In Pride Group Holdings Inc. et al., 2026 ONSC 4700 (“Pride Group”), the Ontario Superior Court of Justice (the “Court”) held that securitization parties whose assets were expressly excluded from the debtor’s “Property” under a CCAA proceeding could not be compelled to contribute additional funds toward the debtor’s restructuring costs, beyond any amounts already paid by them. While the decision is currently under appeal, it nonetheless provides important guidance to market participants.
The decision addresses a risk that is difficult to price at closing: the possibility that costs arising from an originator’s insolvency could migrate back into an otherwise bankruptcy-remote structure through cost allocation.
For securitization market participants, Pride Group confirms that bankruptcy remoteness protects not only asset ownership but also potentially against the imposition of new economic liabilities arising from the originator’s insolvency.
The Pride Group proceedings background: Securitized assets, CCAA charges, and a cost-allocation dispute
Pride Group Holdings Inc. and related entities (“Pride Entities”) commenced proceedings under the CCAA in March 2024. The Pride Entities’ operations included truck and trailer dealerships and involved vehicles and leases financed through a combination of secured lending and securitization programs.
The securitization arrangements involved transfers of leases and related interests to special purpose vehicles funded by securitization providers.
As the CCAA proceedings moved toward a wind-down, certain recourse lenders sought to allocate a portion of the restructuring costs to the securitization parties, notwithstanding that the securitized assets had been excluded from the Pride Entities’ “Property” by the court’s amended and restated initial order. In the Pride Group decision, the Court rejected this attempt, holding that compelling the securitization parties to contribute additional funds through cost allocation would contravene s. 11.01(b) of the CCAA, which provides that an order under s. 11 or s. 11.02 cannot have the effect of requiring the further advance of money or credit. Since the securitized assets were not “Property” of the Pride Entities, requiring the securitization parties to satisfy an allocation of CCAA costs from their own funds would amount to such an advance.
Bankruptcy remoteness: More than a true sale
Bankruptcy remoteness is traditionally associated with true sale: assets transferred to a securitization vehicle should remain outside the originator’s insolvency estate. However, Pride Group demonstrates that the protections can extend further. Where securitized assets were excluded from the debtor’s “Property” and the applicable CCAA charges, the securitization parties could not subsequently be required, through cost allocation, to contribute new money toward the debtor’s restructuring costs. The Court held that s. 11.01(b) of the CCAA, which prohibits an order requiring the further advance of money or credit, prevented the securitization parties from being compelled to contribute new money through a cost-allocation process.
This introduces an important distinction between asset isolation and liability isolation. A securitization structure may not only protect ownership of the transferred assets; it may also limit the ability of the originator’s insolvency proceeding to impose new liabilities on the securitization parties, notwithstanding that they may have benefited from the CCAA proceeding.
Reviewing your securitization documentation after Pride Group
While the outcome in Pride Group was favourable to the securitization parties, the decision turned on specific features of the CCAA proceeding, including the express exclusion of securitized assets from “Property” and the applicable CCAA charges in the initial court orders. Securitization parties and their counsel should consider whether their existing structures and documentation would support the same result in a comparable scenario:
Servicing agreements. Does the servicing agreement clearly allocate responsibility for post-insolvency administration costs? Pride Group involved an attempt to shift restructuring costs through a cost-allocation process. Agreements that are silent on cost-allocation risk in originator insolvency may leave securitization parties exposed to similar claims.
Transition provisions. If the originator becomes insolvent and servicing must transfer, who bears the cost of that transition? The practical expense of administering and transferring securitized assets during a CCAA proceeding can be significant. Transition provisions should address this explicitly rather than relying on general indemnities.
Initial order carve-outs. The outcome of Pride Group depended in part on the securitized assets being expressly excluded from the debtor’s “Property” in the amended and restated initial order. Securitization parties should ensure they are actively engaged in the initial order process at the outset of any CCAA proceeding involving their originator, not relying on the assumption that the bankruptcy-remote structure will speak for itself.
The broad takeaway is that where the insolvency proceeding recognizes that the securitized assets remain outside the debtor’s “Property,” that separation may also limit the ability to impose the economic burden of the restructuring on the securitization parties. Pride Group suggests bankruptcy remoteness can protect the securitization structure from being drawn back into the economics of the originator’s insolvency through cost allocation. The decision should not, however, be read as establishing a categorical exemption for securitization parties from insolvency-related costs. The Court’s decision was based on the particular circumstances of the proceeding; in the circumstances before the Court, a cost allocation requiring fresh money from securitization parties was impermissible. The Court expressly left open the question of whether the securitization parties should have been required to contribute additional amounts toward the CCAA proceeding costs, beyond the amounts they had already paid.
How Miller Thomson can help
Pride Group reinforces the importance of structuring for bankruptcy remoteness, and of actively protecting that structure when an originator enters CCAA proceedings. Whether you are reviewing existing securitization documentation, negotiating initial order terms in an active insolvency, or assessing cost-allocation risk in a new transaction, Miller Thomson’s Financial Services and Restructuring and Insolvency lawyers work together on these issues. Contact us to discuss how Pride Group applies to your existing securitization documentation or an active CCAA proceeding.
