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Vancouver Business Bankruptcy, Insolvency and Restructuring Law Blog



Cannabis Troubles Continue

Cannabis-related businesses continue to struggle. Last week Destiny Bioscience Global Corp., an Alberta research and development company focused on the genetics and cultivation of cannabis, was placed in receivership by its main lender...



Director's Liability and COVID-19

Question: It seems likely that my business will fail, given the COVID-19 recession we’re in. Fortunately, the business was carried on through a corporation, but as a director do I face any personal exposure despite incorporation?


Cannabis Businesses and Insolvency – A Whole New Frontier

The legal cannabis industry is a relatively new addition to the Canadian economy since its introduction in November 2018. Until December 2019 there had been very few insolvency proceedings commenced by cannabis companies but 2020 has seen at least 6 such insolvency proceedings ranging from receiverships to BIA proposal proceedings to CCAAs. With the onslaught of the COVID-19 pandemic...








Second Cryptocurrency Exchange under Court Protection in Canada

Einstein Exchange Inc. joins QuadrigaCX as the second cryptocurrency exchange to fall under court protection in 2019. In early February, 2019, the Quadriga group sought protection under the Companies’ Creditors Arrangement Act (the “CCAA”) following the death of the founder, Gerald Cotton. Mr. Cotton had sole responsibility for the wallet storage protocols and wallet passwords for Quadriga’s cryptocurrency inventory. When he died...


Changes to Canada’s insolvency laws now in effect

Amendments to the Bankruptcy and Insolvency Act (“BIA”) and the Companies’ Creditors Arrangement Act (“CCAA”) Came into effect on November 1, 2019. As of the publishing of this article, these changes are not yet reflected on the Department of Justice website, or on CanLII. However, it is important for debtors, creditors, and others to be aware of...


Creative lending arrangements can have unintended consequences

Lenders sometimes charge an “interest rate” that varies with the profits of the borrower’s business. So, rather than an interest rate of 5% per annum of the principal amount, the rate of return might be 5% of the borrower’s before-tax profit for that year. This can be attractive to the lender, as it gives them a share in the borrower’s “upside” if the business does well. (What about the “downside” of the business not doing well?



Post-filing suppliers of goods and services in CCAA proceedings

Suppliers of goods and services to the debtor following the initial order in proceedings under the Companies’ Creditors Arrangement Act (the “CCAA”) can be in a precarious position with respect to payment for those post-filing goods and services. While section 11.01 of the CCAA permits payment to be made to post-filing suppliers, there is no specific requirement for suppliers to be paid and no statutory priority over other parties in respect of such payment.


Alberta Court of Appeal confirms priority of “priming” charges over statutory deemed trusts

When companies seek to restructure through insolvency proceedings there is frequently an interim lender who “primes” the restructuring process by making a loan to fund the company taking necessary restructuring steps. This lender is routinely given a super-priority ahead of all other potential creditors, which is seen as a necessity to entice someone to inject new funds into an otherwise heavily encumbered and insolvent operation.


Parents’ loan saved by resulting trust

Get it in writing! A recent BC case highlighted the dangers of entering into financial arrangements with family members, without a clear written agreement on the terms of the arrangements. In T.L.G. v. K.M.G. (unusually, the names of the parties are not disclosed), a mother and father advanced money to their daughter which was used to buy her a house near Victoria. The daughter’s name went on the title, except for a 1% interest to the parents’ names.



Another logging company announces cutbacks

Amid continuing weakness in lumber markets, Teal-Jones recently announced a halt in all logging on the B.C. Coast including under a significant timber farm licence in the Fraser Valley and Honeymoon Bay. As the company’s news release acknowledged, this halt “will result in substantial loss of employment for the company’s forestry employees and contractors.



The risk of joint ownership of property as an estate planning tool

It is not uncommon for a parent to decide to hold property in joint tenancy with one or more adult children in joint tenancy as an estate planning tool. A parent may transfer title to a property into joint tenancy with a child with the intention that the child will become the sole owner of the property on the parent’s death, thereby avoiding probate fees associated with the property being held as part of a joint estate. However...




Insolvency and Deceased Persons - Part 2

In Part 1 we discussed the factors to be considered in deciding whether to deal with a deceased person's insolvent estate under either the Wills, Estates and Succession Act ("WESA") or the Bankruptcy and Insolvency Act ("BIA"). In this concluding part, we will discuss the court proceedings in general terms under the WESA and the BIA.

Bankruptcy, Secured Creditors, and the Superintendent's Levy

All distributions made out of a bankrupt estate are subject to a 5% levy payable to Superintendent of Bankruptcy pursuant to section 147 of the Bankruptcy and Insolvency Act. Generally, this does not impact secured creditors, whose rights are largely unaffected in bankruptcy. However, in Superintendent of Bankruptcy v Business Development Bank of Canada, 2019 MBCA 72, the Manitoba Court of Appeal recently confirmed that in certain circumstances, even a secured creditor's recovery can be subject to the levy.

Another one bites the dust: Roxodus Music Festival declares bankruptcy

In a plot twist familiar to festival-goers here in BC, another music festival has declared bankruptcy, this time in Ontario.

The Roxodus Music Festival, put on by MF Live Inc., was set for July 11 to 14 and was to feature a star-studded cast of performers, including Aerosmith, Kid Rock, Nickelback, Lynyrd Skynyrd, Alice Cooper, Cheap Trick, Collective Soul, Matthew Good, Peter Frampton, Billy Idol, Theory of a Deadman, and Blondie, among others. Instead, just two days before the start of the four-day festival, MF filed for bankruptcy, listing creditors owed over $18 million.

Insolvency and Deceased Persons - Part 1

At death, nearly everyone will have a few outstanding creditors, even if it is only for the last month's bills and outstanding taxes. The executor or court appointed administrator (the "Personal Representative") will generally pay the final bills in the course of the administration of the deceased's estate, assuming there are funds in the estate. If the estate is insolvent, because there are not enough assets to pay all the debts and liabilities of the deceased, the Personal Representative of the deceased, or family members who may be deciding whether to become a Personal Representative, will need to consider how they will deal with the insolvent estate. 

Ontario Court provides guidance on non-arm's length transactions

A trustee in bankruptcy has special powers to investigate the affairs of a bankrupt estate, and among the greatest of those powers is the ability to review and potentially unwind transactions prior to bankruptcy under section 95 and 96 of the Bankruptcy and Insolvency Act ("BIA").

Transfers to family members upheld following bankruptcy

A transfer of a car to a family member, within one year of the transferor's bankruptcy. Such transactions are regularly set aside in bankruptcy. Even where the transfer was on account of a previous debt owed to the family member, such a transfer would normally be an invalid "preference" under s. 95 of the Bankruptcy and Insolvency Act.

Chinese debtors face public shaming - at the movies

No one likes the endless trailers and advertisements that precede the main feature at movie theatres these days. But some in the audience might have preferred more ads to the fare on offer at a recent screening of the latest Avenger movie. ABC News reports that Chinese authorities now shame debtors and defaulters who owe money to the state by projecting their names and faces on the screen at movie theatres.

Bill C97

On April 8, 2019, the federal government introduced Bill C 97, An Act to Implement Certain Provisions of the Budget Tabled in Parliament On March 19, 2019 and Other Measures, which includes proposed amendments to the Bankruptcy and Insolvency Act, as well as the Companies' Creditors Arrangement Act.

Trustee's disallowance of claim a reminder to creditors to take proofs of claims seriously

A recent decision of the Supreme Court of BC took issue with a bankruptcy trustee's investigation of a proof of claim, but also serves as a reminder that creditors need to take the proof of claim process seriously, particularly where there is any complexity to their claim, or else they risk unneeded cost and inconvenience.

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