Chasing Ontario PPSA Estoppel Letters From Uncooperative Creditors

Why Estoppel Letters Are Needed

Ontario uses a "check-the-box" system on financing statements to secure personal property under the PPSA¹. This means that creditors must, when filing a financing statement, indicate which categories of collateral their registration relates to by marking the appropriate check-boxes, which include "consumer goods," "inventory," "equipment,", "accounts," "motor vehicle" and "other". From a practical perspective, this leads to the convention whereby creditors will often mark the "other" box as a way to broadly cover their bases with respect to describing the assets subject to their security interests. There is nothing problematic with this practice in and of itself, but it can sometimes pose problems for a debtor down the road if attempting to obtain new or additional financing from a different creditor.