Nova Scotia court limits CCAA judge’s reach over D&O coverage
Before that lawsuit could even get going, Eckler asked Justice Keith to settle a side question: who pays the legal bills? Two insurers were on the hook – AIG Insurance Company of Canada, which covered the Herald itself, and Newline, which covered the three individuals personally. On January 30, 2026, Justice Keith ruled that AIG had to defend both the Herald and its former directors, and that Newline had to start fronting the directors’ legal costs too. He stopped short of deciding whether either insurer would ultimately have to pay out on a judgment.
Newline pushed back, and the Court of Appeal agreed with it. The CCAA gives a restructuring judge wide powers, Justice Farrar wrote for the panel, but only to help put a failing company back on its feet – and by the time this coverage question came up, the Herald’s assets were already sold off and the business was done. As the court put it plainly: “The Eckler D&O Action has nothing to do with the CCAA proceedings.” In other words, that fight belonged in its own lawsuit, not tucked inside the insolvency file.
Because the CCAA judge never had the authority to weigh in, the Court of Appeal said it had no business ruling on what Newline’s policy actually covers either. So the real question – does Newline have to pay the directors’ legal bills – is still wide open, just in a different courtroom. AIG’s side of things is untouched, since AIG never appealed.
There’s a tidy postscript: the Court of Appeal ordered Eckler to hand back the $25,000 it had been awarded at the lower court, and tacked on another $10,000 for the cost of the appeal itself.
The takeaway for wealth and insurance professionals: if your firm ever ends up restructuring under the CCAA, don’t expect the insolvency judge to also sort out who your insurer has to pay. That’s a separate fight, in a separate courtroom.
