Ontario Civil


Bankruptcy and Insolvency

Bankruptcy and receiving orders

Rescission or stay of order

Receiver should have responsibility for evaluating claims of secured creditors

Debtor company became insolvent. Receiver was appointed by court and sold debtor’s assets. Debtor made assignment into bankruptcy without leave of court or consent of receiver. Trustee in bankruptcy purported to disallow claim of secured creditor. Secured creditor brought motion to stay bankruptcy proceeding until after receiver completed its evaluation of secured creditors’ claims. Motion granted in part. Leave granted for bankruptcy proceeding to continue, in tandem with receivership, before same judge. Receiver should have responsibility for evaluating claims of secured creditors. It would be unfortunate if receiver and trustee had to duplicate work or work at cross purposes. Because receivership was put in place first and because bankruptcy was initiated without court approval, receiver was authorized to complete its work. Trustee had right to be heard both as trustee and as holder of debtor’s residual rights, right to be informed of steps taken by receiver and right to take position when report was submitted for court approval. If receiver and trustee reached different conclusions on status and quantum of secured claims, hearing would be required in receivership.

Royal Bank of Canada v. Casselman PHBC Ltd. (2017), 2017 CarswellOnt 10241, 2017 ONSC 4107, Calum MacLeod J. (Ont. S.C.J.).

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