In recent years, the status of the Crown with respect to claims by the Crown to the goods and services tax (GST) and to the Quebec sales tax (QST) portion of accounts receivable collected in insolvency matters has evolved dramatically.
Not so long ago, with the introduction of the amendments to the insolvency legislation in 1992, practitioners believed that the Crown, with respect to the claims for GST, QST, provincial sales tax (PST) or harmonized sales tax (HST) arising from the operations of the bankrupt prior to its bankruptcy would now rank as ordinary creditor.
Among other developments, the decision rendered by the Quebec Superior Court in the Chibou-Vrac case2 has seriously challenged the principle introduced by section 86 BIA and has at least for now propelled the Crown to a new priority status with respect to the GST and QST portions of accounts receivable collected by trustees, interim receivers, and privately appointed receivers.
In this article, we will review the recent case law in Quebec in the aftermath of the Chibou-Vrac decision, and its impact on the practice of trustees, interim receivers, and
privately appointed receivers.