ICLG: The International Comparative Legal Guide to: Corporate Recovery and Insolvency 2012: Chapter 10: Canada

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1 Issues Arising When a Company is in Financial Difficulties -

1.1 How does a creditor take security over assets in Canada?

Personal Property -

Personal Property Security Acts (“PPSA”) in force in all of Canada’s common law provinces and territories govern the creation and enforcement of security in personal property. Under the PPSA, before a security interest can be enforced against third parties, the security interest must have “attached” and be “perfected”. Attachment, within the meaning of the PPSA, requires three conditions:

a) a security agreement signed by the debtor, or possession of the collateral by the secured creditor;

b) “value” or consideration sufficient to support a simple contract must be given; and c) the debtor must have rights in the collateral.

Once the security interest has “attached”, it becomes “perfected” under the PPSA by:

a) registration of a financing statement in a computer based registration system administered by the provincial government; or

b) the secured party obtaining possession of the collateral.

Please see full chapter below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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