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Vancouver Business Bankruptcy, Insolvency and Restructuring Law Blog

Understanding basic insolvency terms

Too often the basic terms in bankruptcy and insolvency law are used incorrectly and in a way which just makes things more confusing. Even professionals can be guilty of this. If on the other hand you understand the terms, then you will quickly understand the process and be able to identify and analyze the issues that may arise.

BC Court of Appeal provides insights on determining fair market value of assets transferred by bankrupts

The British Columbia Court of Appeal recently provided insight into how a bankrupt's assets will be valued when determining if they were transferred at less than fair market value.

In Randen v HPCB-Online Ltd., 2018 BCCA 123, a chain of bookstores sold about 10% of its book inventory to a related company for approximately $22,000.00, and assigned itself into bankruptcy a few weeks later.

True Lessors Are Generally Exempt From Professional Fee Allocations Under the CCAA

In a recent case from the Nova Scotia Supreme Court Atlantica Diversified Transportation Systems Inc. (Re), 2018 NSSC 77, the court was asked to determine whether a true lessor of numerous trucks and trailers of the debtor, Canadian Western Bank ("CWB"), was liable to contribute to a $75,000 administration charge ordered in Companies Creditors Arrangement Act ("CCAA") proceedings that ended without a restructuring plan in place.

Canadians filing consumer proposals in record numbers

Filings from the Office of the Superintendent of Bankruptcy (OSB) show a worrisome trend among Canadians. While bankruptcies are declining in Canada, consumers are filing "consumer proposals" in record numbers. The OSB received 5,327 consumer proposals in January 2018, an almost 20 per cent increase from the previous month and a 10 per cent increase from January 2017.

Gwizd, (Re), 2017 BCSC 1975 - A bankrupt's equity in real property and agreements with the trustee

A recent decision of a British Columbia Master, sitting as a Registrar in Bankruptcy, has provided some much needed guidance to bankrupts and trustees with respect to non-exempt equity in a bankrupt's home where there is an agreement with the trustee.

In Gwizd (Re), 2017 BCSC 1975, the Court granted the bankrupt a discharge on the condition that he make a payment to the trustee of approximately $27,000, enforcing an agreement entered into between the bankrupt and trustee almost two and a half years earlier at the outset of bankruptcy.

Builders' lien trust in bankruptcies

Monies paid to a contractor in respect of an improvement on real property (the "Trust Funds") are subject to a trust (the "Trust") in favour of subcontractors, workers, and material suppliers, among others, who remain unpaid with respect to their work, services or materials (the "Beneficiaries"). The contractor is obligated to deal with the Trust Funds for the benefit of the Beneficiaries in accordance with the relevant builders' lien legislation. The contractors may be held liable for breach of the Trust if the Trust Funds are used for payments other than to Beneficiaries. In addition, third parties, such as directors of a corporate contractor, can also be held liable for breach of trust in a claim by the Beneficiaries if the Trust Funds are not used in accordance with the requirements of relevant legislation.

Third Party Funding of litigation in insolvency

In Arrangement relatif à 9354-9186 Québec inc. (Bluberi Gaming Technologies Inc.) v. Ernst & Young Inc., 2018 QCCS 1040, the Supreme Court of Quebec recently permitted third party funding of a lawsuit in a proceeding under the Companies' Creditors Arrangement Act ("CCAA").

In the case, the only real asset of the debtor company, Bluberi, was a potential lawsuit against its largest secured creditor, estimated to be worth as much as $200 million. As an insolvent company, however, Bluberi could not afford to pursue this claim on its own.

Canada Post latest big insolvency?

Canada Post, a venerable institution which has been delivering our mail since 100 years before confederation, is possibly facing the end of its viability to Canadians. New technologies, from the fax machine to email and video chats, have left the corporation dealing with its lowest ever volume of delivered letter mail. 

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