In Seeley (Trustee of) v. Canadian Imperial Bank of Commerce (2008), the Bankruptcy Court determined that the Superintendent’s Levy was payable on the amount paid to a secured creditor by a Trustee in bankruptcy.The bankrupt made an assignment into bankruptcy. He owned a cabin which was mortgaged to the Bank.

The Trustee sent the Bank three notices requiring it to file proof of its security. The Bank did not respond.The cabin was sold and subsequently the Bank filed a Proof of Claim in the bankruptcy.

What you need to know

The entry of the Cape Town Convention into force under Canadian law is a positive step, but has led to a legislative “black hole” in the protection provided to certain aviation creditors, bringing with it considerable uncertainty and potentially expensive ramifications.

The Cape Town Convention in Canada

Prudent lenders should monitor their corporate debtors’ pension plan liabilities and pension plan deficits because they may have a significant impact on the priority of the lender’s security and on the amount the lender will recover if the lender enforces its security.

Priority with respect to Lender’s Security

TheBankruptcy and Insolvency Act, RSC 1985, c. B‐3 (the “BIA”) was recently amended to repeal the settlement and reviewable transaction sections of the Act, and replaced these sections with provisions regarding transfers under value and preferences. The aim of these new provisions is to prevent bankrupts from unfairly preferring certain creditors over others and to prevent bankrupts from transferring assets for significantly less than they are worth.

In Ultra Information Systems Canada Inc. v. Pushor Mitchell LLP (2008 Carswell BC 1537 (B.C.S.C.)), one of the corporate Defendants had become bankrupt. There was an issue as to whether some of the bankrupt Defendant’s production documents were privileged. The Court considered whether the Trustee in Bankruptcy could waive the previously claimed solicitor and client privilege and therefore produce the documents.

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

On July 7th, the Wage Earner Protection Program (hereinafter the "WEPP") came into force, as instituted by the Wage Earner Protection Program Act[1].

The WEPP applies to workers whose employers have been declared bankrupt or were placed under receivership as of July 7, 2008.

In the recent decision of Century Services Inc. v. Canada (Attorney General), 2010 SCC 60, the Supreme Court of Canada has, for the first time, interpreted key provisions of the Companies’ Creditors Arrangement Act (“CCAA”).

The judgment of the Court, which was pronounced December 16, 2010, overrules appellate authority from Ontario and British Columbia that previously conferred a priority for unremitted GST on the Crown in CCAA proceedings, and endorses the broad discretionary power of a CCAA court.

In Mendlowitz & Associates Inc. v. Chiang, an Order was granted in 2006 compelling the bankrupt and others to attend for an examination by the trustee under section 163(1) of the Bankruptcy and Insolvency Act (Canada). In 2008, the trustee applied under the same section to examine the bankrupt and others again.

Section 163(1) of the BIA provides:

In Rieger Printing Ink Co, 2009 WL 477541 (Ont S.C.J. [Commercial]), the Ontario Superior Court of Justice dealt with a party's right to protection against selfincrimination in relation to an examination held under section 163 of the Bankruptcy and Insolvency Act, R.S.C., 1985 c. B-3 ("BIA").