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ARTICLE · 16 OCTOBER 2019

Breaking Fiduciary Ties In An Asset Purchase Agreement

Does a corporate director of a vendor corporation owe independent fiduciary duties to a purchasing corporation in the context of an asset purchase?

CanadaLitigation, Mediation & Arbitration

Does a corporate director of a vendor corporation owe independent fiduciary duties to a purchasing corporation in the context of an asset purchase? In Manson Insulation Products Ltd. v Crossroads C & I Distributors, 2019 ABQB 684 (Manson), the Court dismissed counterclaims by a purchasing corporation against directors of the vendor corporation. The purchaser corporation had acquired substantially all of the assets from the vendor corporation through an asset purchase agreement. The Court ruled the purchaser corporation had no legal basis to sue the directors of the vendor corporation for any wrongs they committed against the vendor corporation.
The plaintiff, Crossroads C & I Distributors (or, as they are referred to in the decision, New Crossroads) counterclaimed against, among others, Shawn Tilson and Keith Eaman. Tilson and Eaman were directors of the vendor corporation (which is referred to in the decision as Old Crossroads). Tilson and Eaman together owned half of

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