The following comes from an affidavit by Dan MacDonald sworn February 27th 2009 and attached to Challenger Energy's Court Application for protection under the Companies Creditors Arrangement Act (CCAA) for bankrupcy protection. On page 7 Dan MacDonald states:

"26. Pursuant to the terms of the JOA, any party alleged to be in default under Article 8.1 of the JOA must remedy the default within a certain time from receiving notice of the same, failing which any non-defaulting party shall have the option to require that the party in default completely withdraw from the JOA. In the event that such option is exercised by a non-defaulting party, the party in default is deemed to have transferred its Participating Interest under the PSC to the non-defaulting party, effective as of the date of the non-defaulting party's notice. In effect, the party in default may forfeit its Participating Interest under the PSC. As I understand it the effect of the First Joint Account Notice under the JOA will place BGI in the position of being in a position to forfeit the CSEI Participating Interest under the PSC (which BGI has intimated that such interest includes the CEC Participating Interest) by as early as March 6, 2009 unless CSEI is able to remedy the alleged incidences of default or to obtain other relief."

http://www.alger.ca/challenger/Affid...

Best Wishes; Scott