The case Re Bearcat is the first where a court has considered whether debtor in possession financing is available in Bankruptcy and Insolvency Act ("BIA") proposal proceedings. Justice Romaine of the Alberta Court of Queen’s Bench noted the differences between the Companies’ Creditors Arrangement Act ("CCAA") regime, where it has been established that DIP financing is available, and the BIA proposal regime. The CCAA is brief, flexible and remedial in nature. The BIA proposal provisions are specific and detailed, and designed to provide a quick and inexpensive process for an insolvent debtor to resolve issues with its creditors. Despite these differences, Justice Romaine concluded that there was nothing in the BIA that would preclude the concept of super-priority financing nor would DIP financing be in conflict with the proposal provisions of the BIA.

type Insolvency & Restructuring Alert - Dipping Under the BIA