The Bulk Sales Act – Repealed

On March 22, 2017, the Burden Reduction Act, 2017 (the "Act"), which, as its name indicates, is part of an initiative to reduce the regulatory burden on Ontario businesses, received Royal Assent and came into force. Schedule 3 of the Act repeals the Bulk Sales Act (the "BSA"), which was enacted in 1917 and had long been a source of frustration to people doing asset deals in Ontario.

The BSA was intended to protect trade creditors from a situation in which a vendor liquidates its assets over a short period of time, leaving its trade creditors unpaid. Typically, the parties to an asset purchase transaction dealt with the BSA in one of three ways: (1) by applying to a court for an order to exempt the transaction from compliance with the BSA; (2) by the vendor agreeing to indemnify the purchaser for any non-compliance with the BSA; or (3) by complying with the BSA through onerous reporting and verification requirements.