Known as Companies' Creditors Arrangement Act (CCAA or maybe CC-doubleA). Federal Act for financially troubled corporations providing an opportunity to restructure through a Plan of Arrangement/Compromise (Plan). The Plan outlines how creditors are paid. CCAA is not intended to hold off creditors for several years, unless approved by the majority of creditors as outlined further down.

Eligibility - CCAA is for larger corporations, owing to creditors in excess of $5 million. The CCAA allows a company, if it so chooses, to address its shareholders in addition to its creditors. Typically, if shareholders are impacted, they are often given the opportunity to vote on the Plan.

Process - Starts in the Court system when the company applies for CCAA protection. Court typically issues an Order giving the company 30 days of protection (Stay) from its creditors to allow time to prepare the Plan of Arrangement. Typically, the Court continues the protection beyond the initial 30-day period if the company shows due diligence in formulating a Plan.

Monitor (independent third party) is appointed by the Court to monitor the company's ongoing operations and assist with the filing and voting on the Plan of Arrangement. The Monitor will prepare a report on the Plan of Arrangement included in mailings of the Plan.

Debtor in possession (DIP) financing may be arranged to pay company expenses while under the Stay. DIP financing is not to be confused with the Plan of Arrangement/Compromise.

The Plan of Arrangement proposes how the company intends to deal with the debt it owes. No restrictions on the Plan. Not uncommon to pay a percentage on the dollar of debt, offer shares in leiu of cash, or combinations. Debtor can identify a particular creditor or group of creditors as "unaffected." Unaffected creditors are included in the Plan and are not to be paid.

Creditors must provide/file Proof of Claim with the Monitor to be able to vote on the Plan. Company files Plan of Arrangement and forwards copies to creditors/shareholders. Meeting of creditors (and possibly shareholders) is called to vote on the Plan. Plan is binding if within each class of creditors the following is achieved: a majority of the proven creditors in that class, by number, as well as 2/3 of creditors in that class, by dollar value, approve of the Plan. If all classes of creditors (and shareholders) approve the Plan, the Court likely approves the Plan as a final step. With Court approval, company operates under the Plan until it satisfies the requirements of the Plan.

If a creditor class or the Court does not approve the Plan, the Stay is lifted. The cause the company filed for CCAA protection will likely return and, quite likely, will result in receivership or bankruptcy of the company.