Bulk sales legislation

The underlying concern bulk sales laws addressed has not gone away: a seller could, in theory, sell off the business’s assets, pocket the proceeds and leave creditors unpaid, with the buyer holding assets those creditors expected to be able to claim against. Bulk sales legislation was Canada’s original, blunt tool for preventing exactly that.

Why this still matters to an asset-purchase buyer today

Certain seller debts — unremitted source deductions or HST are the clearest examples — can attach to the business even after its assets change hands, regardless of whether bulk sales legislation technically applies. A buyer who does not check for this exposure can end up managing a creditor problem they had nothing to do with creating.

The mistake people actually make

Assuming a bulk sales act still governs every Canadian asset purchase, or assuming none does. Ontario repealed its Bulk Sales Act as part of a broader regulatory modernization effort, and coverage now varies by province — some retain a version of the older regime, some do not. A buyer needs to check what actually applies where the business is located rather than assume a single national rule.

What has taken its place in practice

Modern deals generally protect a buyer the same way regardless of whether bulk sales legislation technically applies in that province — through a corporate-status and good-standing check on the seller, lien and judgment searches against the business assets, and confirmation there are no outstanding tax debts before closing funds are released.