Can the contracting party, who is not in default, terminate or amend the contract due to the debtor's insolvency. This article will then move to the Canadian context in III. work and began a review of the anti-deprivation rule in Canadian jurisprudence. In England, the treatment of a debtor's contracts in insolvency has been largely shaped by the common law in the form of the "principle of fraud under bankruptcy law" or the "rule against deprivation".
The size of the pie - that is, the intrinsic value of the debtor - thus remains unchanged. Like the anti-deprivation rule, the substance and role of the pari passu rule have similarly been challenged (see, for example, a gift from the debtor could qualify as a transaction at an undervalue while it would not fall under the anti-deprivation the rule rule, as the recipient of the gift was not in a contractual relationship with the debtor.53 Another difference,.
However, Lord Collins' holding in Belmont has further narrowed the scope of the anti-deprivation rule and in doing so has attracted its share of both support and criticism. However, Worthington notes that the effectiveness of the anti-deprivation rule has been hindered since it would be difficult to determine subsequently whether the parties had acted in bad faith.104. Returning to Borland's Trustee, which was also instrumental in the development of the anti-deprivation rule in Canadian jurisprudence, it is important to examine the basis on which the transfer price was found to be fair.
However, both Goode and Worthington are rightly concerned about the difficulty of applying Lord Collins' formulation of the anti-deprivation rule.
The Treatment of Ipso Facto Clauses in Canada
Besides Bramalea, another notable Canadian decision is Coopérants.163 While the Supreme Court of the United Kingdom engaged in detailed discussion of the development of the anti-deprivation rule in Belmont, the Supreme Court of Canada did not. an explicit reference to the principle. Subsequent case law has also disagreed on the validity of the anti-deprivation rule following the Supreme Court of Canada's ruling in the Coopérants case. As noted above, Borland's Trustee was the English decision underlying the formulation of the anti-deprivation rule in the Ontario Court of Appeal judgment in Bramalea.
Coopérants could be distinguished from the classic cases, highlighted in Part II.D., where there was a clear deprivation of the debtor's assets. Although the Ontario Court of Appeal affirmed Bramalea and affirmed the validity of the anti-deprivation rule in Canadian law, it is unfortunate that it did not discuss the effect, if any, of the Supreme Court of Canada's decision in Coopérants. Wood believes that the amendments to the BIA and CCAA not only adapted their approaches to ipso facto clauses, but were a statutory codification of the rules in this area.205 However, Wood does not address the role, if any, of anti-deprivation. the rule can continue to play.
Coincidentally, the provisions in the BIA and the CCAA would address some of the concerns raised by Lord Mance in Belmont. In that case the court examined section 65.1(1) of the BIA, which is only triggered where the debtor has submitted a notice of intention or a proposal. As explained in Part II.E.2., the anti-deprivation rule does not apply in England where the deprivation occurred for reasons other than bankruptcy.233 As discussed in Part III.C.1., each of the Canadian statutory provisions list situations where they apply, such as in the case of a bankruptcy order or the submission of a proposal.
The Ontario Court of Appeal's holding in Aircell Communications suggests that where the contractual breach is a consequence of the party's insolvency, the court would consider applying the anti-deprivation principle. That is, in the case of a licensing agreement, a party cannot rely on ipso facto clauses on the basis that the bankrupt has not paid royalties in the period preceding the filing of the notice of intent or pro-. The purpose of BIA section 65.1 has been recognized as attempting to balance the competing interests of in-
Second, Canadian jurisprudence has already applied a version of Lord Collins' formulation of the anti-deprivation rule, albeit three years earlier than Belmont. Using the development of the English application of the anti-deprivation rule as a framework of analysis, it is clear that the statutory provisions in the BIA and CCAA have codified and to some extent displaced the common law approach. For example, while in the English context it was unclear whether reorganizations and administrations were sufficient to trigger application of the principle, the BIA and CCAA provide clearer guidance.
Despite the fact that the bulk of statutory amendments were enacted with little scrutiny by Parliament, they appear to have resolved some of the problems that arose in the common law application of the anti-expropriation rule. An area in need of reform is the nature of the relationship between the statutory provisions in the BIA and the CCAA and the anti-deprivation rule. Furthermore, some of the problems seen in the English application of the anti-deprivation rule may also arise in Canada.
As seen in the discussion on the English application of the anti-deprivation rule, there are still many unresolved issues.