Recent Amendment to Ontario PPSANCS Credit - April 07, 2017
Recent Amendment to Ontario PPSA
In the article Two Ontario Law Reform Changes of Note to Lenders and Lessors, author Jennifer E. Babe reviewed two notable changes to the most recent legislative change for the PPSA in Ontario.
Ontario has joined the ranks of the other provinces with the enactment of the Burden Reduction Act, 2017 which went into effect on March 22, 2017.
Per Babe, the debtor now has the option to waive (or not waive) their right to receive copies of the registered PPSA. What does this mean for you?
“Lenders and lessors need to check that their Ontario contracts are updated to ensure there is PPSA registration waiver language in the contract. Then they may stop sending copies of all PPSA registrations, amendments, renewals and discharges to any debtor who has waived. This is a significant overhead cost saving for lenders and lessors to no longer have to copy and mail these verification statements.”
The other notable change under the Burden Reduction Act is the repeal of the Bulk Sales Act. Ontario was the last holdout on the Bulk Sales Act. (To learn more about the Act, read Compliance with the Bulk Sales Act - A Consideration for Any Asset Sale in Ontario by Jordan Morelli of Dale & Lessmann LLP.)
Babe noted the additional risk that had been associated with compliance requirements of the Bulk Sales Act.
“This statute applied where there was a sale of assets out of the ordinary course of the vendor’s business. The purchaser had to comply with the Bulk Sales Act (“BSA”) failing which the unpaid creditors of the vendor could move to have the deal declared void and make the purchaser account for the value it obtained in the deal. This compliance work added costs to transactions as the parties considered how to comply or obtain court exemption orders or negotiate waivers and indemnities to cover the risk (although case law held one cannot waive compliance with the BSA). For lenders funding an asset acquisition by their customer, it created an added risk that the deal might be unwound.”
With the repeal of the BSA, creditors can eliminate the burdensome compliance of the Bulk Sales Act, and simply register a PPSA as designated by statute.
If you are supplying to the foodservice/hospitality industries, a Blanket UCC filing may be the right fit for your credit needs.
However, do you know there may be a better option? A PMSI filing affords you the same benefits as a Blanket filing, but with the addition of priority of repossession of goods and/or equipment you provide.
Read this week’s post to learn more about PMSI in Inventory & PMSI in Equipment UCC filings.
Upcoming Educational Opportunities
4/18/17 @ 1:00 pm: Understanding Lien Waivers
5/2/17 @ 1:00 pm: UCCs Offer Security for Many Business Transactions
5/16/17 @ 1:00 pm: The Importance of Gathering Job Information
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