The appellant bank, acting on behalf of unsecured creditors, challenged the realization of assets by the respondent under an unregistered debenture.
The respondent had appointed a receiver and sold the debtor's assets to a related company to satisfy its debt.
The Supreme Court of Canada held that under section 2(1) of The Corporation Securities Registration Act, an unregistered debenture is void as against other creditors, not merely voidable.
Consequently, the respondent could not rely on the unregistered debenture to gain priority, and the proceeds of the sale were to be distributed among all unsecured creditors.
