Executive Summary: Key Legal and Evidentiary Issues

• Issue centered on whether Conifer’s post-filing exclusion of Razor from the gas plant violated the automatic stay under section 69(1)(a) of the BIA.

• Debate focused on whether the lockout was a “continuing remedy” or a completed act.

• Conifer argued that reconnecting Razor would force it to provide services on credit, which is prohibited by section 65.1(4)(b) of the BIA.

• Razor’s filing of a Notice of Intention triggered a statutory stay that the chambers judge found Conifer had breached.

• The appeal was rendered moot after Razor entered CCAA proceedings and was subsequently sold to a third party.

• Court declined to decide the appeal, citing lack of adversarial context and absence of full submissions.

Background facts

Conifer Energy Inc. operates the Judy Creek Gas Conservation Plant and processes a significant portion of Razor Energy Corp.’s gas production under an ownership and operating agreement. Both Conifer and Razor are among the owners of the gas plant.

In December 2023, Conifer locked Razor out of the plant due to Razor’s default on financial obligations under the agreement. Because of the plant’s configuration, Conifer could not fully block Razor’s gas and continued to process approximately one-third of Razor’s volumes.

In January 2024, Razor filed a Notice of Intention to Make a Proposal under the Bankruptcy and Insolvency Act, RSC 1985, c B-3, which invoked the statutory stay in section 69(1)(a) of the BIA.

Lower court decision and statutory interpretation

On February 21, 2024, an order was pronounced finding that Conifer breached the statutory stay by continuing to lock Razor out after the notice of intention was filed. Conifer appealed, arguing that the lockout was a completed act, not a continuing remedy or proceeding. It further contended that compelling it to reconnect Razor without payment was akin to forcing it to provide services on credit, contrary to section 65.1(4)(b) of the BIA. Conifer also submitted that the chambers judge did not give sufficient regard to the terms of the ownership and operating agreement.

Subsequent developments and mootness

Soon after the February order, Razor’s proceeding transitioned to one under the Companies’ Creditors Arrangement Act, RSC 1985, c C-36. This led to a sale that closed on December 11, 2024, making Razor wholly owned by a third party. On December 19, 2024, the Court of Appeal raised the issue of mootness.

Applying the two-part Borowski test, the Court concluded that the dispute was no longer live. Razor’s insolvency proceedings had ended, the chambers judge’s decision had never been fully implemented, and there was no prospect that it would be.

Although Conifer urged the court to decide the case for its precedential value and to clarify operator rights under what it described as a standard form agreement, the Court noted the lack of full participation from Razor, the trustee, or monitor. Razor only attended to address mootness and did not file submissions on appeal.

Final outcome

The Alberta Court of Appeal concluded that the appeal was moot and declined to exercise discretion to decide it. The appeal was dismissed on January 21, 2025.