Agence du revenu du Québec v. FTI Consulting Canada Inc., et al.

(Quebec) (Civil) (By Leave)


Bankruptcy and insolvency - Bankruptcy and insolvency — Arrangement — Exercise of discretion — Compensation — Pre-filing debt to tax authority — Post-filing claim against same authority — Possibility of effecting compensation between two forms of debt under federal companies creditors’ arrangement scheme — In liquidation arrangement situation, where distribution of proceeds of assets is all that remains in issue, whether supervising judge, in exercising discretion to authorize or not to authorize pre post compensation, can confine himself to considering only two of remedial objectives of legislation, namely “maximizing recovery” and “providing for the equitable distribution of assets among creditors” — Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36, s. 11.



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The respondent FTI Consulting Canada Inc., a monitor within the meaning of the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C 36, filed a motion for directions with the Superior Court in which it sought, among other things, a declaration that the applicant, the Agence du revenu du Québec (“ARQ”), could not have compensation effected between a pre-filing debt and a post-filing claim in the context of the arrangement regarding Bloom Lake. The judge supervising the arrangement accepted the monitor’s arguments and did not authorize compensation in the circumstances. He found that it is well established that no compensation can be effected between a pre-filing debt and a post-filing claim under the applicable tax legislation, which, moreover, is clear and unambiguous. The Court of Appeal found no error in the supervising judge’s conclusions and dismissed the ARQ’s appeal.