Bankruptcy & Insolvency
Recent Decsions on Limitation Periods for Repossession of Goods in Cases of Bankruptcy
Summarized from:
Court of Queen’s Bench of Alberta
Judgment of Honourable Madam Justice C.A. Kent
Docket # 0801 – 16008
Citations:
Goldman Sachs Canada Credit Partners Co. v. Pantano Energy Services Inc., 2009 ABQB 119 and ABQB 206
These citations are of interest because we are dealing with the same bankruptcy, namely that of Pantano Energy Services, and two of its equipment suppliers – Control Technologies and Alco Flow Control. In the case of Control Technologies, the court allowed an extension of time for Control Technologies to file its demand for repossession of the goods, while in the case of Alco Flow Control, the court allowed for an extension in some of its invoices, but not others. This begs the question- why were these companies dealt with so differently and by the same judge.
The 30 day limitation period in section 81.1 of the Bankruptcy and Insolvency Act, 1985,cB-3, permits an unpaid supplier to repossess goods if the supplier presents a written demand for repossession within 30 days after the delivery of the goods to the purchaser. However, section 187(11) of the Act allows some discretion and permits the court to extend the time for repossession, if it feels it is appropriate to do so.
Rationale:
Control Technologies supplied their equipment on November 21 and 26, 2008. It did not obtain any security at the time of providing the equipment. The receiver was appointed on December 19, 2008; however, Control Technologies did not receive information about the appointment of a Receiver until December 31, 2008 when its offices were closed for the Christmas-New Year’s shut down. The judge ruled that given the realities of how businesses in Canada operate immediately prior to and after Christmas, it was reasonable to allow for an extension of the time for repossession.
In the case of Alco, two invoices were ruled inadmissible. The first one did not have a date and there was no evidence as to when that equipment was delivered. The second invoice was dated November 13, 2008. Since the Receiver was appointed on December 19th, the 30 day time period prior to the appointment of a Receiver had already passed, so there was no valid reason for granting an extension.
