A secured creditor brought an application under the Bankruptcy and Insolvency Act seeking the appointment of an interim receiver over the assets of a debtor corporation.
The debtor opposed the application and brought a motion to stay the receivership proceeding or alternatively to consolidate it with a separate action challenging the validity of a general security agreement and alleging contractual breaches.
The court found on the evidence that the debtor was insolvent, unable to meet obligations as they became due, and operating at a deficit.
As the debtor had granted security that became enforceable upon insolvency, the secured creditor’s interest required protection through court supervision.
An interim receiver with limited powers was appointed and the debtor’s motion for a stay or consolidation was dismissed.
