Alberta appeal court backs decision that favoured Redwater Energy creditors
CALGARY — A court decision that gave secured creditors priority over environmental cleanup in the case of bankrupt Redwater Energy Corp. has been upheld by the Alberta Court of Appeal.
The lawsuit has been closely watched as a precedent-setting case as bankruptcies continue to afflict the oil and gas industry after more than two years of low commodity prices.
In a 2-1 decision released Monday, the appeal court upheld the ruling in favour of Grant Thornton, Redwater’s trustee in bankruptcy, and its lender, ATB Financial, who wanted to sell off its productive wells to pay creditors and leave the others for the industry-supported Orphan Well Association to remediate.
The Alberta Energy Regulator, however, argued funds from the sale of the productive wells must be used to cover cleanup expenses for the unproductive wells, a position backed by appeal interveners from the Alberta, B.C. and Saskatchewan governments as well as the Canadian Association of Petroleum Producers.