Our client, Business Development Bank of Canada, had obtained judgment against the corporate debtors and an individual guarantor. Efforts by Kornfeld’s Lana Li to locate property of the guarantor to satisfy that judgment involved identification of White Willow Investments, a company owned by the guarantor which in turn owned property that was assessed at $6.2 million and generating rents of some $24,000 per month.
To overcome the challenges of a seizure and sale of shares in a privately held company which can be fraught with liquidity and valuation issues, Lana obtained an Order in November 2019 for the appointment of an Equitable Receiver over the assets and property of the guarantor, and thereby gained control over the shares in White Willow Investments. Equitable receiverships are a rarely-used tool requiring the creditor to establish “special circumstances”. Lana was able to obtain the order without notice, based on evidence that the guarantor had been storing and selling equipment of a corporate debtor, without accounting for it or notifying our client.
The receivership was successful, and some two months later, based on arrangements to fully pay the Judgment against the guarantor plus the costs of the receivership, the Receiver was discharged.