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.
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").
China modernized its bankruptcy laws for corporations back in 2007, enacting a legislative scheme similar to that of western nations, including the power to restructure insolvent corporations and avoid outright bankruptcy in certain situations.
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.
A fundamental term in the "standard" receivership order is the provision granting the receiver a super priority for its fees and disbursements over the interests of secured creditors of the debtor.
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).
In order for a creditor to participate in a dividend in a bankruptcy, the creditor must file a proof of claim and have that proof of claim accepted by the trustee in bankruptcy.
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.
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.
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.