In its unanimous decision, Ernst & Young Inc. v. Aquino, the Ontario Court of Appeal modified the common law doctrine of corporate attribution in the bankruptcy and insolvency context to uphold a decision of Ontario Superior Court’s Commercial List, which ordered a corporate officer and his associates, whom collectively orchestrated a fraudulent invoicing scheme, to repay over $30 million to company creditors pursuant to s. 96 of the Bankruptcy and Insolvency Act (“BIA”).

Background

While the impact of the coronavirus disease (COVID-19) is as of yet uncertain, one thing is clear: the global outbreak of COVID-19 has caused − and will likely continue to cause − a precipitous decrease in demand and supply as a result of quarantine orders, business closures, and social distancing, all aimed at flattening the curve of the pandemic. As a result, a dramatic and pronounced economic downturn is predicted as the pandemic’s impact touches virtually all businesses, regardless of geography or industry.

In recent months, the US has seen a staggering increase in the number of retailers, both large and small, filing for bankruptcy. Among others, Dots, Alco Stores, Radio Shack, Deb Shops, Wet Seal, and Delia’s have each filed for bankruptcy protection in the past six months alone.