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LEAVE TO APPEAL A RECEIVERSHIP ORDER IN ONTARIO: WHY IT RARELY WORKS & WHAT TO DO INSTEAD

Company owner drowned in lLegal papers and judge with gavel, all with the word denied stamped on them, symbolizing the tough challenge of securing leave to appeal an Ontario receivership order.
leave to appeal

As Brandon Smith, Senior Vice-President of Ira Smith Trustee & Receiver Inc., I understand the stress and confusion that comes with financial difficulty and legal proceedings. My goal is to provide clear, actionable, and compassionate advice to help you navigate these challenging times. This Brandon’s Blog post will demystify the complex world of seeking leave to appeal a receivership order in Ontario, using a real-world example to highlight the critical steps and why early professional guidance is essential.

Leave To Appeal Key Takeaways

  • A receivership order means a third party takes control of a business’s assets, often leading to their sale. It’s a serious step, usually initiated by a creditor.
  • Appealing a receivership order in Ontario is extremely difficult. You usually need “leave to appeal,” which is not automatically granted.
  • Courts consider strict legal tests, including whether there’s a serious question to be tried, if irreparable harm would occur, and the balance of convenience.
  • The case of Royal Bank of Canada v. 2339366 Ontario Inc., 2026 ONSC 327 (CanLII), shows just how challenging it is to successfully get leave to appeal.
  • Strict deadlines apply, often as short as 10 days for insolvency-related appeals, making immediate action crucial.
  • Proactive measures, like Bankruptcy and Insolvency Act Division I proposals or Companies’ Creditors Arrangement Act Plans of Arrangement, are often a better solution than waiting until receivership.
  • Seeking expert advice from a Licensed Insolvency Trustee (LIT) like Ira Smith Trustee & Receiver Inc. early can help you explore options and avoid the receivership process entirely.

Leave to Appeal Introduction: When Control Slips Away

Imagine building a business from the ground up, pouring your heart, time, and money into it. Then, suddenly, financial pressures mount, and a powerful creditor, normally the senior secured lender, steps in, asking a court to appoint a licensed insolvency trustee as the “receiver.” This receiver takes control, manages the company’s assets, and sells them off. The feeling of losing control can be devastating. It’s a moment when everything you’ve worked for feels like it’s slipping away.

This is the harsh reality of a receivership order. It’s a powerful legal tool for creditors in Ontario. Many business owners, understandably, want to fight back, to appeal the decision. But what does that really mean, and what are your chances of success?

We’ll dive into the complexities of appealing an Ontario receivership order, using the important case of Royal Bank of Canada v. 2339366 Ontario Inc., 2026 ONSC 327 as a guide. This case highlights just how tough it is to get “leave to appeal” a receivership order. More importantly, we’ll discuss how to avoid reaching this point, and why expert advice from Ira Smith Trustee & Receiver Inc. is your best defence. We believe that understanding your options before a crisis hits is the key to protecting your financial future.

Company owner drowned in lLegal papers and judge with gavel, all with the word denied stamped on them, symbolizing the tough challenge of securing leave to appeal an Ontario receivership order.
leave to appeal

Understanding Receivership: What It Is and Why It Happens

A receivership is a legal process where a court appoints a neutral licensed insolvency trustee third party, called a receiver, to take control of a company’s assets or business operations. The receiver’s main job is to preserve the value of these assets and, usually, sell them to repay creditors. This is a serious step, often considered a last resort by a secured creditor seeking to recover their funds.

Why does it happen? Receiverships usually happen when a business is in severe financial trouble and can no longer pay its debts, especially to a secured creditor like a bank. This creditor will then ask the court to appoint a receiver to protect their interests. Common reasons include:

  • Defaulting on loans: The business fails to make agreed-upon payments on its bank loans or other secured debts.
  • Breaching loan agreements: Even if payments are being made, other terms of the loan agreement might be broken, such as not providing financial statements or selling key assets without permission.
  • Mismanagement or fraud: If there are concerns about how the business is being run, or if there’s suspected fraud, a court might appoint a receiver to ensure assets are protected.
  • Disputes among owners: Sometimes, conflicts between business partners or shareholders can threaten the company’s financial health, leading to a creditor seeking receivership.
  • Risk of asset loss: If there’s a risk that valuable assets might be wasted, sold off improperly, or disappear, a receiver can step in to secure them.

The impact on a business is immediate and severe. Once a receiver is appointed, the original owners lose all control over daily operations and decision-making. The receiver steps in to manage everything – from selling inventory and equipment, to collecting money owed to the business, to dealing with employees and suppliers. They make all decisions that affect the business and its assets. The goal is liquidation and repayment, not usually continued operation or rehabilitation.

It’s important to understand that only a Licensed Insolvency Trustee (LIT) can be appointed as a receiver. While a LIT is a Canadian insolvency professional experienced in all insolvency processes, including receivership, their primary role in other insolvency processes, like corporate financial restructuring or corporate bankruptcies, is different. In those cases, LITs focus more on helping debtors restructure or liquidate in an orderly, debtor-focused manner. Receivership, by contrast, is often a creditor-driven process, putting the secured creditor’s interests first, but not exclusively, without regard to the interests of all other stakeholders.

Royal Bank of Canada v. 2339366 Ontario Inc., 2026 ONSC 327 Case: A Closer Look At Leave To Appeal

This Ontario Superior Court of Justice decision, released January 16, 2026, Royal Bank of Canada v. 2339366 Ontario Inc., is a clear example of the challenges involved in trying to stall or overturn a receivership order. It demonstrates the high legal hurdle faced by debtors seeking to appeal such a decision.

What Happened in the Case? In this specific case, Royal Bank of Canada (RBC) had successfully obtained a receivership order against 2339366 Ontario Inc. and other related parties. The statutes relied upon to gain the appointment were the Ontario Courts of Justice Act and the Bankruptcy and Insolvency Act. This meant the court had agreed with RBC that a receiver was needed to take control of the assets of the debtor company and its related parties. The debtor, understandably wanting to retain control, challenged this decision by seeking “leave to appeal” that receivership order. They were asking for permission from the Court of Appeal for Ontario to challenge the original decision that put their business into receivership.

What is “Leave to Appeal”? In many legal matters, especially those involving the Bankruptcy and Insolvency Act (BIA), including the appointment of court-appointed receivers, you don’t have an automatic right to appeal a court’s decision. This is a critical distinction. Instead, you must first ask a judge of the Court of Appeal for Ontario for leave to appeal, which means asking for permission to bring the appeal forward. It’s a vital first hurdle, a gate that must be passed before the actual appeal can even be heard. The court looks at whether there’s enough merit or public importance to justify the time and resources of a higher Ontario Court of Appeal.

The Legal Threshold: Criteria for Granting Leave to Appeal

To get leave to appeal, the court typically looks at several strict factors. In insolvency cases, and specifically when trying to appeal a receivership order, these often include:

  1. Is there a serious question to be tried? This isn’t just about disagreeing with the decision. It means, is there a real, important legal issue that needs to be addressed by a higher court, not just a minor disagreement about facts or a desire to re-argue the case? The potential appellant must show that their appeal has “arguable merit” and a reasonable chance of success.
  2. Will the applicant suffer irreparable harm if the leave is refused? Would they face damage that cannot be fixed later, even if they were to eventually win the appeal? For example, if assets are being sold off by a receiver, the “harm” of losing those assets is often already happening, making it hard to argue future irreparable harm.
  3. Does the balance of convenience favour granting the leave? The court weighs who would be more negatively affected by granting or refusing the leave – the party wanting to appeal (the debtor), or the other parties (like the creditors and the Canadian insolvency professional receiver who is working to recover funds)? In receivership, delaying the receiver’s work can cause more harm to creditors, who are trying to recover their money and mitigate further losses.
  4. Is there an error in principle? Receivership orders are often considered “discretionary.” This means the original judge had some choice in making the order, based on the specific facts and legal principles. To successfully appeal a discretionary order, you usually need to show that the judge made a mistake in applying a legal principle, rather than just disagreeing with how they used their discretion.

In the RBC case, the debtors argued that since appealing an insolvency order invokes the stay of proceedings, applying for leave to appeal the receivership order must also stay the actions and activities of the receiver. They further argued that therefore, they did not have to cooperate with the receiver, including delivering the books and records and the assets of the company.

The court determined that the debtor’s and the other moving parties’ argument was without merit. The court said that seeking leave to appeal is not the same as an active appeal and did not impose an automatic stay. This meant their attempt to challenge the validity of the receivership order was stopped before it could even begin. The original decision to appoint a receiver under Canadian insolvency law stood at that time. This case highlights how robust the initial evidence for a receivership must be, and why it is in force until a higher court says it was stayed or is no longer valid.

Company owner drowned in lLegal papers and judge with gavel, all with the word denied stamped on them, symbolizing the tough challenge of securing leave to appeal an Ontario receivership order.
leave to appeal

Navigating An Appeal: What “Leave to Appeal” Really Means in Ontario

The RBC v. 2339366 Ontario Inc., 2026 ONSC 327 case underscores a crucial point for anyone facing such a situation: simply disagreeing with a receivership order is not enough to have it stayed (or get an appeal heard). The bar for getting leave to appeal in Ontario, especially for insolvency matters under the Bankruptcy and Insolvency Act (BIA), is very high. It’s designed to prevent endless litigation and allow the insolvency process to move forward efficiently.

Why is it so difficult to obtain leave to appeal an Ontario receivership order?

It’s difficult because courts want to ensure that appeals don’t unduly delay the administration of an insolvent estate, which can cause further losses for creditors. The legal system aims for finality and efficiency in insolvency proceedings. For a receivership order, this means letting the receiver do their job of securing and selling assets as quickly and effectively as possible.

The Strict Legal Tests Courts Apply:

When deciding whether to grant leave to appeal, courts apply several strict legal tests. These are not easy to meet:

  1. Arguable Merit (Serious Question to be Tried):
    • You must show that your proposed appeal is not frivolous or simply a delay tactic. It must raise a genuine insolvency law legal issue that has a reasonable chance of success if fully argued.
    • This often means identifying a clear error of insolvency law or otherwise by the original judge, a misinterpretation of a statute, or a significant factual error that led to an incorrect legal conclusion. It’s not enough to say the judge “got it wrong”; you need to show how they got it wrong according to legal principles.
    • For example, you might argue that the original judge did not properly apply the specific conditions required under insolvency law for a receivership under the BIA, or that there was insufficient evidence to prove the debt existed.
  3. Irreparable Harm:
    • You need to convince the court that if the appeal isn’t allowed to proceed, you will suffer harm that cannot be fixed later, even if you eventually win the appeal.
    • This is incredibly challenging in a receivership case because the core “harm” – losing control of your assets and having them sold – is usually already in motion by the receiver. Once assets are sold, reversing that is often impossible. The court will question whether the harm is truly “irreparable” if it could be compensated with money if you were to win the appeal. In many cases, the harm is financial, and the court may see that as reparable by damages, even if that’s a difficult outcome for the debtor.
  5. Balance of Convenience:
    • The court weighs the potential negative impact on you if leave to appeal is denied against the potential negative impact on the other parties (primarily the creditors and the receiver) if leave is granted.
    • In insolvency law, courts often prioritize the interests of creditors and the efficient administration of the estate. Delaying a receivership through an appeal can increase costs, devalue assets, and frustrate creditors’ efforts to recover their money.
    • The court asks: Who will suffer more if the process is stalled? Often, the creditors’ need for timely recovery outweighs the debtor’s desire to appeal a decision already made.
  7. Public Importance (Less Common for Individual Cases):
    • Sometimes, the court will consider whether the case raises a novel or important question of law that has significance beyond the parties involved. This is less common for typical receivership orders, which usually hinge on the specific facts of a debt.
    • Unless your case sets a new legal precedent or clarifies a significant area of insolvency law, this factor is unlikely to swing the decision in your favour.

Tight Deadlines: An Unforgiving Reality One of the most unforgiving aspects of insolvency appeals, especially those related to receivership orders, is the strict timeline. Under the Bankruptcy and Insolvency Act (BIA) Rules, you often have only 10 days from the date of the order to file your notice of appeal or your application for leave to appeal. Missing this deadline can be fatal to your appeal, regardless of how strong your arguments might otherwise be. The courts are very reluctant to extend these short deadlines in insolvency matters, especially if the appeal lacks general importance in insolvency law, as noted by legal experts.

This highlights why time is truly of the essence and why professional guidance is not just helpful, but essential from the very first sign of financial trouble. Delaying action to address debt issues can close doors to crucial legal avenues, making a difficult situation even harder to resolve.

The Proactive Path: Alternatives to Receivership for Businesses and Individuals

The challenging reality of appealing a receivership order emphasizes one critical truth: prevention is far better than reaction. Waiting until a creditor has obtained a receivership order, and then trying to appeal it is often too late to truly save your business or regain control of your assets. By that point, the legal and financial damage is usually significant.

Instead, businesses and individuals facing financial distress should explore proactive restructuring options. This is where the expertise of a Licensed Insolvency Trustee (LIT) like the Ira Smith Team becomes invaluable. We can help you understand and navigate solutions designed to avoid the drastic measures of receivership or bankruptcy. We offer guidance that allows you to take control before others step in.

Key Alternatives to Avoid Receivership:

Consumer Proposals: A Lifeline for Individuals and Small Proprietorships

    • What it is: A Consumer Proposal is a formal, legally binding offer that an individual (or a small business owner with personal guarantees) makes to their unsecured creditors. You propose to pay back a portion of what you owe, over a period of up to five years, without interest. It’s a structured debt settlement overseen by a Licensed Insolvency Trustee.
    • How it helps:
      • Stops collection calls and legal actions: Once filed, a “stay of proceedings” comes into effect. This means creditors cannot call you, garnish your wages, or pursue other legal actions.
      • Reduces debt: You often end up paying back only a fraction of your original unsecured debt.
      • No interest: All interest charges are frozen once the proposal is filed.
      • You keep your assets: Unlike receivership or bankruptcy, you generally keep all your assets, including your home, car, and business property.
      • Avoids bankruptcy: It’s a powerful alternative to personal bankruptcy, allowing you to settle your debts while protecting your credit rating more quickly than bankruptcy.
    • Who it’s for: Individuals with debts of up to $250,000 (not counting a mortgage on a principal residence). It’s an excellent option for consumers and small business owners whose personal guarantees are a significant burden.

Division I Proposals: Restructuring for Larger Consumer Debts and Corporations

    • What it is: Similar to a Consumer Proposal but designed for larger debts, corporations, or individuals with debts over $250,000 (excluding a mortgage on a principal residence). A Division I Proposal allows a company (or a high-debt individual) to propose a restructuring plan to all of its creditors (generally only those who are unsecured). This plan is administered by the LIT, who acts as the Proposal Trustee.
    • How it helps:
      • Business continuity: If accepted, the business can often continue operating, avoid bankruptcy, and repay its debts under new, manageable terms. This is a crucial difference from receivership, which usually means the end of the business.
      • Stops creditor actions: Like a Consumer Proposal, it imposes a “stay of proceedings,” stopping all legal actions, including potential receivership requests, from creditors.
      • Comprehensive restructuring: It can be tailored to address various types of debt and allow for more complex negotiations with creditors, including secured creditors.
      • Preserves value: It allows for the orderly winding down or sale of parts of a business, or the full rehabilitation of a viable business, often preserving more value than a receivership.
    • Who it’s for: Corporations struggling with significant debt, or individuals whose unsecured debt exceeds the Consumer Proposal limit. It’s a powerful tool for business rescue.

Understanding Bankruptcy: When It’s the Right Option

    • What it is: While often seen as a last resort, bankruptcy is a formal legal process that can provide a fresh financial start by clearing most unsecured debts. For businesses, it involves the orderly liquidation of assets to pay creditors. An LIT oversees this process, ensuring all legal requirements are met. It is governed by federal law, specifically the Bankruptcy and Insolvency Act.
    • How it helps:
      • Debt discharge: For individuals, it legally eliminates most unsecured debts, offering a true fresh start. Corporate bankruptcy does not give the company a fresh start.
      • Stops creditor action: Immediately stops all collection calls, lawsuits, and wage garnishments.
      • Orderly asset liquidation: For businesses, it provides a structured way to close down, sell assets, and distribute funds to creditors fairly, rather than a chaotic dismantling.
      • No more interest: All interest on unsecured debts stops.
    • Who it’s for: Individuals or corporations who cannot meet their financial obligations, and for whom a proposal is not feasible or desirable. It’s a powerful tool when other options are exhausted, and a complete reset (consumer) or shut down (corporate) is needed.

These alternatives empower you to take control of your financial situation, often preserving assets, stopping legal actions, and offering a clear path forward. This is incredibly difficult to achieve once a receivership order has been imposed by the court and a receiver is already at work. By speaking with a Licensed Insolvency Trustee early, you gain the knowledge and support to make informed decisions that protect your future. Ira Smith Trustee & Receiver Inc. is here to help you explore these options with dignity and professionalism.

Company owner drowned in lLegal papers and judge with gavel, all with the word denied stamped on them, symbolizing the tough challenge of securing leave to appeal an Ontario receivership order.
leave to appeal

The Real-World Impact: What This Means for You

The lessons from cases like Royal Bank of Canada v. 2339366 Ontario Inc., 2026 ONSC 327 are clear and profound. They highlight the significant consequences of delaying action when facing financial distress.

  • For Business Owners: If your business is struggling, waiting until a secured creditor initiates receivership proceedings means:

Once a receiver is appointed, you lose control of your operations, your assets, and often your entire business. This can lead to a complete loss of the value you’ve built, damage to your reputation, and immense personal stress. Proactive engagement with a Licensed Insolvency Trustee can open doors to solutions that keep you in control and your business viable, or at least allow for an orderly wind-down on your terms, not a creditor’s.

  • For Individuals with Personal Guarantees: Many small and medium-sized business debts, especially to a secured lender, are backed by personal guarantees from the owner. Further, corporate directors are liable for unpaid salary, wages and vacation pay, unremitted source deductions and unremitted HST.

If your company goes into receivership, those personal guarantees don’t disappear. They can lead to personal financial ruin, putting your home, savings, and future at risk. Understanding options like consumer proposals for your personal debts, or a Division I Proposal for you or your business, is crucial to protect your personal finances.

  • For Creditors: While receivership is a powerful tool to recover debt, it can be costly and time-consuming. The receiver’s fees and legal costs can eat into the recovered funds, sometimes leaving less for creditors than expected. Understanding the alternatives and how a debtor might proactively offer a proposal can sometimes lead to a quicker, more efficient recovery of funds and a less adversarial process.

The stress and emotional toll of financial uncertainty cannot be overstated. I’ve witnessed it countless times. Knowing your options and having a clear plan of action provides not just practical solutions but also immense peace of mind. Taking early action with expert guidance can transform a seemingly hopeless situation into a manageable path forward.

Comparison Table: Receivership vs. Proposal vs. Bankruptcy

Understanding the differences between these insolvency processes is key to making an informed decision. Here’s a quick comparison:

Company owner drowned in lLegal papers and judge with gavel, all with the word denied stamped on them, symbolizing the tough challenge of securing leave to appeal an Ontario receivership order.
leave to appeal
Company owner drowned in lLegal papers and judge with gavel, all with the word denied stamped on them, symbolizing the tough challenge of securing leave to appeal an Ontario receivership order.
leave to appeal

Leave To Appeal FAQ Section

Q1: What does “leave to appeal an Ontario receivership order” mean, and why is it so difficult to obtain?

A: “Leave to appeal” means you must ask the court for permission to bring an appeal; it’s not an automatic right. It’s difficult to obtain because courts want to prevent delays in insolvency proceedings and require you to meet strict criteria. You must show there’s a serious legal question, that you’d suffer irreparable harm, and that the balance of convenience favours hearing the appeal.

Q2: What are the specific legal tests courts apply when deciding whether to grant leave to appeal a receivership order in Ontario?

A: Courts typically apply a three-part test: (1) Is there a serious question to be tried (meaning your appeal has arguable merit)? (2) Will you suffer irreparable harm if leave is refused? (3) Does the balance of convenience favour granting leave? For a discretionary order like receivership, you often also need to show an error in legal principle by the original judge.

Q3: How is a receivership different from bankruptcy?

A: A receivership is usually initiated by a secured creditor to seize and sell specific assets to recover a debt; the business owner loses control. Bankruptcy, on the other hand, is a broader insolvency process. For individuals, it aims to discharge most debts and provide a fresh start. For corporations, it involves the liquidation of all assets to pay creditors, in priority, leading to the company’s cessation. A Licensed Insolvency Trustee (LIT) administers both personal and corporate bankruptcies.

Q4: What should I do if my business is facing financial trouble?

A: Act immediately. The most crucial step is to seek professional advice from a Licensed Insolvency Trustee (LIT) as early as possible. An LIT can assess your situation, explain all your options (like consumer proposals or Division I proposals), and help you develop a strategy to avoid receivership or bankruptcy.

Q5: How can Ira Smith Trustee & Receiver Inc. help me?

A: The Ira Smith Team specializes in helping individuals and businesses facing financial distress in Ontario. We are Licensed Insolvency Trustees, which means we are licensed by the federal government to administer all insolvency processes. We offer a free, confidential consultation to evaluate your specific situation, explain all your options in plain language, and guide you toward the best solution to gain control of your financial future. We focus on providing clear, actionable, and empathetic advice.

Brandon’s Take On Leave To Appeal

As a Senior Vice-President at Ira Smith Trustee & Receiver Inc., I’ve seen firsthand the stress and heartache that financial problems can cause. The Royal Bank of Canada v. 2339366 Ontario Inc., 2026 ONSC 327 case is a stark reminder that once a receivership order is in place, your options become severely limited. Trying to get leave to appeal is often a long, costly, and very difficult battle with a low chance of success. It’s a fight most people can and should avoid.

My experience tells me that most companies that end up in receivership could have found a better, less disruptive solution if they had sought help sooner. The emotional toll of waiting, hoping the problem will just go away, is immense. But financial problems rarely resolve themselves; they usually get worse, piling on more stress, more debt, and fewer options.

That’s why I strongly advocate for proactive measures. Don’t wait until a creditor is at your door, or a receiver is being appointed. Explore alternatives like consumer proposals or Division I proposals. These options allow you to take charge, protect your assets where possible, and restructure your debts in a way that provides real relief. We are here to listen without judgment and guide you through every step of that journey. Our goal is to empower you to make informed decisions and find the best path to financial recovery.

Company owner drowned in lLegal papers and judge with gavel, all with the word denied stamped on them, symbolizing the tough challenge of securing leave to appeal an Ontario receivership order.
leave to appeal

Leave To Appeal Conclusion: Don’t Face Financial Challenges Alone – Take Control Today

The legal landscape surrounding receivership orders and appeals in Ontario is complex and unforgiving. The lessons from cases like Royal Bank of Canada v. 2339366 Ontario Inc., 2026 ONSC 327 clearly demonstrate that appealing a receivership order is an uphill battle, fraught with strict legal tests and tight deadlines. By the time you’re considering an appeal, a significant amount of control and potential value has likely already been lost.

Your best strategy against financial distress is not to fight a receivership order after it’s been granted, but to prevent it from happening in the first place. Early intervention, comprehensive understanding of your options, and expert guidance are your most powerful tools. With the right information and professional support, you can explore viable alternatives that allow you to regain control, manage your debts, and secure a more stable financial future.

Don’t let financial uncertainty dictate your future. If you or your business is struggling with debt, losing sleep, or facing the possibility of legal action, contact Ira Smith Trustee & Receiver Inc. today. We offer a free, confidential consultation to discuss your situation, explain your options in plain language, and help you develop a clear, actionable plan. Our team of Licensed Insolvency Trustees is dedicated to providing the compassionate, professional support you need to regain control and achieve a debt-free life. Take the first step towards a brighter financial future – call us now.

Ira Smith Trustee & Receiver Inc. is licensed by the Office of the Superintendent of Bankruptcy and is a member of the Canadian Association of Insolvency and Restructuring Professionals.

  • Phone: 905.738.4167
  • Toronto line: 647.799.3312
  • Website: https://irasmithinc.com/
  • Email: brandon@irasmithinc.com

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Disclaimer: This analysis is for educational purposes only and is based on the cited sources and my professional expertise as a licensed insolvency trustee. The information provided does not constitute legal or financial advice for your specific circumstances.

Every situation is unique and involves complex legal and factual considerations. The outcomes discussed in this article may not apply to your particular situation. Situations are fact-specific and depend on the particular circumstances of each case.

Please contact Ira Smith Trustee & Receiver Inc. or consult with qualified legal or financial professionals regarding your specific matter before making any decisions.

About the Author:

Brandon Smith is a Senior Vice-President at Ira Smith Trustee & Receiver Inc. and a licensed insolvency trustee serving clients across Ontario. With extensive experience in complex court-ordered receivership administration and corporate insolvency & restructuring proceedings, Brandon helps businesses, creditors, and professionals navigate challenging financial situations to achieve optimal outcomes.

Brandon stays current with landmark developments in Canadian insolvency law. He brings this cutting-edge knowledge to every client engagement, ensuring his clients benefit from the most current understanding of their rights and options.

Company owner drowned in lLegal papers and judge with gavel, all with the word denied stamped on them, symbolizing the tough challenge of securing leave to appeal an Ontario receivership order.
leave to appeal
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Brandon Blog Post

INSOLVENCY AND BANKRUPTCY ACT: ANTI-DEPRIVATION RULE COMPLETELY VALID IN INSOLVENCY

insolvency and bankruptcy act
insolvency and bankruptcy act

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting. We hope that you and your family are safe and healthy.

If you would prefer to listen to an audio version of this Brandon’s Blog, please scroll to the very bottom and click on the podcast.

Insolvency and bankruptcy act introduction

On October 2, 2020, the Supreme Court of Canada (SCC) rendered its decision in Chandos Construction Ltd. v. Deloitte Restructuring Inc., 2020 SCC 25 (Chandos decision). This decision upheld the idea that the anti-deprivation rule is completely valid when it pertains to both personal and business insolvency and bankruptcy act cases.

In this Brandon’s Blog, I describe the Chandos case and what it stands for.

The definition of the word deprive and the insolvency and bankruptcy act context

The Merriam-Webster dictionary states the definition of the word deprive is:

  • 1: to take something away from; and
  • : to withhold something from.

In the Chandos Construction Ltd. (Chandos) insolvency and bankruptcy act case, the SCC was asked to rule on contract clauses that if upheld, would deprive the bankruptcy estate and therefore the unsecured creditors of money that would otherwise be available. This deprivation of funds, which may make total sense as between contracting parties, is not enforceable in bankruptcy.

The anti-deprivation rule in the Canadian insolvency and bankruptcy act matters

Neither the Bankruptcy and Insolvency Act (Canada) (BIA) nor the Companies’ Creditors Arrangement Act (CCAA) stops non-defaulting parties to a contract, from relying upon agreement provisions that create an inevitable result when a debtor declares bankruptcy. The common law becomes pertinent in these situations.

Canadian courts still refer to these anti-deprivation provisions as “ipso facto” provisions and also this idea as the fraud upon the bankruptcy law concept. In more current times, this has been described as the anti-deprivation rule.

The SCC has recognized the anti-deprivation rule since the 1890s. However, the contemporary application of this principle in Canadian law greatly originates from an Ontario court decision in 1995 – Canadian Imperial Bank of Commerce v. Bramalea Inc., 1995 CanLII 7262 (ON SC) (Bramalea decision).

This is a decision from the Ontario Court of Justice (General Division). Canadian courts have thought about and decided upon the anti-deprivation rule in many insolvency and bankruptcy act cases since then.

The Bramalea case and its relevance of insolvency and bankruptcy act matters

Luckily for me, Ira Smith was the receiver responsible for the file that involved the Bramalea decision. So, I have a bird’s-eye view of that case which started it all leading to the SCC Chandos decision.

In the Bramalea insolvency and bankruptcy act case, a group of companies, including Bramalea Inc. (Bramalea) was in a partnership agreement to develop and operate a shopping mall in Markham, Ontario called Shoppes on Steeles. In 1995, Bramalea was placed into receivership and bankruptcy. Bramalea’s partners included Sears Canada and a private real estate development company.

Amongst the different provisions of the partnership agreement was a specific provision in the contract which considers insolvency. It said that, in case of the insolvency of any of the partners, the non-insolvent partner(s) (given it does not waive the event of insolvency) can buy the interest of the financially troubled partner at the lesser of book value or fair market value.

The paradox of this case was that the large company partners at the time of the drafting of the partnership contract were concerned about what happens if the private property developer one day became insolvent? None of the partners ever believed that it would be that private company that would be the only one that was not insolvent. We all know what happened to Sears Canada!

The moving parties sought to exercise that right by serving a notification to buy the Bramalea passion at book value, approximated to be around $200,000. This was opposed by the receiver and also other stakeholders.

The receiver gave evidence that the fair market price surpassed book value by as much as $2 million to $3 million. The moving parties acknowledged that the fair market value of Bramalea’s stake in the partnership was more than book value. They did not agree with the receiver’s evidence regarding the amount of that difference. They additionally did not submit their own fair market valuation.

The Bramalea insolvency and bankruptcy act decision

Based on the evidence, the court took the view that the specific spread between book value and fair market value was not trivial. The court was satisfied that the distinction is greater than marginal, and enough to properly draw the interest of the receiver and the creditors.

The receiver’s position was that there is a higher principle in play and that the concern is not one of hindering the freedom of contract. Rather it was just one of whether or not that part of the partnership contract is void as being contrary to the public interest.

The receiver submitted that while the arrangement might quite possibly stand as between the contracting parties, it is void as against the receiver and also the bankruptcy trustee in the Bramalea insolvency and bankruptcy act proceedings.

The court agreed with the receiver’s position in this insolvency and bankruptcy act case. The court decided that it was clear from the provisions of the partnership agreement itself that the parties contemplated a transfer to one of the partners of the other partner’s partnership interest, only in case of insolvency, at a price less than what could be acquired for that interest on the open market.

The court specified that this stipulation made perfect sense, as between the contracting parties. It made total sense in regards to maintaining their partnership and their respective interests. Nevertheless, the court likewise specified that the clause cannot survive through the scrutiny of the “fraud on the bankruptcy law” principle.

The receiver ended up selling Bramalea’s partnership interest to the other partners for fair market value.

insolvency and bankruptcy act
insolvency and bankruptcy act

The Chandos Alberta court case and the anti-deprivation rule for insolvency and bankruptcy act matters

Chandos was the general contractor for a condo project contracted with Capital Steel to give $1.3 million worth of steelwork. In the subcontract, Capital Steel agreed that if it became insolvent, Chandos was entitled to all costs arising from the suspension of the contract and it would forfeit 10% of the total subcontract price as an inconvenience fee. Capital Steel performed the majority of its commitments, nevertheless, it filed an assignment in bankruptcy before completing full performance.

As a result, Chandos was forced to finish the contract at an estimated expense of $22,800. Up until that point, Chandos owed Capital Steel $149,618 in outstanding invoices for the job it had performed.

Chandos relied upon the agreement and said that it was qualified to deduct its cost of finishing the job plus 10% of the total contract cost from the amount owing. Given the price of the subcontract, the 10% deduction eliminated Chandos’ balance owing plus an extra amount of $10,511. Chandos declared that gave them a provable claim in the Capital Steel insolvency and bankruptcy act case.

The Trustee’s application to the Alberta Court of Queen’s Bench

On March 6, 2017, the Trustee applied to the Alberta Court of Queen’s Bench seeking advice and directions on whether Chandos was entitled to rely on the provision in the contract or was it void pursuant to the anti-deprivation rule in common-law.

The chambers judge acknowledged that the common law anti-deprivation rule stops parties from contracting out of insolvency and bankruptcy act regulations. The judge stated that if that provision was a liquidating damages provision as opposed to a penalty, it would not violate the rule.

The chambers judge ruled that the condition was an authentic pre-estimate of costs, which imposed liquidated damages and not a penalty. He additionally held that the provision represented a bona fide commercial arrangement that did not have as its predominant objective the deprivation of Capital Steel’s property. Consequently, the chambers judge decided that Chandos can implement the clause against the Trustee.

Trustee appeals the Chandos insolvency and bankruptcy act decision to the Court of Appeal for Alberta

The Trustee appealed the Chandos decision to the Court of Appeal for Alberta. The appellate court reviewed the lower court decision in this insolvency and bankruptcy act case and decided that:

  • The chambers court properly determined the presence and application of the fraud on the bankruptcy law principle in Canada.
  • In describing the scope of the anti-deprivation rule, however, the chambers judge erred.
  • The lower court embraced the purpose-based technique set out by the Supreme Court of the United Kingdom
  • The appropriate technique is to check out the impact of the provision. Its purpose is a different analysis.
  • Chandos certainly had a genuine commercial interest it was looking to protect.
  • However, the clause conflicts with the BIA‘s scheme of distribution. The common law anti-deprivation rule revokes the clause and Chandos cannot count on it to defend its claim against the Trustee.

Chandos appeals to the SCC in this insolvency and bankruptcy act anti-deprivation rule case

One of the key goals of the insolvency and bankruptcy act law is to make certain there is a fair distribution among creditors. In order to fulfill the objective, the legislation restricts specific contractual stipulations that trigger when one of the parties goes into insolvency proceedings (ipso facto clauses).

As seen in the Bramalea situation, one of these limitations is the anti-deprivation rule. It holds that ipso facto conditions that rob the debtor’s creditors of assets they are qualified to receive in insolvency and bankruptcy act matters are void. This is likewise what the Court of Appeal for Alberta decided. Chandos appealed that decision to the SCC.

The Chandos appeal was heard on January 20, 2020. The SCC split decision was released on October 2, 2020. On the facts of Chandos, the SCC dismissed the Chandos appeal. The SCC refused to promote a contractual stipulation that the subcontractor Capital Steel waive 10 percent of the agreed price if Capital Steel became insolvent or bankrupt.

The SCC majority maintained that the test for application of the contractual provision is effects-based and not purpose-based. The SCC majority confirmed that the anti-deprivation rule stands under Canadian common law and it has not been eliminated in dismissing the appeal in this corporate insolvency and bankruptcy act case.

insolvency and bankruptcy act
insolvency and bankruptcy act

Insolvency and bankruptcy act summary

I hope you have enjoyed this insolvency and bankruptcy act Brandon’s Blog. Hopefully, you have better insight now into the fact that a sick insolvent company’s business can be saved by doing a sale of its assets to a healthy organization.

Do you or your company have too much debt? Are you or your company in need of financial restructuring? The financial restructuring process is complex. The Ira Smith Team understands how to do a complex restructuring. However, more importantly, we understand the needs of the entrepreneur or the person who has too much personal debt.

You are worried because you are facing significant financial challenges. It is not your fault that you are in this situation. You have been only shown the old ways that do not work anymore. The Ira Smith Team uses new modern ways to get you out of your debt troubles while avoiding bankruptcy. We can get you debt relief freedom.

The stress placed upon you is huge. We understand your pain points. We look at your entire situation and devise a strategy that is as unique as you and your problems; financial and emotional. The way we take the load off of your shoulders and devise a debt settlement plan, we know that we can help you.

We know that people facing financial problems need realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team.

That is why we can develop a restructuring process as unique as the financial problems and pain you are facing. If any of this sounds familiar to you and you are serious in finding a solution, contact the Ira Smith Trustee & Receiver Inc. team today.

Call us now for a free consultation.

We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting. We hope that you and your family are safe and healthy.

 

Categories
Brandon Blog Post

INSOLVENCIES IN CANADA: THE CALM BEFORE THE SCARY STORM?

The Ira Smith Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Insolvencies in Canada introduction

Insolvencies in Canada are at a record low. Is it the calm before the scary storm?

Consumer insolvencies in Canada have been driven to unusually reduced degrees in recent years because of sustained low-interest rates and strong property values.

In this Brandon’s Blog, I discuss what could very well happen in the 4th quarter of 2020 and into 2021.

Insolvencies in Canada – recent history

The lower number of insolvency filings is not a new phenomenon. Insolvencies in Canada have been at historically low levels for many years. It was not until last year that personal insolvency filings increased year over year.

In 2019, consumer insolvencies for the 12-month period finishing December 31, 2019, increased by 9.5% compared to the 12-months ending December 31, 2018. Personal bankruptcy decreased by 1.2%, while consumer proposals were 17.9% higher.

After many successive years of steady decline, business bankruptcies in Canada had reached a plateau level in 2019. Typically speaking, business bankruptcies in Canada have been stable.

During the 1st quarter of 2020, the Office of the Superintendent of Bankruptcy Canada (OSB) reports that between the 4th quarter of 2019 and the end of the 1st quarter of 2020, for insolvencies in Canada:

  • Total insolvency filings decreased by 5.4%.
  • Consumer filings were down by 5.5%.
  • Business insolvency filings were 2.6% lower.
  • In all cases, bankruptcy filings were drastically lower and restructuring proposals were essentially flat.
  • For personal filings, Alberta was basically flat while the other provinces and territory showed decreases.
  • In business filings, Ontario showed a slight increase (8.3%) and British Columbia showed a huge increase (43.5%). Again, it was restructuring proposals, not bankruptcy, making up the majority of business filings. All other provinces and territories showed a decrease.

Then the effects of the economic shutdown of the country started taking hold in April 2020.

April 2020 insolvencies in Canada and the United States

The total variety of insolvencies in Canada (both bankruptcy and proposal filings) decreased by 38.7% in April 2020 contrasted to March 2020. Personal bankruptcy decreased by 41.5% and proposals decreased by 37.2%.

The number of insolvencies filed in April 2020 was 43.5% less than the total in April 2019. Consumer bankruptcies decreased by 43.1%, while consumer proposals decreased by 54.8%.

The story in the United States is very similar. American Banker reports that presently in the US, personal bankruptcy filings are actually reduced year over year. It reports that according to information from the federal courts, there were 186,000 consumer bankruptcy cases in the first quarter of 2019. By comparison, there were 175,000 for the initial quarter of 2020.

A lot more noticeably, the rate of consumer insolvency cases for April of 2020 was 46% lower than in April of 2019.

There are a variety of reasons in both countries. From my discussions with a couple of US bankruptcy lawyers, I am friendly with, it seems the reasons in both countries are generally the same.

In no particular order, the main reasons are:

  • Mortgage payment deferral programs masking what might otherwise be increased delinquencies.
  • Lower overall credit card spending while people are at home in self-quarantine.
  • Various government programs supplying much-needed cash to unemployed people and businesses.
  • Government programs deferring the timing for filing income tax returns and the payment of income tax.
  • Moral suasion so far stopping banks, credit card companies and collection agencies from aggressively making collection attempts during this time.
  • The closure of the courts making it impossible to sue anyone.

    insolvencies in canada
    insolvencies in canada

The economy is starting to reopen

In conjunction with the federal government, the provinces and territories are starting to reopen cities and businesses. No doubt there will be a lot of growing pains as the economy reopens. What should we expect? What will it mean for insolvencies in Canada?

In his first speech as Governor of the Bank of Canada, on June 22, 2020, Tiff Macklem stated that he expects there will be an initial boost to the Canadian economy as it reopens and activity resumes. He does not expect that good news to last very long. Rather, he expects there will be the 2nd stage of economic recovery that will certainly be long and slow, due to the remaining unpredictability around the coronavirus.

The federal government will need to wean Canadians off of the various support programs. When that happens, all the financial pain currently hiding under the radar will rise to the forefront. COVID-19 support programs, payment deferrals and other “time outs” will end and the courts will reopen. Creditors will get back to business as usual in chasing delinquent accounts. The federal, provincial and territorial governments will feel they have done enough to the tune of trillions of dollars. Their attitude will be, in so many words, it is now time for you to stand on your own two feet again.

In fact, some government attitudes are already changing.

Will temporary layoffs be a harbinger for business insolvencies in Canada?

Throughout the coronavirus pandemic, BC seemed to handle their lockdown and other COVID-19 things a bit differently than the other provinces and territories. As they now consider reopening, BC businesses are worried.

British Columbia businesses are discouraged by Labour Minister Harry Bains’s failure to recognize the seriousness of problems facing the mainly small and medium-sized businesses. Their issue is the possibility for thousands of companies to have to make an insolvency filing. Their main worry is that they will be compelled to make severance payments as a result of the unexpected scenarios brought by the COVID-19 pandemic.

The Minister has it within his power to supply a Ministerial Order to expand the temporary layoff time frame under the Employment Standards Act to provide companies with the breathing room” required to survive, recoup, and facilitate return-to-work for laid-off staff.

All provinces and territories face extraordinary difficulties as a result of the economic results from COVID-19. Few business owners can plan for or have the cash-on-hand to terminate all or a considerable part of their labour force at the same time throughout the very best of times.

BC companies will be faced with fears as the clock ticks to target dates beginning in very early July requiring several companies to either recall or permanently terminate laid-off staff members. They don’t have enough business or money to rehire everyone. They also don’t have the cash to make the severance payments. Without legislative support, this problem will face all Canadian businesses.

In the nick of time, the federal government has come to the rescue. On June 23, 2020, Prime Minister Justin Trudeau announced that the federal government has expanded the period for temporary layoffs by as much as 6 months. Employers now have more time to recall staff members who were laid off due to COVID-19.

Now, for employees who were laid off before March 31, the government has proposed that their employers have the earlier of 6 months or up until December 30 to recall their staff. For employees laid off between March 31 and September 30, their company will have up until December 30, unless a later recall day was given on their layoff notification.

I caution that this is a proposal floated by our PM right now and not actual legislation. Labour legislation is largely left up to the provinces and territories. It is interesting to note that the Feds seem to be stepping into this. As we all know, ultimately, businesses will either be able to survive or will have to restructure under our laws for insolvencies in Canada.

Will extending employee recalls be a harbinger for personal insolvencies in Canada?

So now that employees can expect to remain unemployed for longer, what is that going to mean? For several years now polls have shown that Canadians are on the brink of insolvency. As I already mentioned, rock-bottom interest rates and rising real estate values, leading to lots of home equity lines of credit room to borrow on. This has kept Canadians in debt and out of becoming one of the statistics for insolvencies in Canada.

So the question is, once the Canada Employment Response Benefit (CERB) runs out, what will the unemployed do? Seems to me there are a few options, none of them good:

  1. Cut back on spending as much as possible. In places like the Greater Toronto Area (GTA), you have to be a magician to be able to live on $2,000 per month (after putting away the amount you will have to pay eventually in CERB income tax).
  2. Burn through the rest of your savings until you have no cash.
  3. As a result of 1 or 2, go deeper into debt on your lines of credit and credit cards until you have no more borrowing room.

Once all of this has happened, the only thing left to do will be to consult with a licensed insolvency trustee (formerly called a bankruptcy trustee) to discuss your realistic options for eliminating debt.

Insolvencies in Canada summary

I hope you have found the insolvencies in Canada Brandon’s Blog interesting and helpful. The Ira Smith Team family hopes that you and your family members are remaining secure, healthy and well-balanced. Our hearts go out to every person that has been affected either via misfortune or inconvenience.

We all must help each other to stop the spread of the coronavirus. Social distancing and self-quarantining are sacrifices that are not optional. Families are literally separated from each other. We look forward to the time when life can return to something near to typical and we can all be together once again.

Ira Smith Trustee & Receiver Inc. has constantly used clean, safe and secure ways in our professional firm and we continue to do so.

Income, revenue and cash flow shortages are critical issues facing entrepreneurs, their companies and individual Canadians. This is especially true these days.

If anyone needs our assistance for debt relief Canada COVID-19, or you just need some answers for questions that are bothering you, feel confident that Ira or Brandon can still assist you. Telephone consultations and/or virtual conferences are readily available for anyone feeling the need to discuss their personal or company situation.

The Ira Smith Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

insolvencies in canada
insolvencies in canada
Categories
Brandon Blog Post

HOW TO LOSE MONEY WITH WINNING LOTTERY NUMBERS

winning lottery numbersIntroduction

It is true that winning a lotto game can transform lives. Most people hope for winning lottery numbers. They hope for a lotto win to bring life-altering money. They hope their winning ticket will let them quickly repay a home mortgage or get a new home, purchase a brand-new vehicle, bring on early retirement and also limitless travelling.

That dream result is not always the case. I really hope a money windfall will bring excellent luck and fortune to you. However, this Brandon’s Blog is about how betting on winning lottery numbers to erase your debt or repair all your troubles, might not always hold true.

The probability of having the winning lottery numbers

Winning lotto is an unbelievable experience. The possibility of winning a lotto game are controlled by the law of probabilities. You do not need to have a Ph.D. in mathematics to recognize that winning a lottery game is a once-in-many-lifetimes chance. The likelihood of winning a lottery game is truly a conditional probability.

Your chances of winning are conditional on the number of tickets you have purchased. The selling of individual tickets and the selection of the winning lottery numbers are independent events. After that, the probability of winning a lottery is the combined event wherein your ticket matches the numbers selected.

There are just two ways of raising your possibilities to win a lottery game:

  1. Purchase extra tickets.
  2. You and your associate engage in fraudulent behaviour by having inside details on which numbers your pal can manipulate the bouncing spheres to get you the win!

Religious people say that everything they obtain is a true blessing. So, I assume winning a lottery falls into that same category. So, rather than thinking about their probabilities of winning, they buy lotto tickets and put their faith a higher power. Some people claim that the opportunity of winning a lottery game is so low, it is almost like throwing your cash away. The opposite side of the coin is that people who talk about the small probability of winning the lotto are met with the argument: But what if I’m the one?

Winning a lottery is not a debt elimination plan

For sure winning a lotto will put a smile on your face. Winning a lotto may be among the best experiences in someone’s life. Winning a lottery has constantly been the only opportunity for the typical individual with financial debts to get their financial freedom. Surveys show that virtually half of Canadians are counting on either receiving an inheritance or winning a lotto game for their retirement, with similar numbers showing up in various other developed nations.

Some people incorrectly think winning a lotto will fix all their troubles. If you see that your desire for winning a lotto has developed into troubles in any other facets of your life, understand that you are a lottery addict. The addiction is fuelled because the possibility of winning the lotto is so little and there are none of the regular small gains which persuade the habitual casino player to take their winnings and leave the table a winner that day. Chasing after the desire of winning the lottery keeps many people always coming back for more because their requirement to win has actually not been satisfied.

Winning a lotto game can have both adverse as well as positive influences in your life. Winning a lotto can totally transform you. A few years ago I wrote two blogs on how winning a lottery can ruin a person’s life as opposed to saving it. Those people actually lost money with winning lottery numbers.

Worse problems from winning a lottery

Most provincial lotteries have similar rules. One common rule is the need for transparency by publishing the name and other details about the winner. This can lead to worse problems than the ones I have already mentioned. Consider this coming from the United States.

One fortunate lottery winner from New Jersey might have the ability to relish all the cash from the next state lottery in secret– many thanks to a brand-new regulation that went into effect just last month. New Jersey Gov. Phil Murphy signed a law in January that enables winners to stay confidential.

Previous Governor Chris Christie vetoed the regulation saying that it would certainly threaten the openness that provides taxpayers confidence in the honesty of the lottery game. But advocates of the regulation, which was passed unanimously this year, claimed lottery winners must be able to make their own choice on whether they want the publicity or not.

New Jersey joined a handful of various other states consisting of Arizona, Delaware, Georgia as well as Kansas that permit lotto game champions to conceal their identifications if their winnings exceed a particular amount.

The legislation excuses names and addresses from the state’s public records, but state departments are still able to share the information internally to collect child assistance or other state social assistance overpayments.

Winning the lottery can lead to great pleasures like high-end cars, holidays and homes. However, it can also attract a lot of unwanted attention. All sorts of scammers come out of the woodwork to try to get the lotto winners to separate from their money. It can also lead to unwanted attention, harassment and even physical violence.

In 2016, a 20-year-old male that had won an almost half-million-dollar lottery game prize was killed during a home invasion robbery in Georgia. In 2010, a man that won $31 million, was found buried under concrete. His good friend was found guilty of his murder.

So from these examples, it is possible to lose money and more, with winning lottery numbers.

Summary

You can’t rely on winning lottery numbers to solve your financial problems. In fact, always buying lottery tickets might lead some people to have bigger problems. Do you have too much debt? Are you banking on some outside event that you have no control over, like an inheritance or gambling winnings to save you or your company?

If yes, then you need immediate help. The Ira Smith Team comprehends just how to do a debt restructuring. Much more notably, we know the demands of the business owner or the person who has too much debt. Due to the fact that you are managing these stressful financial problems, you are anxious.

It is not your fault you cannot fix this issue on your own. You have just been shown the old ways. The old ways do not work anymore. The Ira Smith Team makes use of new contemporary ways to get you out of your debt troubles while avoiding bankruptcy. We can get you debt relief now.

At Ira Smith Trustee & Receiver Inc., we take a look at your whole condition and layout a strategy that is as unique as you are. We take the load off of your shoulders as a part of the debt negotiation approach we will create just for you.

We understand that individuals facing financial troubles require a lifeline. That is why we can establish a restructuring procedure for you as well as end the pain you feel.

Call us now for a no-cost consultation. We will certainly get you or your business back on the road to a well balanced and healthy life and end the pain factors in your life, Starting Over, Starting Now.

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Categories
Brandon Blog Post

BUY NOTHING DAY CANADA: WILL IT HAVE ANY EFFECT ON HOLIDAY SHOPPING

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Introduction

Buy Nothing Day Canada is part of an international day of protest against consumerism. In North America, it takes place on the Friday after U.S. Thanksgiving. That is the same day as Black Friday. Elsewhere, it is held on the last Saturday in November.

It is a Canadian invention. Founded in Vancouver by creator Ted Dave in 1992 it was subsequently advertised by Adbusters magazine, based in Canada.

In this Brandon’s Blog, I discuss what effect, if any, Buy Nothing Day Canada has on Black Friday, Cyber Monday and holiday shopping in general. I also provide some tips on how not to go deep into debt from holiday spending.

What is the purpose of Buy Nothing Day Canada?

Buy Nothing Day Canada and worldwide, it is meant as a day for society to take a look at the problem of over-consumption. In 2000, Adbusters tried to purchase advertising time on television to promote Buy Nothing Day Canada and elsewhere were rejected marketing time by nearly all significant TV networks besides CNN.

Notwithstanding, it has become a grassroots movement. Campaigns started showing up in the USA, the United Kingdom, Israel, Austria, Germany, New Zealand, Japan, the Netherlands, France, Norway and Sweden. Currently, it is held in about 65 countries.

Doubters of the day feel that it merely:

  • shifts people’s buying habits to the next day; or
  • appeals really only to those people who rebel against over-consumerism all year through.

Is it effective?

Based on a recent study, I think Buy Nothing Day Canada is meaningful only to those who already practise a lifestyle against over-consumerism. This study says that Canadians will spend approximately$1,593 per person for the 2019 holiday season. This is a little up from $1,563 (or 1.9 percent) in 2018, according to the same report.

For many years now, there have been reports that say Canadians are over their heads in debt. They are living paycheque to paycheque. On average, Canadian adults are $200 away from financial disaster. I have written several blogs on the topic of Canadian households in debt.

So, from what I can tell, this movement has no effect at all on holiday shoppers.

Must I resort to a buy nothing Christmas?

Black Friday and Cyber Monday are over. You may feel you overdid it on your holiday spending last year. Perhaps it put you in a bad place that took a lot of time to get out of. You don’t wish to repeat it going into 2020.

So I have created a holiday spending in Canada tips list to try to assist with your budgeting for the holidays. Ideally, by following my suggestions, you won’t get in the brand-new year with more financial debt that you cannot handle. You will have avoided one of the most typical holiday spending blunders.

By following my tips, you can buy gifts and remain financially healthy without resorting to shopping abstinence.

But first, it all starts with a budget

You don’t need to adhere to a Buy Nothing Day Canada philosophy, but you do have to live within your means. So, the overall key is proper budgeting for holiday spending. It is so vital that you think out your holiday budget before you start spending.

I believe there are 3 major classifications to your Xmas holiday spending plan:

  1. presents;
  2. food and beverage in your home if you are hosting; and
  3. tree and decors.

To begin setting your holiday budget plan, you need to establish 3 separate mini-budgets; one for each item. For gifts, the first thing is to detail out everybody you feel you would like to buy a gift for. After that reduce the list to everyone you really must buy a present for. You may not be able to manage your “desires”, but only your “needs”. The various other classifications will be easier to establish.

Now, check out your regular monthly earnings and expenses as well as any kind of savings you might have designated for holiday costs. This will help you to understand just how much you can afford to spend without going into holiday spending financial debt. Simply figure out the amount you can safely spend.

With that total, you should estimate your spend in the food and drink and tree and decors groups. What you have leftover in total will be your gift spending plan. Nothing is set in stone. If you feel you require to readjust the allowances among the 3 categories, go right ahead. Eventually, you will be left with your present total spending plan.

Now spread out the total gift budget among the people. Your specific amounts need to add up to a number not higher than the total you established as your total gift spending amount. With the budgeting worksheets finalized, it is now time to go shopping!

Holiday spending in Canada tips list

Purchase with objectives – You have determined just how much you can safely spend on each person. Get the best gift possible for each that satisfies your spending budget. Stick to the financial limitations of your gifts. You can now spend more time focussing on the appropriateness of the gift within your budget limitations.

Only spend cash don’t buy on plastic – You will be lured to buy with your charge cards. Using plastic will cause you to overspend due to the fact that you will not feel the purchase. To truly feel it, you must only use cash. When you feel it, you don’t spend beyond your means. You will also stay clear of the nasty shock in January since you won’t get an unmanageable credit card statement. You will feel terrific in both December and January.

Think of a family present to conserve cash – If you feel you will not be able to afford specific gifts, think of people in the very same family and search for a household present. A gift card for the household to go see a movie or a family pass for admission to a tourist site may turn out to be cheaper than the overall cost of separate gifts. Or one thing for their home that you feel all family members will take pleasure in. Look at that option. There are many opportunities for a group gift.

Give an experience, not simply your money – Do not think that the only gift that counts is one that sets you back the money. You have numerous abilities and talents. Probably one or more would certainly make an excellent present. If you cannot think of anything special you can give of yourself to that special someone that would make a wonderful present, how about your time? Think to babysit for nieces or nephews. How about helping out an ageing relative because they can’t go out a lot on their own but have appointments or tasks to get. These can all count as useful presents that won’t cost you anything or much in any way. Your time and enjoying each other’s company are much more valuable than any gift you would buy in the mall or online.

Think outside the gift box – If you do not have a box of ornaments from years past to use, think artistically. The accessories bought at a Dollar Store will look just as good on your tree as ones bought at a more expensive specialty shop. Or, use your own imagination to make your own. If you aren’t sure where to start, look online. There are many video clips to reveal step-by-step how to make terrific looking ornaments that don’t cost too much for materials. Your creativity and labour, of course, is cost-free.

Summary

I hope you found this Brandon’s Blog on Buy Nothing Day Canada and my holiday spending tips useful. Are you in need of financial restructuring? The financial restructuring process is complex. The Ira Smith Team understands how to do a complex restructuring. However, more importantly, we understand the needs of the entrepreneur or the person who has too much personal debt. You are worried because you are facing significant financial challenges.

It is not your fault that you are in this situation. You have been only shown the old ways that do not work anymore. The Ira Smith Team uses new modern ways to get you out of your debt troubles while avoiding bankruptcy. We can get you debt relief freedom.

The stress placed upon you is huge. We understand your pain points. We look at your entire situation and devise a strategy that is as unique as you and your problems; financial and emotional. The way we take the load off of your shoulders and devise a debt settlement plan, we know that we can help you.

We know that people facing financial problems need realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team. That is why we can develop a restructuring process as unique as the financial problems and pain you are facing. If any of this sounds familiar to you and you are serious in finding a solution, contact the Ira Smith Trustee & Receiver Inc. team today.

Call us now for a free consultation. We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

buy nothing day canada

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