Pre-filing Sales Taxes Benefit From No Priority Under The CCAA

In the matter of the Companies' Creditors Arrangement Act of North American retailer Groupe Dynamite, Justice Kalichman, then of the Superior Court of Québec, rendered a judgment on the treatment of pre-filing sales taxes required to be remitted by the debtors. The Court exercised its discretion to amend the Initial Order to provide that only sales taxes accrued or collected after the filing date shall be immediately paid to the tax authorities.

Background: Groupe Dynamite's restructuring

Groupe Dynamite, a Montreal-based fashion retailer operating over 300 stores across North America, has obtained an Initial Order on September 8, 2020 under the CCAA to restructure its operations and present a compromise or arrangement to its creditors. The Initial Order contained a provision from the  Ontario lnitial Order Model requiring Groupe Dynamite to pay all applicable sales taxes (1) accrued or collected after the date of the Initial Order; or (2) accrued or collected