Our mission is to ensure that every site is in a safe state, that sites are reclaimed by a responsible party, and that industry meets its obligations to address its liabilities.
Managing Insolvency-Related Risks
When a company fails to meet its obligations, it may enter court-appointed insolvency proceedings (e.g., bankruptcy, receivership, CCAA, NOI), and the court may appoint an insolvency professional to oversee the company’s assets.
Our Role During an Insolvency
The AER does not control or prevent insolvencies. When a company enters insolvency, our role is to protect the public and the environment.
Following the Supreme Court of Canada’s Redwater decision, we work to ensure that any remaining funds in an insolvent estate are used to address environmental and closure obligations before creditors are repaid.
When infrastructure is sold, a licence transfer application must be submitted to us for review and decision. This step ensures that the purchaser is an eligible licensee and that the application meets all regulatory requirements. Directive 088: Licensee Life-Cycle Management outlines the requirements for licence transfer for the oil and gas sector.
Insolvency Proceedings
The Government of Canada’s Office of the Superintendent of Bankruptcy maintains the official records of companies in formal insolvency proceedings. The insolvency professional handling an insolvency will publish information about it, including contact information and materials for court applications, on its website.
For inquiries related to a specific energy insolvency, email OrphaningInsolvency@aer.ca.
Unpaid Surface Lease Payments
The AER and Orphan Well Association are not involved in surface lease payments.
Landowners may apply for surface lease compensation through the Land and Property Rights Tribunal. The tribunal will provide information and guidance on eligibility and application requirements.
The Government of Alberta also has information on what to do when a company fails to make annual surface lease payments. Additional support and advocacy services for farmers and ranchers are available through the Farmers’ Advocate Office, including assistance with energy and utility surface rights and rural dispute resolution.
Terminology
Common terms related to insolvencies include:
- Bankruptcy: A company can place itself into bankruptcy or be placed by a creditor. A trustee is assigned and may take possession and sell the company’s property.
- CCAA protection: A company that owes more than $5 million to its creditors may seek protection under the Companies’ Creditors Arrangement Act (CCAA) to avoid bankruptcy and renegotiate its debt with its creditors. If granted, it will receive court protection from its creditors for a limited time—which may be extended with court approval—to help plan how it intends to renegotiate its debt. A court-appointed monitor will observe the company’s operations but does not take possession of the company’s property.
- Ceased operations: An AER-licensed company has contacted us to indicate that it cannot continue operations and has no remaining staff to oversee and supervise its AER-licensed infrastructure.
- Notice of Intention to Make a Proposal: A company may restructure by preparing and submitting a formal proposal to its creditors to avoid bankruptcy. If a company does not file a proposal or it is rejected by its creditors, the company may be assigned to bankruptcy.
- Receivership: A receiver takes control and possession, operates, manages, sells, or liquidates a company’s infrastructure to manage and recover value for stakeholders and address outstanding obligations.
