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ARTICLE · 02 OCTOBER 2025

Are Profit-Sharing Claims Equity Claims?

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The Court of Appeal for Ontario recently affirmed a decision of the Ontario Superior Court of Justice (Commercial List), which found that the profit-sharing claim of a former employee...

CanadaEmployment and HR
Matilda Lici
Matilda Lici
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The Court of Appeal for Ontario recently affirmed a decision of the Ontario Superior Court of Justice (Commercial List), which found that the profit-sharing claim of a former employee of an insolvent company in proposal proceedings was not an equity claim within the meaning of the Bankruptcy and Insolvency Act (the "BIA"). At first glance, the decision would appear to constitute appellate confirmation that profit-sharing claims are debt obligations or liabilities of debtors, rather than ownership interests. The narrow guidance handed down from the Court of Appeal on this issue, however, warrants a closer look.

In YG Limited Partnership and YSL Residences Inc. (Re), 2025 ONCA 591, YSL Residences Inc. ("YSL"), along with its limited partner, YG Limited Partnership ("YG"), owned a development property on which they intended to develop an 85-storey retail and condominium complex (the "YSL Project"). Following financial difficulties, YSL and YG filed Notices of

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