Ontario Civil


Bankruptcy and Insolvency

PROPERTY
Tax obligations were given no special protection under Bankruptcy and Insolvency Act (Can.)

Applicant sought declarations that transaction between EFG and TFI was bulk sale; that transaction was void for failure to comply with Bulk Sales Act (Ont.) (“BSA”); that respondent was liable to account to trustee for value of property purchased in transaction; and for order requiring respondent to pay trustee consideration paid for transaction. Sale was found to be bulk sale and did not comply with BSA. Sale was declared void in part. Sale proceeds were used to pay secured creditor and TFI was not liable to any creditors for that amount. Parties could not agree on terms of formal order. Disagreement arose from fact that reasons failed to deal with disputed point. Plain and ordinary meaning of “value of stock in bulk” did not include HST exigible on goods sold. Principal meaning of value was worth, and there was no evidence that stock acquired by TFI was worth anything other than what it agreed to pay in arms’ length transaction. TFI had an offset for tax. Tax obligations and HST obligations were given no special protection under Bankruptcy and Insolvency Act (Can.), in bankruptcy situation. CRA might qualify as creditor under BSA, but that did not mean that HST owed to CRA qualified as part of value of stock in bulk that TFI acquired.

Ellen’s Food Group Inc. (Trustee of) v. TFI Foods Ltd. (Apr. 7, 2015, Ont. S.C.J., Penny J., File No. CV-14-10628-00CL) 252 A.C.W.S. (3d) 402.

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