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Creditor Claims and Remedies Archives

Deemed trust amounts

In the course of business a person, in compliance with various statutory obligations, may collect tax or withhold monies that are payable to federal or provincial governments. Examples of such collection or withholding are for provincial sales tax, goods and services tax and employee source deductions for income tax, employment insurance and Canada Pension Plan amounts.

When bankruptcy reshuffles the priority of creditors

Under ordinary circumstances, certain creditors enjoy a favoured standing in the realization pecking order. For example, federal and provincial legislation may create preferred rights in respect of debts such as collected but unremitted taxes and unpaid wages. However, once a debtor is bankrupt, a new hierarchy for creditors will govern.

Piercing the Corporate Veil - In Reverse

A corporation is regarded by the law as a separate legal entity, separate from its shareholders or directors, so the liabilities of the corporation are not the liabilities of the shareholders. Courts will sometimes "pierce the corporate veil" and find shareholders liable for the debts of the company, in special circumstances. In the recent decision of Borden Ladner Gervais LLP v. Sinclair and others, however, this cross-liability was reversed.

Internet auctions

When an equipment financier disposes of seized equipment using an internet auction site, how does the financier comply with the B.C. Personal Property Security Act requirement that notice of the "date, time and place" of the auction be given to the lessee? This was the dilemma addressed by Mr. Justice Betton of the Supreme Court of B.C. in the recent decison of CNH Capital Canada Ltd. v. Diamond 4 Holdings Ltd.

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