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Receivership Frequently Asked Questions

The following is a list of frequently asked questions and answers. The answers are based on a general set of circumstances and are for illustrative purposes only. If you are in any doubt as to the action you should take, you should consult your own professional advisors.

Q. Who is the Receiver?

A. A Receiver is usually an independent third party (usually a firm of accountants) appointed by the secured creditor or the Court. The Receiver must be licensed as a Licensed Insolvency Trustee by the Office of Superintendent of Bankruptcy.

Q. What is the role of the Receiver?

A. The Receiver’s role will be detailed in the Court order authorizing its appointment or the secured creditor’s engagement letter. Generally, the Receiver will take possession of the assets that are subject to its engagement, secure the assets, and realize upon (i.e. sell) the assets for the benefit of secured creditor and/or other creditors. When the Receiver’s appointment also includes a right or power to operate the business, it is considered a Receiver-Manager.

Q. Will creditors get paid for amounts owing by the Company prior to the Receivership?

A. It depends on the proceeds realized from the sale of the assets and the priority of creditor’s claims. After realizing upon the assets, the Receiver will need to consider the claims of secured lenders, prior ranking claims, deemed trusts, statutory liens, and the costs of administrating the Receivership prior to repaying unsecured creditors. Accordingly, an unsecured creditor will only be paid if there are any proceeds remaining after the payment of priority claims.

Q. When will creditors get paid?

A. Receivers will generally make payments to creditors after realizing upon the Company’s assets and considering whether there may be surplus funds available after taking into account the current and anticipated expenses of administering the receivership, deemed trusts, statutory liens, and prior ranking claims.

Should there be surplus funds available, payments to other creditors will depend on the type of Receiver appointment:

  • A Court Appointed Receiver will implement a claims process (as determined by the Court) by which creditors are notified to file a proof of claim. The Proof of Claim sets out what is owed to the creditor and is reviewed by the Receiver and the Company. Any discrepancies between the creditor's Proof of Claim and the Company's records are investigated by the Company. Disputed claims are resolved in accordance with the Claims Process Order issued by the Court. Creditors will be paid after the claims process is completed and a list of creditors and their priorities are finalized.
  • A Receiver who is privately appointed by a secured lender will remit the remaining funds to the Company or another external administrator (i.e. a Licensed Insolvency Trustee). These parties will be responsible for distributing funds to other creditors.

Q. As a supplier, can I repossess my goods/inventory after a customer has been placed in Receivership?

A. Section 81.1 of the BIA gives unpaid suppliers a right to repossess goods that have been delivered to a debtor who is Bankrupt or who has been placed in Receivership. However, the right to repossess goods is subject to the following criteria:

  • The unpaid supplier has to make a written demand for the goods within 15 days of the date of Bankruptcy or Receivership;
  • The goods had to have been delivered within 30 days of the date of Bankruptcy or Receivership;
  • The goods must be used in relation to the debtor’s business and in the possession of the Receiver or Licensed Insolvency Trustee, acting as Trustee of a bankrupt estate (the “Trustee”); and
  • The goods must be identifiable and not fully paid for, in the same state as they were on delivery, and
  • The goods must not be sold or subject to an agreement for sale to an arms’ length party.

Suppliers should use Form 75 of the BIA, a copy of which may be found on the website, and demand the return of unpaid goods.

Q. I have consignment goods on the company's premises, how do I get these goods back?

A. You will need to submit a property proof of claim form (Form 74) to the Receiver which details the particulars of the property and provide evidence of a consignment agreement and ownership of the consignment goods.

Q. As an employee, am I entitled to a priority claim for my unpaid wages? What are my rights?

A. An employee is entitled to a priority claim for unpaid wages and vacation pay, which remain outstanding six months before the initial Bankruptcy event or the date of Receivership. The amount of the priority is limited to $2,000 per employee with an additional $1,000 for disbursements made by a travelling salesperson. The priority claim for unpaid wages does not include termination and severance pay.

The priority amount is paid out of the proceeds from the realization of assets after taking into account deemed trusts, statutory liens, and the rights of unpaid suppliers under section 81.1 of the BIA. The priority claim for employee wages and vacation pay will rank ahead of secured creditors only to the extent of realization from current assets (cash, inventory and accounts receivables).

Q. What is the Wage Earner Protection Program (“WEPP”)?

A. WEPP is a program delivered by Service Canada, which reimburses eligible employees for unpaid wages, vacation pay, severance and termination pay that are owed after an employer becomes Bankrupt or is subject to a Receivership under the Bankruptcy and Insolvency Act.

The maximum payment for an eligible employee is equivalent to four weeks of insurable Employment Insurance earnings less amounts prescribed by regulations. Payments under WEPP will be made directly by Service Canada and not by the Receiver or Trustee. If a payment is made to an employee by Service Canada, then Service Canada will be entitled to any dividend payments made by the Receiver or Trustee to the employee, up to the amount paid by Service Canada.

Further information on WEPP can be obtained through contacting the following:

  • Hot-line: 1-866-683-6516
  • Website:
  • Mail: WEPP Processing Centre
    P.O. Box 5900
    Cornwall, Ontario, K6H 6S2

Q. Will there be a meeting of creditors?

A. No, there is no meeting of creditors in a Receivership. A meeting of creditors will only be called if the Company is Bankrupt.

Q. I am interested in purchasing the Company's assets, who should I contact?

A. You should contact either the Receiver and/or the Trustee (if one has been appointed) to determine who has the right to realize upon the assets. You can also check this website for information on the sale of assets.

Q. I'm a shareholder - will my investment be returned?

A. As a shareholder, you may have an “equity claim” against the Debtor, however an equity claim is subordinate to other creditor claims and will not be paid until all other creditors have been paid in full.

Contact us

Tammy Muradova

, PwC Canada

Tel: 416 941 8383 ext. 14456

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