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").

On November 8, 2018, in a decision delivered unanimously from the bench, the Supreme Court of Canada confirmed that the Crown’s superpriority over unremitted Goods and Services Tax/Harmonized Sales Tax (GST/HST) is ineffective against a secured creditor who received, prior to a tax debtor’s bankruptcy, proceeds from that taxpayer’s assets.1

​Canada v Callidus Capital Corporation

Facts: The appellants were brothers who had incorporated a company (the “Corporation”) which was, in January 2008, involuntarily dissolved for failure to file corporate tax returns as required. In 2014, the minister issued an assessment under section 160 Notice of Assessment against the appellants.

The BLG Monthly Update is a digest of recent developments in the law which Neil Guthrie, our National Director of Research, thinks you will find interesting or relevant – or both.

In the recent decision of the Supreme Court of Canada in Toronto-Dominion Bank and Her Majesty the Queen (2012 SCC 1), the Supreme Court succinctly agreed with the reasons of Justice Noël of the Federal Court of Appeal.

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.

From July 21, the reform of rules on prospectuses, intended to establish a common rulebook across the EU to encourage financing through capital markets, will directly apply in Spain.

In the wake of the recent economic downturn caused by the COVID-19 pandemic, there will likely be a sharp rise in bankruptcy filings by businesses seeking to obtain relief from the burdens of excessive debt.1 1 Winston & Strawn’s Tax Controversy and Litigation Group litigates tax disputes in the bankruptcy courts and works in conjunction with the firm’s Bankruptcy Practice Group. Portions of this article were originally published by the author in 2008.

In the wake of the recent economic downturn caused by the COVID-19 pandemic, there will likely be a sharp rise in bankruptcy filings by businesses seeking to obtain relief from the burdens of excessive debt.[1] The bankruptcy code is designed to provide debtors relief and protection from creditors, which includes the Internal Revenue Service (“IRS”).  One of the benefits of bankruptcy court protection is the automatic stay, which will prevent the IR