A summary of recent Canadian insolvency-focused court decisions.
Does a clause in a guarantee offend the anti-deprivation rule? Javeri sold lands to Windsor Park in 2016. Part of the consideration for the sale was a vendor-take-back mortgage (the “VTB Mortgage”) granted to Javeri. Javeri agreed to subordinate the VTB Mortgage to construction financing.…
What conduct is captured by the phrase “debt or liability resulting from obtaining property or services by false pretences” in s. 178(1)(e) of the BIA? A discharge from bankruptcy releases the insolvent debtor from pre-bankruptcy debts or liabilities, subject to certain exceptions. One exception, under…
Does a bankrupt have the right to inspect the trustee's records? The Bankrupt operated a business as a sole proprietor. He filed for bankruptcy on four occasions since 2004, with the last filing occurring in 2016. The Respondent was the licenced insolvency trustee on each…
What is the law on pre-post compensation under the CCAA? SM Group, a consulting engineering firm, performed a variety of contracts for the City of Montreal over a period of several years. SM Group subsequently became insolvent and two of its former officers were charged with criminal…
What is the test for setting aside a sealing order? The Bondfield Group is a business owned and operated by the Aquino family, and was a leading design-build and general construction company providing services to both public- and private-sector clients. Bondfield underwent a period of…
Can the limitation period for a trustee to bring a claim begin prior to the date of bankruptcy? In October 2013, the court made a bankruptcy order against the bankrupt and appointed the respondent as Trustee. Subsequently, the Trustee took steps to recapture certain assets…
What is the test for setting aside a bankruptcy order? The Bankrupt was adjudged a bankrupt on the application of Servus Credit Union Ltd. (“Servus”). The Bankrupt applied for an order setting aside the bankruptcy order on the grounds that he intended to contest the…
Are input tax credits on damage payments for agreements disclaimed under section 32 CCAA pre-filing or post-filing claims owing to the debtor and can they be set-off by fiscal authorities against their pre-filing sales tax-related claims against the tax debtor? On January 27, 2015 (the…
What is the test for leave to intervene in an appeal? The Receiver was appointed to manage the assets and properties of Manitok, a bankrupt oil and gas producer. The two Lien Claimants were contractors who performed work on certain Manitok oil and gas well…
When will a court overturn a settlement agreement as a fraudulent preference? Andrew, the appellant Magdalena’s husband, and his brother were the directors and shareholders of a corporation. In 2016, the respondents obtained judgments against the corporation for an amount in excess of $300,000. In…