In most trading relationships, suppliers enter into deferred payment agreements, such as instalment sales, with their retailers in order to allow retailers to stock their inventory and to manage cash flow between the delivery of goods and the resale to the customer. The possibility of default on payments or often the insolvency of a trade customer/retailer exposes the supplier to considerable risk without control of its goods and without payment. As an unsecured creditor, the supplier then stands in an unfortunate position and may never recover its goods or receive payment.
On August 30, 2019, the Ontario Superior Court of Justice handed down its decision in Doyle Salewski Inc. v Scott 2019 ONSC 5108.
Although this lengthy decision covers many topics, one of interest relates to the "appropriate means" part of the discoverability analysis when a Trustee in Bankruptcy brings a claim for unjust enrichment.
Background
On July 31, 2019, the Ontario Court of Appeal rendered its decision in Ridel v. Goldberg, clarifying the interplay of the various provisions of the Limitations Act, 2002 at play in circumstances where judgment creditors are allowed to take proceedings in their own name pursuant to an order under the Bankruptcy and Insolvency Act.
The Facts
Going forward, lenders must take precautionary measures to protect themselves. Anticipating the risk of a U.S. bankruptcy case is a crucial first step.
The court noted that the DOJ might prosecute cannabis-related businesses under the CSA, notwithstanding plan confirmation. Thus, Garvin may have foreclosed any future DOJ CSA-based noneconomic objections to cannabis reorganizations.
In the recent decision of Edmonton (City) v Alvarez & Marsal Canada Inc., 2019 ABCA 109, the Alberta Court of Appeal has concluded that fees and costs incurred by a court-appointed receiver should have priority over all claims by secured creditors, including special liens in favour of municipalities for unpaid property taxes. This is an important decision for the insolvency bar and provides some much needed comfort to receivers that their fees and costs will be protected by the court-ordered charge.
The Decision
The Defendant was a dentist who had executed a personal guarantee on July 7, 2011 in favour of the Plaintiff (the "Bank") in order to secure payment of the indebtedness of the Defendant's professional corporation. The Bank made a demand for payment on the guarantee, and subsequently brought an action against the Defendant (the "First Action").The Bank was successful on a motion for summary judgment and judgment was granted against the Defendant.
Contrary to the Bankruptcy Court’s ruling, the District Court concluded that California's liquidated damages statute does not apply to the default interest rate provision.
This is a favorable decision for commercial secured lenders. Although the ruling is not controlling on other bankruptcy courts as it is a trial court level ruling, courts may certainly consider it when presented with similar issues.
In In re 1111 Myrtle Avenue Group, LLC (Bankr. S.D.N.Y. 2019), a New York bankruptcy court held that a default interest rate provision of 7 percent was enforceable and not a penalty against a debtor, which retained significant equity postbankruptcy.
Background
Background
Virginia Hills Oil Corp. was a small publicly traded oil producer with assets in north central Alberta. Some of its assets were held through its subsidiary Dolomite Energy Inc. (collectively the "Debtors"). The Debtors' main secured creditors were the Alberta Treasury Branches and the Bank of Nova Scotia (the "Banks"). The Debtors also owned a pipeline that passed through three municipalities (the "Municipalities").