Skip to content

CCAA & Insolvency Exposure

If you supply goods to a business that is seeking relief under Canada’s various insolvency statutes, there are a few things you should know.  First of all, there is a distinction to be made between filing for bankruptcy and obtaining an order pursuant to the Companies’ Creditors Arrangement Act (the “CCAA”).  Under the Bankruptcy and Insolvency Act, a debtor company can file for bankruptcy or make a proposal.  In a bankruptcy scenario, the debtor will typically liquidate its assets and pay out its creditors.  For a proposal, the debtor is trying to restructure its business so it can keep operating or sell it as a going concern.  In either of these instances, you, as the supplier of the debtor have a right to repossess goods you have supplied to them but have not been paid for yet.  Even if partial payment has been received for the goods, you may be eligible to repossess the proportion of goods that have not been paid for.

The following criteria must be met before you can exercise this right:

  • Goods were delivered within 30 days of the bankruptcy filing date (or date of Notice of Proposal);
  • Goods are in possession of the purchaser/trustee;
  • Goods are identifiable as the goods delivered by the supplier and not fully paid for;
  • Goods are in the same state as they were on delivery; and
  • Goods have not been resold at arms’ length or subject to any agreement for sale at arms’ length.

If all of these criteria apply, you will then have 15 days from the date of filing for Bankruptcy (or date of Notice of Proposal) to make a claim for the repossession of your goods by sending a letter to the trustee in bankruptcy stating your intention to repossess the goods. Although you should be notified of any proceedings taken by the debtor, it is important to stay on top of what they are doing because the 15 day time limit for asserting this claim is relatively short.

If the debtor is using the CCAA to restructure, there is no similar right to repossess your goods.  In a CCAA scenario, the debtor receives an order from the court that will set out the procedures for dealing with the creditors and the debtor’s property.  Generally the overall goal will be to keep operating, so if suppliers were allowed to take back their goods, the debtor business would have no inventory. The order may contain a statement of the debtor’s intention to pay for all supplies from the date of the order going forward, but nothing about what is owing to the suppliers from before the date of the order.  If a supplier is deemed “critical” the debtor may have permission to pay some old receivables so the critical supplier will keep on supplying during this restructuring period, but most of the suppliers will be left holding onto their receivables for several months while the restructuring takes place.  During this time, a supplier has a business decision to make – keep working with the customer on their terms, or demand immediate payment and risk losing the business?  The CCAA specifically says “no person shall be prohibited from requiring immediate payment for goods…on or after (the date of the Order)”, and the order should state the same.  It is within your legal rights to ask for immediate payment or negotiate new terms that work for you going forward.  

At the end of the CCAA process, there may be some assets that can be used to pay off old debt, but as an unsecured debtor supplier you will rank below the secured creditors and then rank proportionately with all other unsecured creditors, where the likelihood of getting repaid is low.

If you are in a position to protect yourself now, before customers avail themselves of these insolvency procedures, here are some strategies:

  • Stay on top of your receivables.  Task someone in your office with making regular calls and sending reminders;
  • Do not grant long payment terms.  Keep due dates for payment close to the date of delivery to limit your exposure;
  • If a supplier has trouble paying you on time, avoid shipping large orders out to them until it has brought its balance down to a manageable level.  Even if you have the right to repossess the goods as outlined above, it is only for the goods that were delivered 30 days before the date of bankruptcy, not for all unpaid goods;
  • Keep on top of what your customers are doing.  Stay in regular contact with your customers so you are not surprised when you get the notice they have filed for bankruptcy.  Although it is unlikely they will tell you of their plans, you can get a sense of their financial position by staying in touch; and
  • If your product is large and costly, take security in it until it is paid off.  This is a topic for another article, but there are ways to retain title to certain goods and equipment until they are paid for. 

If you have any questions relating to any of the above, please do not hesitate to contact Sarah MacDonald at or 905.276.0416.


This article is provided for general information purposes and should not be considered a legal opinion. Clients are advised to obtain legal advice on their specific situations.

If you have questions, please reach out

KMB white box logo

Mississauga Head Office

3 Robert Speck Parkway
Suite 900
Mississauga, ON L4Z 2G5

Tel: 905.276.9111
Fax: 905.276.2298


3115 Harvester Rd., Suite 400
​Burlington, ON L7N 3N8


85 Enterprise Blvd., Suite 400
Markham, ON L6G 0B5

Privacy Policy   |   Accessibility Policy    |    © 2023 ​Keyser Mason Ball, LLP All Rights Reserved.