Note that Equitable Subordination is not a legal concept in the Canadian Bankruptcy Acts, and the Bennet Jones article refers to this American bankruptcy equity remedy as a potential basis for Canadian courts to rule on good faith breaches going forward. However, misappropriation of assets is indeed a breach of good faith in Canada and the U.S.A., where the Chapter 15 case is ongoing. And an eventual approval of the distribution of the value of the mining data and the tax loss benefits to other than the legacy shareholders would fall under misappropriation of assets in both the Canadian and U.S. bankruptcy law.

In this case, a breach of the requirement of good faith would apply to all the directors and the DIP lender.