A summary of recent Canadian insolvency-focused court decisions.
Are EI overpayments discharged in a bankruptcy? The bankrupt filed her second bankruptcy on September 22, 2017 (her first, from 2006, ended in an automatic discharge nine months later). Of her $58,499 in declared total debt (all unsecured), $32,000 was an Employment Insurance (EI) overpayment.…
Is a purchaser or a ResidualCo entitled to a tax refund of the debtor? PwC as Monitor of 124 Canada Inc. brought a motion for declaratory relief about entitlement to HST refunds with a value of approximately $456,429.42. The issue arose in connection with a company…
Does a CCAA court in one province have jurisdiction to hear a motion under the CBCA when CBCA proceedings have been commenced in another province? On June 29, 2018, the Quebec CCAA Court issued an Order sanctioning the Joint Plan of Compromise and Arrangement that…
Does a stay of proceedings suspend the running of a limitation period? The Applicants – freehold owners of mines and mineral rights on certain lands and the lessors of petroleum and natural gas leases that affect the lands – sought to lift the stays granted…
Can a bankrupt revoke a discharge to sue a trustee? In July 2013, the appellant McKibbon made an assignment into bankruptcy. BDO acted as the corporate trustee. During the administration, issues arose in calculating the appellant’s surplus income and tax payable to Canada Revenue Agency.…
What is the test for the discoverability of an auditor's negligence claim? In the fall of 2008, the Atcon Group of Companies (“Atcon”) – a New Brunswick-based provider of construction, energy, industrial and waste management services – sought loans from the Bank of Nova Scotia,…
Can CCAA priority charges prime the CRA’s deemed trust claim? The Debtors initiated restructuring proceedings under the BIA, but soon changed course and sought to restructure under the CCAA. In their initial CCAA application, they requested, among other things, the creation of three super-priority charges.…
When will an insolvency court not approve a litigation funding agreement? In July 2018, JMX, a demolition company, entered into a contract with OPG for the demolition of the Lambton Thermal Generating Station. In February 2020, OPG formally notified JMX that it was in default of…
Does a bankrupt require leave to sue a trustee in a personal capacity? The plaintiff had undergone four bankruptcies over the course of 13 years. He claimed that, following his fourth bankruptcy, he discovered that his former bookkeeper misappropriated approximately $206,000 from his sole proprietorship between…
Does a judgment on a guarantee survive bankruptcy where the underlying claim is for fraud? The appellant, Johansen, filed a statement of claim against the respondent, Wallgren, alleging breach of contract, fraudulent misrepresentation and fraudulent preference. Johansen then severed his claim and sought partial summary…