Why use a Receiver?

  1. Can be appointed by a secured creditor to realize on assets covered by their security.
  2. Can be appointed by the Court, with greater powers such as Conduct of Sale or to manage a business during liquidation. Provides for a general Stay of Proceedings and security for Receiver's Borrowings.
  3. Receiver of Rents - appointed over a landlord who is in default, in order to collect rents, determine condition of the premises, arrange for repairs and maintenance, and deal with tenancy issues such as lease renewals and evictions. Can sometimes be for a specific purpose such as collecting leases from tenants, or to get insurance coverage on a vacant property.
  4. Appointment of a Receiver puts pressure on the owner to comply with the mortgagee's requirements.
  5. Equitable Receiver - appointed when a debtor is not insolvent (preserving or liquidating property during a shareholder or family dispute).
  6. A Receiver over all or substantially all of a debtor's property must be a Licensed Insolvency Trustee.

Bankruptcy as a Tool for Creditors

  1. Re-ordering priorities: GST, landlords can be moved "down the list".
  2. Trustees have the right to three months occupancy as long as occupation rent is paid.
  3. Investigative powers of the Trustee: pursuing "transfers at undervalue" and other unethical conduct.
  4. Trustee can assign actions (investigations, pursuing lawsuits, pursuing assets) to a creditor willing to fund the action under Section 38 of the Bankruptcy and Insolvency Act.
  5. Employees have access to the Wage Earner Protection Program (up to $7,148.05 each for 2019, to cover wages, vacation pay and severance pay).

Monitor under the Companies' Creditors Arrangement Act (CCAA)

  1. The CCAA is a Federal Statute that is available to design and implement the restructuring of a qualifying corporation, under the supervision of the Court. This Court-driven restructuring process is led by a Monitor (who must be a Licensed Insolvency Trustee). It is usually instigated by the debtor but can be instigated by a secured creditor.  Frequently used on large construction projects including multi-family residences. Needs at least $5 million in debts of a company or group of companies. 
  2. We act as a Monitor to assist Companies operating under the protection of this statute to reorganize their affairs and implement a suitable plan of arrangement with their creditors. 
  3. The CCAA can be applied by a debtor corporation or by its creditor(s) and features a stay of proceedings and features wide discretion of the court to approve proposed courses of action during the restructuring process.
  4.  Debtor company usually continues to operate with same management, with the Monitor in a supervisory role such as co-signing cheques and approving expenditures. 
  5. If a Debtor's management team is not cooperative, the Monitor can be granted expanded powers similar to those of a Receiver and Manager. The Monitor can be granted Conduct of Sale to sell the property/assets. Court has significant flexibility in what it can order.
  6. "Debtor in Possession Financing" (DIP) - emergency financing that allows the debtor company to continues operations, that is given priority to pre-existing secured creditors.
  7. Can be useful in dealing with builders' liens, particularly if significant; Court can give DIP financing and mortgages a priority over existing builders' liens.  Can also give priority to Monitor's Borrowings. 
  8. CCAA proceedings can be useful in dealing with issues such as builders' liens and preserve pre-sale real estate contracts.