The requirements of the Bankruptcy and Insolvency Act and the province of Alberta’s regime concerning the cost of remedying the environmental effects of abandoned oil wells can co-exist, the Supreme Court of Canada ruled today.
The 5-2 decision overturned the Alberta appellate court decision in allowing the appeal of the Orphan Well Association and the Alberta Energy Regulator against Grant Thornton Limited, the receiver and trustee in bankruptcy for a bankrupt oil and gas producer.
“The big takeaway is that it’s a win for the regulator but a loss for secured creditors,” says Jeremy Opolsky, a commercial litigator at Torys LLP in Toronto. “This decision effectively puts creditors at the back of the line; in many cases, including this one, they recover nothing at all, including their investment. The [Alberta] Court of Appeal called it replacing ‘polluter pays’ with ‘third-party pays.’”