BC Court of Appeal limits scope of property under receiver’s control

June 1, 2016

Integris Credit Union v Mercedes-Benz Financial Services Canada Corporation 2016 BCCA 231

On June 1, 2016, the BC Court of Appeal granted an appeal sought by Mercedes-Benz Financial Services Canada Corporation and BHP Capital under the Model Receivership Order used in most provinces to have their equipment excluded from the control of Integris Credit Union, the receiver in respect of the debtor, All-Wood Fibre Ltd.

In its ruling, the Court agreed that equipment lessors can be excluded from a Receivership – and from the Receiver’s priority claims for its costs and borrowings – where to do so would effectively alter the priorities between secured creditors. The Court also criticized the common approach of Receivers in analyzing leases as “true leases” or “security leases” in deciding whether leased equipment is subject to a receivership, and recognized that Receivers have no greater rights than the debtor. This is an important win for equipment lessors generally, who have long complained about being unfairly subjected to receivership costs.

Gordon Plottel of Miller Thomson appeared for Mercedes-Benz Financial Services in these proceedings.

For a detailed discussion of this decision click here.