The Supreme Court of Canada in Ottawa, Canada. Photo: Marc Bruxelle via Shutterstock The Anti-Deprivation Rule in Canadian Common Law
An analysis of the Canadian case "Chandos Construction Ltd. v. Deloitte Restructuring" which should be of interest to U.S. and other global commercial actors who plan to do business in Canada and need to structure their transactions and contracts in accordance with what is now the new law of the land.
December 14, 2020 at 10:03 AM
8 minute read
In a recent 8-1 decision, the Supreme Court of Canada upheld a majority court of appeals decision and invalidated a semi-ipso facto clause providing that a company's bankruptcy filing triggers a payment of 10% of the contract price to its counterparty. See Chandos Construction Ltd. v. Deloitte Restructuring, 2020 SCC 25 (Oct. 2, 2020). Resolving an unsettled issue, the Supreme Court of Canada found that the clause violated the Canadian common law "anti-deprivation rule," which the court held renders void any provision in an agreement which provides that upon bankruptcy, value is to be removed from the reach of creditors and handed to others parties. What does this mean for U.S. and other global commercial actors doing business in Canada?
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