Receivership

When you cannot pay your debts, a receiver may be appointed by a court through a court order, or by a secured creditor through a letter of appointment to:

• take control of property;
• supervise liquidation proceedings; and
• remit the proceeds according to priorities established by common or statutory law.

The receiver will take control of the business using the existing GST/HST account. The receiver will sometimes request a second GST/HST account be opened in order to wind down receivership accounts or to separate the activities controlled by you and those controlled by the receiver.

There are two types of receivers:

• a court appointed receiver; and
• privately appointed receiver appointed by a secured creditor.

You have to send to your tax services office a copy of the court order issued Letter of Appointment or a non-court issued document that meets 1 of the 5 regulations set out as follows. A "receiver" means a person who:

• under the authority of a debenture, bond or other debt security, of a court order or of an Act of Parliament or of the legislature of a province, is empowered to operate or manage a business or a property of another person;
• is appointed by a trustee under a trust deed in respect of a debt security to exercise the authority of the trustee to manage or operate a business or a property of the debtor under the debt security;
• is appointed by a bank to act as agent of the bank in the exercise of the authority of the bank under subsection 426(3) of the Bank Act in respect of property of another person;
• is appointed as a liquidator to liquidate the assets of a corporation or to wind up the affairs of a corporation; or
• is appointed as a committee, guardian or curator with authority to manage and care for the affairs and assets of an individual who is incapable of managing those affairs and assets, and includes a person who is appointed to exercise the authority of a creditor under a debenture, bond or other debt security to operate or manage a business or a property of another person but, where a person is appointed to exercise the authority of a creditor under a debenture, bond or other debt security to operate or manage a business or a property of another person, does not include that creditor.