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Bankruptcy and Insolvency Archives

Landlord rights in bankruptcy: Trustee's disclaimer of lease eliminates claim for unsecured damages

Where a tenant is in breach of a commercial lease, a landlord generally has the option to sue the breaching tenant for the unexpired portion of the lease (subject to the landlord's duty to mitigate). However, where a tenant goes bankrupt, the bankruptcy trustee has the power to disclaim the lease under section 30(1)(k) of the Bankruptcy and Insolvency Act ("BIA"). To the surprise of some landlords, this disclaimer will extinguish any right of the landlord to the unexpired term of the lease, save for a preferred three months' accelerated rent claim pursuant to section 136(1)(f).

Supreme Court of Canada finds bankrupt energy company cannot ignore environmental obligations

In a long-awaited decision, the Supreme Court of Canada has overturned the Alberta Court of Appeal, and determined that a bankrupt company does not have carte blanche to ignore its environmental obligations.

Fonts prove forgery

Mark Twain said, "If you tell the truth you don't have to remember anything." That wisdom was driven home in the recent Ontario case McGoey (re), in which a bankrupt tried to prove that two properties registered in his name were actually held by him in trust for someone else, and therefore were not available to his creditors. He produced two trust deeds showing this.

Landlords Must Take Issue with Assignment of Lease Before Court Approval

A recent case out of the Ontario Supreme Court, Re Aeropostale Canada Corp. (Notice of Intention) 2018 ONSC 1468, examined the question of whether a court ordered assignment of a commercial lease pursuant to s. 84.1 of the Bankruptcy and Insolvency Act (R.S.C., 1985, c. B-3) (the "BIA") would include all terms of the lease, including those limited to the original lessee under the lease who was now bankrupt.

Federal funds for laid-off workers increased

The federal Wage Earner Protection Program Act (WEPPA) provides funds for employees who go unpaid as a result of their employer's bankruptcy. or receivership This program is administered with the help of the trustee in bankruptcy or receiver (as the case may be).

Creditor's inattention to proposal terms leads to release of joint debtor

When a debtor makes a proposal under the Bankruptcy and Insolvency Act ("BIA"), the terms of that proposal must be put to creditors for a vote. If accepted, the proposal will then be submitted to the court for approval and then performed by the debtor; if rejected, the debtor will be deemed bankrupt.

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