Stay of proceedings (insolvency)

A lender or buyer may meet a stay when a business files under federal insolvency law or a court makes an order. Where the stay comes from decides what it covers, so identify the filing or order first.

Where a stay comes from

• BIA s. 69: subject to s. 69(2) and (3) and ss. 69.4 to 69.6, on filing a notice of intention, no creditor has any remedy against the insolvent person or its property, or may start or continue proceedings, for a claim provable in bankruptcy.
• BIA s. 69.1 applies on filing a proposal, and s. 69.3 on bankruptcy, where the stay ends for a creditor the day the trustee is discharged.
• Companies’ Creditors Arrangement Act s. 11.02: a court may stay proceedings on an initial application for a period of no more than 10 days, and on later applications for any period it considers necessary. The applicant must satisfy the court that the order is appropriate and, on a later application, that it has acted and is acting in good faith and with due diligence (s. 11.02(3)). Sections 11.01 and 11.04 to 11.08 limit what such an order can do.

Limits and questions

The BIA stays are subject to exceptions. Section 69(2) leaves some secured creditors free to act, and s. 69.4 lets a creditor ask the court for a declaration that the stay no longer operates. Ask what filing or order created the stay and when it ends. See buying from a trustee versus a receiver, the proposal and the section 244 notice.