Interplay Between the
Limitations Act and Section 38 of the BIA: A Review of IndcondoBuilding Corp. v. Sloan
Date:
May 1 2011
In this article, Kate Stigler discusses the recent decision of the Ontario Court of Appeal (the “OCA”) in Indcondo Building Corp. v. Sloan, which demonstrates that the commencement of bankruptcy proceedings will not restart or toll the limitations clock for creditors who wish to bring actions pursuant to section 38 of the BIA.
This impacts creditor actions in bankruptcies in two important ways. Firstly, creditors who would otherwise be barred from bringing an action due to the Limitations Act will not be given a second opportunity to do so by virtue of the debtor becoming bankrupt and commencing a proceeding under section 38 of the BIA. Second, the decision of the OCA indicates that the limitations clock for actions capable of being assigned under section 38 of the BIA is not tolled upon the debtor becoming a bankrupt. Accordingly, creditors will need to act expeditiously post-bankruptcy should they intend to pursue such an action.
This article was originally published in Volume 26, No. 4 (May 2011) of
Insolvency News
, the official newsletter of the Ontario Bar Association’s Insolvency Law Section.
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