Last year we
reported on Ontario's distinction as the only Canadian
province that has not repealed its century-old Bulk Sales
Act (the Act). With its goal of creditor
protection now served by more modern legislation, the Act is
generally viewed as a nuisance, adding time and cost to
transactions. However, the wait may soon be over, as Ontario
recently introduced legislation that would repeal the Act.
The aim of the Act is to protect creditors from a vendor selling
its assets without first paying its debts owed to creditors. The
Act achieves this aim by imposing certain duties on the purchaser
of the assets. A failure to comply by the purchaser can render the
sale voidable and the purchaser liable for the value of the
purchased assets. The Act broadly applies to every "sale in
bulk". This includes a sale of goods made outside the
vendor's usual course of business, making the Act a necessary
consideration in the context of any M&A transaction structured
as an asset deal.
Bill 218, the Burden Reduction Act, 2016 (the
Bill) is a recent package of proposed legislative
amendments advanced by the Ministry of Economic Development,
Employment and Infrastructure. The Bill proposes to amend more than
50 different statutes and is intended to reduce various regulatory
roadblocks for business. The Bill would repeal the antiquated Act,
thereby bringing Ontario in line with all other Canadian
jurisdictions, and recognizing that other, more effective avenues
are now available to creditors to protect their interests in the
context of a "bulk sale" transaction.
The Bill is still in the early stages, having passed first
reading in the Ontario legislature on June 8, 2016. Dealmakers now
wait with bated breath for the Bill to make its way through the
remainder of the legislative process and bring the repeal of
Ontario's bulk sales legislation at long last.
The author would like to thank Peter Valente, summer student,
for his assistance in preparing this legal update.
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The Canadian Competition Bureau issued a template document for use as a form of Consent Agreement, to be filed with the Competition Tribunal to resolve concerns the Bureau may have with proposed mergers.
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