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August 2012

Dividends in bankruptcy

Companies sometimes declare dividends but do not actually pay them out, instead leaving the funds in the business for additional working capital. Recent changes to the Bankruptcy and Insolvency Act can spell bad news for such unpaid dividends in the event of an insolvency.

How NOT to deal with tenants in arrears

Commercial landlords facing a non-paying tenant have a number of choices available to them. These include terminating the lease, and seizing their tenant's goods using the right of distraint. Landlords can do either of these things. But they can't do both. An Ontario landlord recently learned this the hard way in Tosomba v. Base General Contracting Ltd. The landlord changed the locks on the premises following ongoing non-payment of rent by the tenant, and refused to release any of the tenant's goods until the arrears were paid. The outstanding rent was disputed, but appeared to be less than $10,000. The value of the tenant's goods was estimated at $50,000.

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 decision of CNH Capital Canada Ltd. v. Diamond 4 Holdings Ltd.

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