On April 1st, 2021, the Supreme Court of Canada dismissed the application for leave to appeal the decision of the Court of Appeal of Québec in Séquestre de Media5 Corporation, 2020 QCCA 943. As a result, Quebec courts now have clarity regarding their ability to appoint national receivers for secured creditors.
On July 20, 2020, the Court of Appeal overturned the lower court's decision and confirmed the following principles:
- The Quebec Superior Court may appoint a receiver pursuant to subsection 243(1) of the Bankruptcy and Insolvency Act (BIA) at the request of a hypothecary creditor to sell the business of an insolvent debtor as a going concern. However, the notice requirements and related time limits set out in the Civil Code of Québec for exercising a hypothecary right must be met. Once these requirements have been met, the Superior Court may then exercise its discretion under subsection 243(1) of the BIA to appoint a receiver and confer upon them the powers it deems appropriate, including the power to sell the insolvent debtor's business as a going concern; and
- Section 47 of the BIA does not allow for the appointment of an interim receiver to undertake a bidding process to sell a business as a going concern. The interim receiver under section 47 of the BIA may only take conservatory measures.
The Court of Appeal's decision is now final.
A summary of the Court of Appeal's decision prepared by Blakes can be viewed here: Media5 Corporation: Quebec Court of Appeal Confirms Course of Action to Appoint a Receiver | Blakes.
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