The significant priorities cases in 2020 arose in every imaginable context from the sale of residential properties to construction projects to remediating environmental damage. The overarching theme was that most cases dealt with a dispute between lenders’ registered security interests and unregistered interests that arose as a result of various statutory trusts or priorities in favour of governments.
The decision in Sellathamby (Re), the trustee’s obligation to examine a proof of claim under section 135(1) of the BIA, and the nature of an appeal from a trustee’s disallowance make it clear that a trustee cannot merely disallow a claim because arriving at a decision is difficult or because it is the trustee’s “practice”. The trustee has to properly consider the evidence and prepare a reasoned decision in order for the claims process, including appeals, to function properly.
Defaulting on a business loan is a reality for many Canadian businesses, especially during COVID-19. But what happens when you default? And are there any ways to avoid the worst consequences of a default? What to expect when your bank demands payment The first thing the bank will do will be to demand payment andContinue reading “What happens if you default on a business loan?”
The short answer is no; your corporation’s bankruptcy does not affect your personal credit. Your corporation is a separate legal entity. It has its own debts, its own contracts, and its own credit. Your corporation’s bankruptcy does not affect your personal credit and the fact that a corporation that you were a shareholder, director, orContinue reading “Does your corporation’s bankruptcy affect your personal credit?”
One of the tools available to a receiver is the power to affirm or disclaim contracts. Paragraph 3 of the commercial list users committee model receivership order sets out the powers generally given to a receiver appointed pursuant to section 243(1) of the Bankruptcy and Insolvency Act and section 101 of the Courts of JusticeContinue reading “Can a receiver partially disclaim a lease?”
Priority is a major consideration for any lender when evaluating risks associated with financing. This becomes all the more important when an insolvent debtor seeks to restructure and access debtor-in-possession (“DIP”) financing (also referred to as “interim financing”). DIP financing is financing obtained by an insolvent debtor when restructuring their business. It is unique becauseContinue reading “Beware of Debtor-in-Possession Financing: The Risks to Existing Lenders and Vendor-Take-Back Mortgagees”