Bankruptcy of Canadian Auto Lease Corp.

Bankruptcy of Canadian Auto Lease Corp.

Because the Credit Union's security interest was unperfected at the date of bankruptcy, PPSA s.20(b)(i) renders that unperfected interest ineffective against the trustee in bankruptcy; re-registration after the date of bankruptcy did not restore priority against the trustee under the statutory scheme and equitable arguments cannot override the PPSA/BIA interaction, therefore the Trustee's disallowance stands and the application is dismissed.

Citation
2006 BCSC 849
Parties
Applicant / Secured Creditor: Vernon & District Credit Union; Trustee in Bankruptcy / Respondent: D. Thode & Associates Inc.; Bankrupt: Canadian Auto Lease Corp.
Court
Supreme Court of British Columbia
Jurisdiction
Canada
Judgment Date
1 June 2006
Procedural Posture
Bankruptcy and Insolvency / Application Hearing (chambers)
Outcome
Application dismissed
Legal Topics
Priority of Security Interests, Perfected Vs Unperfected Security, Registration and Re Registration, Disallowance of Claim Under BIA S.135(2), PPSA Ss.20, 35(7), 35(8), 68(1)
Source Language
English
Bankruptcy Personal Property Security Insolvency Equity Priority of Security Interests Perfected Vs Unperfected Security Registration and Re Registration Disallowance of Claim Under BIA S.135(2) +1 more

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Parties

Vernon & District Credit Union

Applicant / Secured Creditor

D. Thode & Associates Inc.

Trustee in Bankruptcy / Respondent

Canadian Auto Lease Corp.

Bankrupt

Procedural Posture

Bankruptcy and Insolvency / Application Hearing (chambers)

Legal Issues

  1. 1 Whether the Credit Union's security interest retained priority despite a discharge and re-registration after the date of bankruptcy
  2. 2 Whether an unperfected security interest at the date of bankruptcy is effective against a trustee in bankruptcy under PPSA s.20(b)(i) and the BIA
  3. 3 Whether PPSA s.35(7) applies to preserve priority where a registration was discharged without authorization and re-registered within 30 days after discharge

Ratio Decidendi

Because the Credit Union's security interest was unperfected at the date of bankruptcy, PPSA s.20(b)(i) renders that unperfected interest ineffective against the trustee in bankruptcy; re-registration after the date of bankruptcy did not restore priority against the trustee under the statutory scheme and equitable arguments cannot override the PPSA/BIA interaction, therefore the Trustee's disallowance stands and the application is dismissed.

Court Disposition

Application dismissed

Orders

  • Application dismissed with costs fixed at $950.00 inclusive of disbursements and any applicable taxes.