SCC Holds No Priority For GST Claims In CCAA Proceedings

Copyright 2011, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on Restructuring & Insolvency, February 2011

On December 16, 2010, the Supreme Court of Canada (the SCC) released its decision in Century Services Inc. v. Canada (Attorney General) (aka Re Ted LeRoy). At issue in Century Services was an apparent conflict between the deemed trust provisions of the Excise Tax Act (the ETA) which granted super priority status to the Crown with respect to its claims for unremitted Goods and Services Tax (GST) and the Companies' Creditors Arrangement Act (the CCAA), Canada's principal statute for the reorganization of large insolvent companies, which did not recognize this priority. The scope of the court's discretion when supervising reorganizations under the CCAA was also at issue in respect of its ability to issue orders for the purpose of providing a bridge between the restructuring provisions of the CCAA and the liquidation provisions of the Bankr