Appointment Of Receiver And Notice Of Exercise: Will The Court Of Appeal Settle The Controversy?

• Published date: 28 May 2020
• Author: Mr Éric Savard, Charles Lapointe and Antoine Veillette
• Subject Matter: Litigation, Mediation & Arbitration, Insolvency/Bankruptcy/Re-structuring, Insolvency/Bankruptcy, Trials & Appeals & Compensation
• Law Firm: Langlois lawyers, LLP

A recent judgment rendered by the Superior Court in the judicial district of Montréal¹ is in line with the current trend in rulings regarding the appointment of receivers under the Bankruptcy and Insolvency Act ("B.I.A."), namely the requirement that the notice of exercise of a hypothecary right referred to in the Civil Code of Quebec ("C.C.Q.") be submitted, and the time limit specified in the notice must have expired, prior to the application to appoint a receiver.

This decision forms part of a legal controversy that the Court of Appeal will have to resolve in the near future.

The facts

In this case, Caisse Desjardins de LaSalle (the "Caisse") went to court as a secured creditor of DAC Aviation International Ltd. ("DAC") to petition to have Raymond Chabot Inc. ("RCGT") appointed as receiver of DAC's assets.

RCGT had obtained a consulting mandate from DAC to review DAC's affairs.

In the context of its mandate, RCGT concluded that DAC was insolvent and that the value of the assets in which the Caisse had a security interest would decrease significantly due to the loss of DAC's main clients. For these reasons, RCGT recommended that a...