Early last week PricewaterhouseCoopers Inc., in its capacity as trustee in bankruptcy for Sequoia Resources Corp., filed a statement of claim against Perpetual Energy Inc., attempting to unwind an asset sale from Oct. 1, 2016. Alternatively, PwC is seeking $217-million in damages. Along with Perpetual, PwC has named certain subsidiaries and its CEO, Susan Riddell Rose, as defendants.
In its statement of claim, the plaintiff is relying upon legal principles associated with oppression, reviewable transactions in insolvencies and regulatory law in support of its action.
Given the elements of lack of good faith raised in this claim, we note the similarities to aspects of the decision of Tronox Inc et al. v. Kerr McGee Corp et al., U.S. Bankruptcy Court, Southern District of New York, No. 09-1198. That case involved a $5.15-billion settlement for the transfer of distressed assets carrying significant environmental liabilities, for a nominal sum, where the recipient filed for bankruptcy shortly afterward.
At this point in time a statement of defence has not been filed, but Gowling WLG (Canada) LLP will be following the case and advising clients of implications. This case will be of significance for any parties involved in A&D or M&A transactions involving environmental liabilities associated with natural resource development.
If you have any questions or would like to discuss further, you can contact members of Gowling WLG (Canada) LLP's Natural Resources Group.