Executive Summary: Key Legal and Evidentiary Issues

• Whether the stay of proceedings under the CCAA applied to penal prosecutions initiated by a regulatory authority

• Distinction between CCAA-protected entities and non-applicant affiliates within a broader corporate group

• Validity of criminal proceedings during and after the expiration of a CCAA stay

• Relevance of prior judicial findings that maintained separation of assets and liabilities across TNW Group companies

• Nature of penal sanctions as regulatory enforcement rather than debt collection

• Applicability of s. 11.1(2) CCAA in permitting criminal proceedings to proceed independently of insolvency protections

Facts and outcome of the case

Background and corporate structure
This case involves 8640025 Canada Inc. and Teliphone Data Centres Inc., members of the TNW Group, a telecommunications conglomerate that operated across several Canadian provinces. These entities initiated insolvency proceedings under the Companies’ Creditors Arrangement Act (CCAA) in November 2016, eventually leading to the liquidation of their assets. The CCAA petitioners did not directly employ staff but relied on affiliated companies like Information Technology and Telecommunications Canada (ITTC), which was responsible for staffing and labor relations. Importantly, there was no overlap between the corporations subject to the CCAA proceedings and those later implicated in penal tax violations.

Québec penal proceedings
In 2018, the Québec Revenue Agency (QRA), through its prosecution branch, brought penal charges against Benoît Laliberté, the directing mind of the TNW Group. He was accused of causing several TNW-affiliated companies (not protected by the CCAA) to withhold but not remit over $1.6 million in employee source deductions between 2011 and 2017. Mr. Laliberté’s trial commenced in February 2024. He was convicted on all counts in December 2024 and sentenced in May 2025 to 48 months in prison and over $2 million in fines.

Application to set aside conviction
Mr. Laliberté returned to the British Columbia Supreme Court, arguing that the penal charges violated the CCAA stay order granted in 2016. He contended that the criminal proceedings should have been barred because they arose from corporate obligations connected to entities within the insolvency process. The QRA opposed the application, asserting that the penal charges targeted separate corporate actors not subject to the stay, and that the stay expired long before trial.

Court’s legal analysis
The Court dismissed Mr. Laliberté’s application, finding that the CCAA stay order did not shield him from penal proceedings. Justice Coval held that the stay applied only to civil actions against the CCAA applicants or their directors for obligations of those specific companies. It did not extend to affiliated entities or to criminal enforcement actions. Additionally, the stay had already expired by 2021, years before Mr. Laliberté’s 2024 trial. The Court emphasized that throughout the insolvency process, Mr. Laliberté and his companies had successfully argued that certain affiliates were not subject to CCAA oversight, and those same arguments prevented him from now invoking the CCAA stay as a defense.

Outcome
The application was dismissed. The Court affirmed that criminal proceedings initiated by a regulatory body such as the QRA are not stayed under the CCAA due to express statutory exemptions. It also emphasized that enforcing criminal fines against an individual director does not conflict with the liquidation of corporate assets under the CCAA. Mr. Laliberté’s conviction and sentence therefore remained valid and enforceable.