Technically the king can do wrong in reorganizing insolvent corporations: evidence from Canada

Abstract

Taken together the international move from liquidation to reorganization‐based bankruptcy regimes and the international move to abolish Crown priority in bankruptcy provide Canada with an opportunity to rethink Crown priority in bankruptcy. This paper makes the case that abolishing Crown priority in bankruptcy in Canada is optimal given a revaluation of traditional normative claims surrounding Crown priority in the context of a bankruptcy system that favours reorganization when possible. While this paper focuses on Canada, it engages in a normative assessment that may be useful for possible reforms to Crown priority in the United States and in other jurisdictions that, like Canada, have been influenced, not only by the English model, but also by the American bankruptcy and reorganization system. Copyright © 2004 John Wiley & Sons, Ltd.

Bank Bankruptcy in Canada: A Comparative Perspective

“…The general Canadian policy, consistent with an international movement in this direction, has been to remove Crown priority in bankruptcy. 99 The main reasons for this include the recognition that the Crown is not a vulnerable involuntary creditor and to allow for more meaningful negotiation with the Crown in a bankruptcy. 100 As a number of commentators have pointed out over the years, there is no reason to depart from these justifications in the context of the WURA.…”