The waiver of Solicitor/Client privilege by a bankrupt company is a difficult matter and one distinct from the waiver of such privilege by an individual bankrupt. As there is nothing in the BIA that either gives or denies a trustee the right to waive solicitor/client privilege on behalf of a company,Hahaha yes with a lot of candles! the courts have had to turn to the common law for guidance on the issue.

Recent regulations confirm that the GST/HST deemed trust has priority over all security interests and charges except for land or building charges. That exception has its own limitations. It is limited to the amount owing to the secured creditor at the time the tax debtor failed to remit the GST/HST. It also forces the secured creditor to look first to its other security; a kind of forced marshalling.

May a deceased person who dies in bankruptcy having failed to complete his duties under the Bankruptcy and Insolvency Act be discharged from bankruptcy?

This was the question that the British Columbia Supreme Court wrestled with earlier this year in a reported decision that began by noting that there was no jurisdiction on point.

Re Gyro-Trac (USA) Inc. (“Gyro-Trac””) is the first appellate decision to consider the centre of main interests (COMI) of a corporate group. In that case, the Quebec Court Appeal upheld the lower court’s decision to recognize proceedings under Chapter 11 of the United States Bankruptcy Code (“Chapter 11”) and to stay Canadian bankruptcy proceedings against Canadian members of a corporate group.

Pursuant to section 38 of theBankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (the “BIA”) a creditor of the bankrupt estate can obtain the trustee’s right to pursue estate litigation where the trustee refuses or fails to pursue such litigation. In a recent Ontario case, Indcondo Building Corp. v. Sloan [2010], CarswellOnt 9785, the Court of Appeal was asked to determine whether the limitation period for the assigned litigation commences with the trustee’s knowledge of the facts giving rise to the claim or the assignee’s knowledge of those facts.

Advising directors and officers of companies that are in the shadow of insolvency regarding the scope of their personal liability can be a daunting task as directors and officers can be exposed to significant personal liability in a variety of areas of the law. Directors are now accountable not only to the corporation and its shareholders but also under certain circumstances to employees, creditors, customers, suppliers, and governments.

In its recent decision in Century Services Inc v Canada,1 the Supreme Court of Canada (the “SCC”) held that, in the context of a Companies’Creditors Arrangement Act2 (the “CCAA”) proceeding, the Crown does not have a superpriority claim over the property of a debtor for unremitted goods and services tax (“GST”) amounts. The decision of the SCC majority rejected existing appellate-level case law, and brought the priority of Crown claims in-line with what they are in bankruptcy proceedings.

The case of Canrock Ventures LLC v. Ambercore Software Inc. et al is a cautionary tale for a Receiver and its counsel alike. In this case, the Ontario Superior Court of Justice rejected a Receiver’s application for the approval of an asset purchase agreement because of a failure to take the requisite steps when conducting a sale process and, in the Court’s view, failing to remain a neutral officer of the Court.

2011 ONCA 160 (Released March 2, 2011)

Trustee – Constructive Trust – Fraud – Bankruptcy

In this case, the Court of Appeal for Ontario explained the conditions under which a constructive trust remedy can be granted in favour of defrauded creditors after the fraudster enters into bankruptcy proceedings.

One of the duties of a trustee is to examine each claim presented by a potential creditor of the
bankrupt and to determine whether such a claim is valid. A trustee is entitled, under
subsection 135(2) of the BIA, to disallow any claim, priority or security that it finds unproven or
invalid. In the event that a creditor’s claim is disallowed by a trustee, that creditor is entitled to appeal that decision to the superior court in the province. A creditor has 30 days after the
receipt of the trustee’s reasons for disallowance to file an appeal, although an extension may be