their own expert — a retired U.S. bankruptcy judge — to demonstrate what they argued were the transparency and oversight advantages of the American system.
Émond found that U.S. asbestos-related TDPs lacked supervision and transparency, noting that they operated outside ongoing court control and that the system had given rise to false and fraudulent claims. The CCAA regime, Émond concluded, filled those gaps by operating as a public process under court supervision with all information publicly available.
“One of the things raised by the company and by the insurers is that the process created by the court pursuant to the CCAA was tighter, because of the level of control by the court over who can claim and how,” Boucher says.
The U.S. Bankruptcy Code provides standardized distribution processes; under the CCAA, the process is always specific to each case — “tailor-made, in some ways, for the situation at hand,” he adds.
“Justice Émond noted that our system is more rigorous and concluded that despite the contestation before him, our rules should prevail because, in short, our rules are better and our process is better.”
Leave to appeal was later denied, an outcome reflective of the high bar in the CCAA context where the first-instance judge is granted considerable discretion.
Common ground, competing rules
The ACL ruling shows how far cross-border legal alignment has come, while also serving as a reminder of its limits. In 2007, both the Bankruptcy and Insolvency Act (BIA) and the CCAA were amended to incorporate provisions dealing specifically with cross-border insolvencies, drawing on the UNCITRAL Model Law on Cross-Border Insolvency. The U.S. enacted its own Model Law-based framework under Chapter 15 of the Bankruptcy Code. But as Boucher notes, the two countries did not simply copy the same rules; each incorporated only what suited its own legal system.
It was still a marked improvement. Historically, recognition of a foreign insolvency proceeding was, as Boucher puts it, “pretty much to the grace of the prince.” while applying the principles of international committee. Now there’s a specific mechanism under Chapter 15, for example, which allows for recognition of an order issued by a Canadian court sitting in insolvency matters — a much more streamlined and straightforward process.
“Orders issued in Canada do not have extraterritorial scope so unless you ask for recognition by the court of the other country where the assets are located, you cannot enforce it right away,” Boucher says. “If you’re the creditor of a debtor corporation based in Canada but doing business in five other countries, you want some certainty as to how you’ll recoup assets.”
As a complement to the statutory framework are cross-border insolvency protocols, which serve as additional mechanisms to remove friction by coordinating hearings, facilitating communication between courts, and establishing procedures for service and notice. But a protocol, Boucher stresses, also cannot make two legal systems into one.
Since there’s some flexibility in the application of the centre of main interest (COMI), Boucher says it’s worth evaluating jurisdictions at the outset to see which might be more favourable. For example, if one of the debtor’s core assets is insurance policies for which there may be some debate on coverage, it may be worthwhile to file in the jurisdiction that takes the most generous approach toward the insured.
While the CCAA is federal legislation, in Quebec the substantive rights of creditors are frequently governed by the Civil Code of Québec, which introduces a new layer of consideration. The presence of a U.S. governing-law clause in loan documentation, Boucher notes, does not resolve questions of proprietary rights over Quebec assets.
“You cannot simply take a UCC security-interest analysis and replace ‘security interest’ with ‘hypothec,’” he says, adding that Quebec counsel should be involved early well before the restructuring reaches the distribution stage.
Even with Canada's closest and most established economic partner, similarities in general principle only go so far. There will always be distinctions — and “potentially a point at which a judge on either side of the border may decide ‘that’s just too bad; this is how we do it here and that’s how we’ll continue to function,’” Boucher says.
“Cross-border insolvency is no longer an exotic area of practice,” he adds. “For businesses operating between Canada and the United States, it’s part of the normal restructuring landscape. But greater sophistication does not mean that the differences between the two legal systems have disappeared.”
The stakes are rising: know the law that governs your rights
The ACL ruling lands at a critical juncture, when Canada’s trade relationship with the U.S. — long the dominant axis of its commercial life — is in flux. As Canada actively works to diversify economic partnerships, companies and their creditors may increasingly encounter insolvency proceedings governed by unfamiliar legal systems.
The trade disruption already underway is creating new forms of financial pressure such as increased input costs, reduced margins, inventory problems, and working-capital stress that may affect entities on different sides of the border very differently. Boucher expects greater attention in cross-border files to supply chains, customs and tariff exposure, intercompany arrangements, guarantees, and the physical location and legal characterization of assets.
And as Canada broadens its commercial relationships beyond the U.S., the UNCITRAL framework moves from background infrastructure to essential architecture. To date, more than 60 countries have integrated some version of the law into relevant legislation. The certainty it provides creditors operating across multiple jurisdictions, Boucher says, is exactly what it was designed to deliver.
“The core concept that one should take in mind is that we should not take for granted that the system in another country works exactly like ours,” he says.
Regardless of jurisdiction, one principle holds: a company that seeks restructuring advice when it first encounters liquidity issues, Boucher advises, will fare far better than one that waits for an acute crisis.
“One element that remains essential is to intervene early — options are always more numerous when we are not running short of time. Know the law that governs your rights. Understand the insolvency process you are entering. And engage early enough to do something about it.”
When U.S. asbestos claimants appeared before the Quebec Superior Court earlier this year and argued that the Canadian claims process should look more like the one they were used to at home, the court’s answer was unambiguous: it doesn’t have to.
“Just because you do it a certain way on your side of the border doesn’t mean we will necessarily do it in the same fashion in Canada,” Bernard Boucher, a restructuring and insolvency lawyer at LCM Attorneys Inc., says of the judge’s reply.
“He told them, essentially, while dealing with a claim process that had been already put in place by the Court that since this process presented some advantages over a Trust Distribution Procedures (TDP) set up pursuant to the US Bankruptcy Code, such CCAA claim process should be enforced even if some US claimants pretended that it suffered from some flaws.”
The June 2026 ruling in the matter of Asbestos Corporation Limited (ACL) — a Quebec mining company that stopped extracting asbestos decades ago but has spent years managing the flood of U.S. damage claims that followed — is an example of the tension Boucher has spent four decades managing: what happens when two deeply integrated legal systems meet in an insolvency proceeding and discover they’re not as alike as either side assumed?
The court draws a line
ACL extracted asbestos from the Quebec mining town of Thetford Mines for decades before ceasing operations, leaving in its wake thousands of U.S. claims from people who alleged they’d been harmed by exposure to the company’s product. The mechanism used to manage those claims was familiar from other mass torts litigation: the establishment of court-supervised trust funds, funded primarily by insurers under product liability policies, designed to compensate claimants without the chaos of individual litigation.
Since 1988, more than 60 such funds have been established south of the border to handle asbestos-related claims alone, paying out more than US$17.5 billion, but not without problems.
“It was argued before the Court in Asbestos that here have been several cases of fraud in the U.S. where people have claimed on numerous occasions for the same damages against various different trust funds,” Boucher says.
It was against that backdrop that U.S. claimants challenged the claims process Justice Jean-François Émond had designed for ACL under the Companies’ Creditors Arrangement Act (CCAA). The claimants retained their own expert — a retired U.S. bankruptcy judge — to demonstrate what they argued were the transparency and oversight advantages of the American system.
Émond found that U.S. asbestos-related TDPs lacked supervision and transparency, noting that they operated outside ongoing court control and that the system had given rise to false and fraudulent claims. The CCAA regime, Émond concluded, filled those gaps by operating as a public process under court supervision with all information publicly available.
“One of the things raised by the company and by the insurers is that the process created by the court pursuant to the CCAA was tighter, because of the level of control by the court over who can claim and how,” Boucher says.
The U.S. Bankruptcy Code provides standardized distribution processes; under the CCAA, the process is always specific to each case — “tailor-made, in some ways, for the situation at hand,” he adds.
“Justice Émond noted that our system is more rigorous and concluded that despite the contestation before him, our rules should prevail because, in short, our rules are better and our process is better.”
Leave to appeal was later denied, an outcome reflective of the high bar in the CCAA context where the first-instance judge is granted considerable discretion.
Common ground, competing rules
The ACL ruling shows how far cross-border legal alignment has come, while also serving as a reminder of its limits. In 2007, both the Bankruptcy and Insolvency Act (BIA) and the CCAA were amended to incorporate provisions dealing specifically with cross-border insolvencies, drawing on the UNCITRAL Model Law on Cross-Border Insolvency. The U.S. enacted its own Model Law-based framework under Chapter 15 of the Bankruptcy Code. But as Boucher notes, the two countries did not simply copy the same rules; each incorporated only what suited its own legal system.
It was still a marked improvement. Historically, recognition of a foreign insolvency proceeding was, as Boucher puts it, “pretty much to the grace of the prince.” while applying the principles of international committee. Now there’s a specific mechanism under Chapter 15, for example, which allows for recognition of an order issued by a Canadian court sitting in insolvency matters — a much more streamlined and straightforward process.
“Orders issued in Canada do not have extraterritorial scope so unless you ask for recognition by the court of the other country where the assets are located, you cannot enforce it right away,” Boucher says. “If you’re the creditor of a debtor corporation based in Canada but doing business in five other countries, you want some certainty as to how you’ll recoup assets.”
As a complement to the statutory framework are cross-border insolvency protocols, which serve as additional mechanisms to remove friction by coordinating hearings, facilitating communication between courts, and establishing procedures for service and notice. But a protocol, Boucher stresses, also cannot make two legal systems into one.
Since there’s some flexibility in the application of the centre of main interest (COMI), Boucher says it’s worth evaluating jurisdictions at the outset to see which might be more favourable. For example, if one of the debtor’s core assets is insurance policies for which there may be some debate on coverage, it may be worthwhile to file in the jurisdiction that takes the most generous approach toward the insured.
While the CCAA is federal legislation, in Quebec the substantive rights of creditors are frequently governed by the Civil Code of Québec, which introduces a new layer of consideration. The presence of a U.S. governing-law clause in loan documentation, Boucher notes, does not resolve questions of proprietary rights over Quebec assets.
“You cannot simply take a UCC security-interest analysis and replace ‘security interest’ with ‘hypothec,’” he says, adding that Quebec counsel should be involved early well before the restructuring reaches the distribution stage.
Even with Canada's closest and most established economic partner, similarities in general principle only go so far. There will always be distinctions — and “potentially a point at which a judge on either side of the border may decide ‘that’s just too bad; this is how we do it here and that’s how we’ll continue to function,’” Boucher says.
“Cross-border insolvency is no longer an exotic area of practice,” he adds. “For businesses operating between Canada and the United States, it’s part of the normal restructuring landscape. But greater sophistication does not mean that the differences between the two legal systems have disappeared.”
The stakes are rising: know the law that governs your rights
The ACL ruling lands at a critical juncture, when Canada’s trade relationship with the U.S. — long the dominant axis of its commercial life — is in flux. As Canada actively works to diversify economic partnerships, companies and their creditors may increasingly encounter insolvency proceedings governed by unfamiliar legal systems.
The trade disruption already underway is creating new forms of financial pressure such as increased input costs, reduced margins, inventory problems, and working-capital stress that may affect entities on different sides of the border very differently. Boucher expects greater attention in cross-border files to supply chains, customs and tariff exposure, intercompany arrangements, guarantees, and the physical location and legal characterization of assets.
And as Canada broadens its commercial relationships beyond the U.S., the UNCITRAL framework moves from background infrastructure to essential architecture. To date, more than 60 countries have integrated some version of the law into relevant legislation. The certainty it provides creditors operating across multiple jurisdictions, Boucher says, is exactly what it was designed to deliver.
“The core concept that one should take in mind is that we should not take for granted that the system in another country works exactly like ours,” he says.
Regardless of jurisdiction, one principle holds: a company that seeks restructuring advice when it first encounters liquidity issues, Boucher advises, will fare far better than one that waits for an acute crisis.
“One element that remains essential is to intervene early — options are always more numerous when we are not running short of time. Know the law that governs your rights. Understand the insolvency process you are entering. And engage early enough to do something about it.”