On March 22, 2017, Ontario's Bulk Sales Act (BSA) was repealed by way of Schedule 3 of Ontario's Burden Reduction Act. This repeal marks the end of bulk sales legislation in Canada as Ontario was the last Canadian jurisdiction to have such legislation.
Enacted in 1917, the BSA was intended to protect creditors from a sale of assets by a business without the creditors first getting what they are owed. Before its repeal, the parties to an asset transaction would satisfy the bulk sales legislation requirements in one of three ways: (a) by complying with the procedures of the BSA, (b) by obtaining a court order or (c) by waiving compliance with the BSA. If the bulk sales legislation was not satisfied, the consequences ranged from the transaction being set aside to the purchaser being subject to additional costs.
For a while now, bulk sales legislation has been viewed as an unnecessary burden and cost to parties involved in asset transactions. This is so because other means for protection of creditors now exist, including: obtaining a security interest under the Personal Property Security Act, the oppression remedy available under applicable corporate legislation, and general protections under the Bankruptcy and Insolvency Act and assignment and preference legislation.
Now that the BSA is repealed, vendors and purchasers involved in asset transactions in Ontario will not have to incur the costs and administrative burden associated with compliance of bulk sales legislation. However, addressing the policy concerns that bulk sales legislation was originally intended to address may require that they be extra cognizant of these other creditor protections.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
