Creditors applied for a bankruptcy order under s. 45 of the Bankruptcy and Insolvency Act against a corporate debtor that had failed to pay debts exceeding the statutory minimum.
The court found the debtor had committed an act of bankruptcy and was operationally insolvent, with accounts payable nearing $300,000 and limited liquid assets.
Although the debtor argued bankruptcy would be futile and harm future revenue prospects tied to intellectual property royalties, the court held that no concrete restructuring proposal or recapitalization plan had been presented.
The court concluded that vague promises of future payment were insufficient to avoid bankruptcy but granted a brief stay to allow the parent corporation an opportunity to inject capital and satisfy the debts.
