When a company enters formal Canadian insolvency proceedings, whether it is a restructuring or liquidation scenario, the Canadian legislation and courts have held that the “interest stops rule” applies in respect of unsecured claims, meaning interest ceases to accrue on such claims after the filing date. A recent decision from the Alberta Court of Appeal has confirmed that the interest stops rule does not apply to secured claims to the extent there is sufficient value in the creditor’s collateral. The decision has confirmed that secured creditors are entitled to payment of their post-filing interest as part of their secured claim, while unsecured creditors’ post-filing interest entitlements are to be disregarded,…
Insolvency Guardian
Insolvency Services & Bankruptcy Advice
