E. Liability of the Receiver

• Author: Roderick J. Wood
• Profession: Faculty of Law. University of Alberta
• Pages: 509-511

Contenidos

• 1) Sources of Liability.
• 2) Protective Devices.

Page 509

1) Sources of Liability

A receiver may be liable in respect of new contracts concluded by him or her after the commencement of the receivership. This will always be the case in respect of a court-appointed receiver but will usually not be the case in respect of a privately appointed receiver.⁶⁷A receiver may also be liable for loss caused by virtue of his or her failure to act in a commercially reasonable manner.⁶⁸This might occur if the receiver sells the property at an unreasonably low price that is sufficient to pay out the secured creditor but that results in a lesser recovery by the lower-ranking claimants. A guarantor may also seek to recover loss caused by an improvident realization of the assets by the receiver.⁶⁹The mere fact that a receiver is appointed by a court is not a bar to an action against the receiver.⁷⁰

In addition to these two sources of liability, a receiver is potentially subject to liability that is not based upon contract or tort but rather is imposed by statute. Environmental protection statutes impose liability for the costs of remediation on persons who exercise control of the property. In 1997 the BIA was amended in order to extend to receivers the same protection afforded to trustees in connection with environmental liability. A receiver is not personally liable for any environmental damage that occurred before his or her appointment, but only for post-appointment damage caused by the receiver’s gross negligence or wilful misconduct.⁷¹

Page 510

Employment statutes are another potential source of statutory liability. The issue is whether a receiver who continues to operate a business is liable as a successor employer. The Supreme Court of Canada in GMAC Commercial Credit Corp. - Canada v. TCT Logistics Inc.⁷² held that the bankruptcy courts do not have the jurisdiction to decide this question, but that it is properly a matter to be decided by the labour relations tribunal. The question that remains is whether these tribunals will decide that receivers are liable as successor employers. The 2005/2007 amendments to the BIA have expanded the statutory liability shield for trustees and receivers. A receiver who continues to operate a business or continues the employment of the debtor’s employees is not personally liable for any liability, including that of a successor employer, in respect of claims arising before or upon the receiver’s...