Solvent parties, other than the debtor company, are increasingly being released from liability for legitimate class claims against them pursuant to restructuring arrangements under the Companies’ Creditors Arrangement Act (CCAA). This paper considers a number of the important policy issues raised by third party releases, particularly where they purport to foreclose or settle tenable class actions. The fact that CCAA releases finally determine liability on a non-opt-out basis,
coupled with the remedial purpose of the CCAA in facilitating swift and effective corporate restructurings, suggest that
class action defendants will be strongly incentivized to have the claims against them resolved in this manner. Third party releases are clearly here to stay.
While the settlement and release of class claims under the CCAA may disproportionately benefit parties who are or
may become class action defendants, plaintiffs’ counsel can and should use this process to strategically leverage larger, faster settlements for the classes they represent. This paper offers specific, practical lessons for plaintiffs’ counsel seeking to realize favourable outcomes under the CCAA. To the extent class counsel are able to swiftly and inexpensively negotiate fair and meaningful class settlements within the ambit of the CCAA, the important objectives of access to justice, judicial economy, and behaviour modification will continue to be served.
