May a deceased person who dies in bankruptcy having failed to complete his duties under the Bankruptcy and Insolvency Act be discharged from bankruptcy?
This was the question that the British Columbia Supreme Court wrestled with earlier this year in a reported decision that began by noting that there was no jurisdiction on point.
Re Gyro-Trac (USA) Inc. (“Gyro-Trac””) is the first appellate decision to consider the centre of main interests (COMI) of a corporate group. In that case, the Quebec Court Appeal upheld the lower court’s decision to recognize proceedings under Chapter 11 of the United States Bankruptcy Code (“Chapter 11”) and to stay Canadian bankruptcy proceedings against Canadian members of a corporate group.
Pursuant to section 38 of theBankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (the “BIA”) a creditor of the bankrupt estate can obtain the trustee’s right to pursue estate litigation where the trustee refuses or fails to pursue such litigation. In a recent Ontario case, Indcondo Building Corp. v. Sloan [2010], CarswellOnt 9785, the Court of Appeal was asked to determine whether the limitation period for the assigned litigation commences with the trustee’s knowledge of the facts giving rise to the claim or the assignee’s knowledge of those facts.
Advising directors and officers of companies that are in the shadow of insolvency regarding the scope of their personal liability can be a daunting task as directors and officers can be exposed to significant personal liability in a variety of areas of the law. Directors are now accountable not only to the corporation and its shareholders but also under certain circumstances to employees, creditors, customers, suppliers, and governments.
Introduction
The decision of the Supreme Court of Canada last month in Century Services Inc. v. Canada1 is of striking interest to the tax and insolvency bars. The Court considered Crown priorities, in particular, the various “deemed trust” provisions found in section 227 of the Income Tax Act (Canada),2 section 86 of the Employment Insurance Act,3 section 23 of the Canada Pension Plan (the “CPP”)4 and in particular section 222 of the Excise Tax Act (GST Portions).5
Creditors and debtors often enter into agreements with respect to the repayment of indebtedness.
Shareholder claims and corporate bankruptcies are on the rise.
The 2010 decision of the Ontario Court of Appeal in Murphy v. Sally Creek Environs Corp. (Trustee of) considered the role of a trustee in bankruptcy as an officer of the court and its obligation to act fairly and with integrity throughout bankruptcy proceedings.
Recovery of legal costs in insolvency proceedings can be a difficult procedure, as the ability of counsel to claim costs depends on the work performed, the timing of the work, and for whom the work was done.
- Ex ParteOrders
There are a number of ethical issues facing lawyers today in bankruptcy and insolvency litigation. One of the main issues is the level of disclosure in ex parte applications, such as those for a stay of proceedings in order to file a proposal under the BIA or a plan under theCCAA.