Nortel Networks – Ontario Court of Appeal finds that interest ceases to accrue following a CCAA filing

Ontario Court of Appeal has found that the “interest stops” rule applies to CCAA proceedings, so that creditors do not have any entitlement to interest which otherwise would have accrued following the CCAA filing date – and rejected the bondholders’ position that “the CCAA filing does not affect the right to accrue interest; it only stays the collection of that interest.” This essentially confirms the CRA position in 2008-0304841I7 that interest ceases to be deductible by the insolvent company from that point on.

Neal Armstrong. Summary of Re Nortel Networks Corporation, 2015 ONCA 681 under s. 20(1)(c).