Court Finds Bulk Sales Act Inapplicable To Proposed Securitization Transaction

In a decision sure to pique the interest of the securitization bar, Ontario's Superior Court of Justice has found the Bulk Sales Act inapplicable to a proposed lease and equipment securitization transaction. The case, Cle Leasing Enterprises Ltd. (Re), involved an asset originator that had applied for a BSA exemption order in the context of a lease securitization transaction that would extend to present and future sales under a program. 

In a decision dated June 9, the Court ultimately found that the proposed transaction did not fall within the BSA's definition of "sale in bulk", which must be outside the usual course of business or trade of the seller. In the present case, however, the Court distinguished the proposed transaction from those captured by the BSA, stating that