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ARTICLE · 29 DECEMBER 2014

Restructuring And Insolvency Report - December 2014

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Many secured creditors see their position in absolute terms. They rely on their general security and aggressively assert their priority over unsecured creditors, such as trade creditors.

CanadaInsolvency/Bankruptcy/Re-Structuring
John Birch
John Birch
Natalie Levine
Natalie Levine
Monique Sassi
Monique Sassi
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In This Issue

  1. Constructive Trust 1 vs. Secured Creditor 0
  2. Void Ab Initio: The Dangers of Insufficient Disclosure
  3. What We've Been Up To

Constructive Trust 1 vs. Secured Creditor 0

By John Birch

Many secured creditors see their position in absolute terms. They rely on their general security and aggressively assert their priority over unsecured creditors, such as trade creditors. However, a recent decision of the Ontario Court of Appeal(306440 Ontario Ltd. v. 782127 Ontario Ltd. (Alrange Container Services), 2014 ONCA 548) demonstrates that creative arguments by trade creditors may allow them to take priority over even secured creditors in certain circumstances, by using trust principles to remove assets from the estate.

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