Gehlen Dabbs Lawyers
Call Us
T: 604 642 6422
Call Us : 604 642 6422
Main navigation

October 2019

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.

contact us today

Submit button