BC court blocks Teal-Jones plan to strip Domtar's fibre supply rights
The British Columbia Supreme Court has refused to approve a reverse vesting order that would have extinguished long-standing fibre supply agreements held by TimberWest and Domtar over Tree Farm Licence 46, as part of insolvent Teal-Jones Group's proposed sale of its Surrey Mill and TFL 46 to Gillfor Manufacturing. The court found the agreements constitute a proprietary interest in the land that should not be vested out, and will not approve the sale unless the agreements remain in force. Domtar's coastal British Columbia pulp mills rely on the agreements for fibre supply.
Why this mattersThe ruling limits insolvency sales' ability to strip long-term fibre supply contracts tied to land interests, protecting Domtar's coastal BC pulp mill feedstock security.
- BC Supreme Court refused to approve a reverse vesting order for Teal-Jones Group's sale of its Surrey Mill and Tree Farm Licence 46 to Gillfor Manufacturing.
- The deal, agreed 17 July 2026, would have vested fibre Supply Agreements held by TimberWest and Domtar into a new company, rendering them unenforceable.
- Domtar is successor to Norske Skog Canada and holds Supply Agreements dating from January 2004 tied to TFL 46, needed for its coastal BC pulp mills.
- The court held the agreements amount to a proprietary interest (profit a prendre) in TFL 46 that should not be extinguished.
- Teal-Jones Group entered CCAA protection on 25 April 2024, citing COVID-19, US tariffs and high interest rates.
- The court found insufficient evidence the agreements were uneconomic or would prevent Gillfor from operating the assets.