• About
  • Offices
  • Careers
  • Students
  • Alumni
Background Image
Logo Bennett Jones
  • People
  • Expertise
  • Resources
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z All

FEATURED AREAS

Energy
Funds & Finance
Mining
Capital Projects
All Industries
Crisis & Risk Management
Environmental, Social & Governance
Governmental Affairs & Public Policy
All Practices
Insights
Media
Events
Subscribe
COVID-19 Resource Centre
Business Law Talks Podcast
Kickstart
New Energy Economy Series
People
Featured Areas
All Practices
All Industries
About
Offices
Careers
Insights
Events
Search
Search
 
Blog

Review Debt Covenants Before Relying on Proposed CSA COVID-19 Financial Reporting Relief

March 20, 2020

Written by Denise Bright, John Piasta, Kris Hanc and Mark Rasile

On March 18, 2020, the Canadian securities administrators (CSA) indicated that they will be providing blanket relief granting a 45-day extension for periodic filings normally required to be made on or before June 1, 2020, by issuers, investment funds, registrants, certain regulated entities and designated rating organizations. While the final order is not yet available, the CSA has indicated that the order will pertain to financial statements, management’s discussion and analysis (MD&A), management reports of fund performance, annual information forms, technical reports, and certain other filings. The CSA has indicated that, during the extension period, issuers will not be noted in default prior to the end of the applicable extension and issuers will not be required to apply for a management cease trade order prior to the expiry of the extension.

Pursuant to National Instrument 51-102, reporting issuers (that are not SEC issuers or venture issuers (both as defined)) are required to file audited annual financial statements and the related MD&A, on the earlier of the 90th day after year-end and the date of filing in a foreign jurisdiction. In addition, they must file their annual information form on or before the 90th day after year-end. Pursuant to National Instrument 51-101, the statement of reserves data and other information for oil and gas companies is due concurrent with the filing of the audited annual financial statements. It is expected that the CSA blanket relief will extend the foregoing filing period by 45 days ,which will result in issuers with a December 31, 2019, year-end having until May 14, 2020, to file these documents.

Reporting issuers (that are not SEC issuers or venture issues) are required to file interim financial statements and the related MD&A on the earlier of the 45th day after quarter-end and the date of filing in a foreign jurisdiction. Therefore, we expect that issuers with a quarter ending March 31, 2020, will have until June 29, 2020, to file these documents.

We also expect that the blanket relief will apply to venture issues which in the normal course have until the 120th day after year-end and the 60th day after the end of a quarter to file their financial statements and related MD&A.

Many entities, including reporting issuers, are also subject to covenants in their credit agreements and note, bond or debenture indentures, which require the provision of financial statements, MD&A, auditors reports, technical reports and other publicly filed documents to the applicable creditors. It is common for covenants relating to the provision of financial statements and other documents to include specific dates by which those items must be delivered to the applicable creditors which dates often mirror the usual securities filing deadlines. Such covenants may also provide that if the financial statements and other documents are filed with the applicable securities authorities earlier than those filing deadlines then the documents must also be provided to the creditors on a concurrent basis. In other cases, the requirement to file may be cross-referenced to the provisions of securities laws as in effect from time to time.

This blanket relief will not provide covenant relief with respect to obligations to deliver financial statements and related documents by specific hard-wired dates but may, depending on the specific language of the credit agreement or indenture, provide relief where the requirement to deliver financial statements and related documents is tied to the filing requirement under securities laws. Issuers are encouraged to review their credit agreements and indentures to assess the impact, if any, of the CSA blanket relief if they expect to be unable to comply with their securities law reporting requirements and intend to rely on the blanket relief. Issuers should be proactive with their lenders, to the extent possible. In addition, most indentures are likely to require security holder consent for any amendments to, or relaxation of, the requirements thereunder and are unlikely to grant the indenture trustee the discretion to agree to an extension absent security holder consent.

In most cases, a failure to provide financial statements (including MD&A) or a reserves report will result in a default which triggers a draw stop, if applicable, and will result in an event of default subject to any cure period.

The specific provisions in any credit agreement or indenture will be important in assessing any risk of breach of covenants, any remedies and the implications of a breach. The lawyers in the Bennett Jones Corporate Finance team would be pleased to assist you with any assessment.

Authors

  • Denise D. Bright Denise D. Bright, Partner
  • John E. Piasta John E. Piasta, Partner
  • Kristopher R. Hanc Kristopher R. Hanc, Partner
  • Mark  Rasile Mark Rasile, Partner

Read the Fall 2020 Economic Outlook

Related Links

  • Insights
  • Media
  • Subscribe

Recent Posts

Blog

Advancing Alberta's New Liability Management Framework

January 11, 2021
       

Blog

Supreme Court of Canada: Silence Can Breach the Contractual [...]

January 05, 2021
       

Blog

Canadian Government Releases Draft Clean Fuel Regulations

December 22, 2020
       

Blog

Fairstone Financial v Duo Bank – Ontario Court Interprets MAC Clause

December 22, 2020
       

Blog

The Power of Now in Canada's Energy Industry

December 22, 2020
       

The firm that businesses trust with their most complex legal matters.

  • Privacy Policy
  • Disclaimer
  • Terms of Use

© Bennett Jones LLP 2021 All rights reserved. Bennett Jones refers collectively to the Canadian legal practice of Bennett Jones LLP and the international legal practices and consulting activities of various entities which are associated with Bennett Jones LLP

Logo Bennett Jones