How the Redwater Case Affects Insurance

How the Redwater Case Affects Insurance

On January 31st, The Supreme Court Ruled that Redwater must fulfill any provincial environment obligations before paying anyone it owes money to. This decision has created enormous liability implications in Canada – specifically for environmental liability. 

If you’re not already familiar with the Redwater case, here’s a recap:

Redwater was an Alberta oil and gas company that went bankrupt in 2018. It owned over a hundred wells, pipelines, and facilities.  

Most of Redwater’s wells were dry when it went bankrupt. Dismantling the sites and restoring the land would end up having to cost millions of dollars more than what the company is worth. To avoid paying these costs, the trustee decided that they were not taking any responsibility for the wells and sites and wanted to sell the productive sites to pay people Redwater owed money to – It said they were allowed to do this under the Bankruptcy and Insolvency Act (BIA). 

The Regulator said that this was not allowed under the BIA or provincial law. They ordered the trustee to dismantle the disowned sites.

How does this case relate to Insurance?

As stated by Beazley Underwriter, Miles Foxworth “We expect this to increase the demand for various lines of insurance as lenders look to hedge their exposure to this increased liability.”

It’s predicted that environmental liability coverage will be increasingly required by property owners and contractors in order to receive any loans from lenders.

Source: Beazley 


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