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[BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS IN CANADA]
environmental remediation obligations, have priority over security interests in equipment. While "unrelated assets" should not be used to satisfy end-of-life environmental obligations, equipment is not an unrelated asset. The Court in Orphan Well Association v. Trident Exploration Corp. clarified that all assets related to the business of the company in question are "related assets" and can therefore be used to satisfy these obligations. In Eye Hill (Rural Municipality) v. Saskatchewan (Energy and Resources) , the Saskatchewan Court of King's Bench confirmed the application of Orphan Well Association v. Grant Thorton Ltd. in Saskatchewan and addressed the priority of unpaid municipal taxes and environmental remediation obligations. Municipalities rank after both the Crown in Right of Canada and the Crown in Right of Any Province, as well as after environmental remediation obligations. Any supposed lien created as a result of municipal taxes does not change the ordering of priorities. Further developments in the law have demonstrated both an expansion and narrowing of the availability of super-priority claims. Corporate Attribution Doctrine When proving misconduct, intention may be a necessary element to prove. However, Corporations lack the requisite mental element. The corporate attribution doctrine addresses this deficiency by attributing the intention of the corporation's "directing mind" to the corporation itself. In Aquino v. Bondfield Construction Co. , the Supreme Court of Canada applied the corporate attribution doctrine in the bankruptcy context and provided important guidance on the doctrine. The corporate attribution doctrine should not be applied strictly, otherwise it would be incompatible with the remedial nature of the BIA . Rather, it should be applied purposefully, contextually, and pragmatically. The flexibility
associated with its application requires sensitivity to the area of law under which this issue arises, consideration of public policy concerns like corporate responsibility and the public interest, and a wide discretion for a court to choose whether to apply the test or not. The Court in Aquino v. Bondfield Construction Co. specifically touched on public policy concerns by rejecting the fraud and no benefits exceptions in the context of insolvency. The reasoning for this was that applying them would be contrary to Parliament’s goals, in that it would render the transfer at undervalue remedy meaningless and deny third-party creditors a statutory remedy. Corporate attribution in the context of insolvency only requires that an individual be a directing mind and be acting within their area of corporate responsibility, even if the corporation did not benefit from fraud carried about by the directing mind. Scott v. Golden Oaks Enterprises reaffirmed the principles set out in Aquino v. Bondfield Construction Co. While the Supreme Court of Canada decided not to apply the corporate attribution doctrine in this decision, they established that it does apply to one-person corporations. Debtor Rights of Redemption in Receivership The right of redemption is a helpful remedy for borrowers looking to reclaim property they have an interest in, even after insolvency proceedings have begun. While it is much rarer once a receiver has been appointed, it has nonetheless been applied in this context. In 2024, the Supreme Court of British Columbia addressed this in their decision in Bank of Montreal v Haro- Thurlow Street Project Limited Partnership . The Court affirmed that the equity of redemption applied in the context of receivership as well as foreclosure, and that the rights to redeem continued until the court approval of sale. This process is flexible, as the courts have the
ILN Restructuring & Insolvency Group – Bankruptcy, Insolvency & Rehabilitation Series
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