Redwater's Continuing Impact on Canada's Energy Sector
Abstract
In 2019, the Supreme Court of Canada rendered its decision in Orphan Well Association v. Grant Thornton Ltd. (Redwater), ruling that environmental reclamation obligations were not claims provable in bankruptcy. This allowed the Alberta Energy Regulator (AER) to assert its claims outside the bankruptcy scheme, giving it priority over secured creditors and destabilizing Canada's energy and lending sectors. The decision disrupted commercial certainty as lenders struggled to recover loans from insolvent oil and gas companies. Although the AER and subsequent case law attempted to address the fallout, these measures have not fully restored stability. This article argues that comprehensive legislative action is needed to clarify the legal framework and mitigate Redwater's impact on the industry.
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