Many cryptocurrency lenders have declared bankruptcy. These loss events are indicators of the significant losses the cryptocurrency market has experienced this year.

For investors who have suffered, an important consideration is how to capitalize on these losses. Accordingly, this article will analyze the recent Celsius Network (“Celsius”) bankruptcy and the tax strategy of writing off bad debt.

The Celsius Bankruptcy

The question of who is entitled to payment of compensation for PPI where a debtor has been discharged from his/her Protected Trust Deed (PTD) has given rise to conflicting judicial decisions in Scotland. In our previous article, we highlighted the uncertainty created following the decision of Sheriff Reid in the case of Donnelly v The Royal Bank of Scotland and the decision of Lord Jones in Dooneen Limited, t/a Mcginnes Associates and Douglas Davidson v David Mond.

Court appointed receivers commonly assume control over all of a debtor’s property. In assuming that control, the receiver may collect various pieces of the debtor’s leased equipment, and include that equipment in a sale of the debtor’s assets. Further, the court order appointing the receiver will typically grant the receiver a priority charge over all such equipment for its fees, including the fees of its counsel, and any borrowings it may make in the course of the receivership.

Generally speaking, the policy of the Bankruptcy and Insolvency Act (“BIA”) is not to interfere with secured creditors, leaving them free to realize upon their security. While this makes sense in the abstract, the question that is most often posed by secured creditors is “what does this mean in a practical sense?  What exactly do I need to do to retrieve my secured asset?”

The case of Hull v Campbell serves as a reminder of an outmoded debt recovery procedure that needs to be modernised.

Perimeter Transportation Ltd. (Re), 2010 BCCA 509, on appeal from 2009 BCSC 1458

Century Services Inc. v. Canada (Attorney General), 2010 SCC 60

Section 222(3) of the Excise Tax Act creates a deemed trust for unremitted GST, which operates despite any other act of Canada, except the Bankruptcy and Insolvency Act. However section 18.3(1) of the Companies’ Creditors Arrangement Act (the "CCAA") provides that any statutory deemed trust in favour of the Crown does not operate under the CCAA, subject to certain exceptions which do not mention GST.

Outdoor Broadcast Networks Inc (Re), 2010 ONSC 5647

The debtor had filed a notice of intention to make a proposal (“NOI”) to its creditors under the BIA. It was proposing to immediately sell certain assets in Ontario and BC to help it fund its proposal. As the proposal had not yet been made, the debtor was the one selling assets out of the ordinary course, and the sale was subject to the Ontario Bulk Sales Act. That Act does not apply to sales by bankruptcy trustees, receivers, sheriffs, or other liquidators for the benefit of creditors.

Where a tenant becomes insolvent, landlords are often faced with a courtappointed Receiver inserted in place of the insolvent debtor who wishes to operate the tenant’s business or conduct a sale of assets on site. While the landlord may be able to successfully negotiate payment of occupation rent, a common issue that arises iswho is responsible for any damages to the leased premises? A recent decision of the Ontario Court of Appeal in General Motors Corporation v.

formal proposal under the Bankruptcy and Insolvency Act (BIA) is a powerful alternative to bankruptcy. The benefits of a proposal for the debtor are clear: the debtor reduces its debt load and avoids bankruptcy. However, proposals are also beneficial to creditors since generally the creditor’s recovery in a proposal scenario is better than the potential recovery from a liquidation through a bankruptcy. In simple terms, upon the successful completion of a proposal, the debtor gets a “fresh start” and creditors recover more than they would in a bankruptcy.