Bloom Lake General Partner Limited, Wabush Resources Inc. and related entities (Bloom Lake) received Court protection under the Companies’ Creditors Arrangement Act (CCAA) in 2015 and subsequently virtually all of its assets were liquidated. The remaining assets included preference claims valued at approximately $173 million. In 2018, there was a proposed settlement reached of the preference claims that would result in between $62 and $100 million available for distribution to the third party unsecured creditors. Based on this proposed settlement, Bloom Lake sought an order allowing a meeting of creditors to be called to vote on a proposed plan of compromise and arrangement (the “Plan”) that would distribute the proceeds to creditors. However, it was also anticipated that further negotiations on the form of the Plan would occur right up until the vote. 

On March 16, 2018, a Quebec Court approved a litigation funding agreement for an insolvent company operating under court-protection in a Companies’ Creditors Arrangement Act (CCAA) proceeding. The insolvent company wanted to pursue a significant claim against its primary secured creditor and the litigation funding agreement stipulated that the third party litigation funder will pay all legal fees and disbursements in relation to the proposed claim in exchange for a portion of any proceeds of the litigation.