An equipment finance company finances the purchase of a truck and registers a purchase-money security interest (a “PMSI”) pursuant to the Personal Property Security Act (Ontario) (the “PPSA”) to protect its interest. The truck breaks down and is taken in for repairs. While the truck is in the shop, the debtor defaults under its lending arrangements with the equipment finance company.

In a January 31, 2018 decision from the bench in the matter of Royal Bank of Canada v. A-1 Asphalt Maintenance Ltd. (Court File No. CV-14-10784-00CL) (“A-1 Asphalt”), Madam Justice Conway of the Ontario Superior Court of Justice (Commercial List) (the “Court”) held that the deemed trust provisions of subsection 8(1)(a) of the Construction Lien Act (Ontario) (the “CLA”) were not, on their own, sufficient to create a trust recognized in a contractor’s bankruptcy or proposal proceedings.

Until a court orders otherwise, a monitor appointed under the Companies’ Creditors Arrangement Act is a neutral party and may not take sides in favour of one stakeholder over another.

Secured creditors have taken note and expressed concern regarding a recent decision from the Federal Court of Appeal (the “FCA”), which has upended conventional wisdom regarding the priority and treatment of GST/HST arrears in a bankruptcy. In Canada v.

In a September 19, 2017 decision from the bench in the matter of Bank of Montreal v. Kappeler Masonry Corporation, et. al.1 (“Kappeler Masonry”), Madam Justice Conway of the Ontario Superior Court of Justice (Commercial List) (the “Court”) confirmed that commingling of construction project receipts in a receiver’s estate account is fatal to a Construction Lien Act (Ontario) (the “CLA”) trust claim in the face of a debtor’s bankruptcy.

In what may prove either to be a landmark decision or a mere outliner confined to its unique facts, the Court of Appeal for Ontario (the "Court of Appeal") in Romspen Investment Corporation v. Courtice Auto Wreckers Limited, et al.1 has overturned an earlier decision and lifted the stay of proceedings against a court-appointed receiver to allow a union to proceed with a certification application and an unfair labour practice complaint against the receiver.

In a May 2, 2017 decision, the Sixth Circuit Court of Appeals decided the fate of a stream of rental payments from the bankrupt owner of a residential complex. (In re: Town Center Flats, LLC, No. 16-1812, May 2, 2017, Sixth Circuit Court of Appeals) The case resembled a similar one, far more controversial and with a different result, from 1993. (Octagon Gas Systems, Inc. v. Rimmer, 995 F.2nd 948, 10th Circuit Court of Appeals, 1993) The Octagon Gas case roiled the factoring and receivables purchasing industry.

Recent Events

The federal district court in New Jersey recently denied an appeal by maritime creditors of Hanjin to lift bankruptcy protections and allow arrest of Hanjin's vessels in and near U.S. ports. The federal district court judge agreed with the bankruptcy judge's grant of blanket protection to Hanjin and directed creditors of Hanjin to file claims in the Korean bankruptcy proceeding. Those claims are now due by October 25, 2016 in the Korean proceedings, according to an amended order issued by the Korean judge.

A number of towage and bunker suppliers in the Hanjin Shipping Co. Ltd. chapter 15 case have requested the intervention of a district court judge to clarify whether the U.S. Bankruptcy Court has authority to "effectively extinguish[] . . . maritime liens" on chartered vessels. The bankruptcy judge has acted to try to preserve Hanjin's assets and ability to continue its business, as he should do. The case concerns roughly $14 billion worth of cargo afloat or held up in container yards across the world. At least 10 vessels are known to be steaming toward U.S.

This past weekend, Hanjin vessels commenced unloading operations on the U.S. West Coast for the first time since Hanjin filed its bankruptcy petition with the Seoul Central District Court in Korea. Vessels have also been reportedly unloading in Japanese and Canadian ports. There is an obvious overriding public interest in having the many millions of dollars worth of cargo resume moving to its various destinations.