Can I buy the real estate along with a business in receivership?

Whether the building comes with the business depends on what the receiver controls and what the court approves for sale. Do not assume the land is included. Read the appointment order, the security and the draft sale agreement to see if the real estate is listed. Provincial examples below are Ontario’s; check your own province’s rules.

What the receiver controls

Under s.243(1)(a) of the Bankruptcy and Insolvency Act, a court may appoint a receiver to take possession of all or substantially all of the inventory, accounts receivable or other property of the debtor acquired for or used in relation to its business. Whether that includes real estate depends on the order and the security, so ask for both. A business-only or a business-and-land purchase is a separate choice, compared on buying the business versus buying the real estate.

How title moves in Ontario

Section 100 of Ontario’s Courts of Justice Act lets a court vest in any person an interest in real or personal property that it has authority to order disposed of, encumbered or conveyed. Under s.69(1) of Ontario’s Land Titles Act, where a court order states that registered land vests in someone other than the registered owner, the registered owner is deemed, for the purposes of that Act, to remain owner until that person applies to be registered or the registered owner transfers the land to them in accordance with the order. Ask your lawyer about the registration step.

Free-and-clear sales and environmental claims

In a CCAA proceeding, the court may authorize a sale free and clear of any security, charge or other restriction and, if it does, must order that other assets or the sale proceeds be subject to a security in favour of the affected creditor (s.36(6)). Separately, BIA s.14.06(7) says a Crown claim, federal or provincial, for the cost of remedying environmental conditions affecting a debtor’s real property in a bankruptcy, proposal or receivership is secured on the affected real property and on contiguous real property of the debtor related to the activity that caused the condition, and under s.14.06(7)(b) that security ranks above any other claim, right, charge or security against the property. Ask about the site’s environmental history before you bid.