Summary#

This bill creates a “deemed trust” to protect unpaid sellers of perishable fruits and vegetables when a buyer goes bankrupt, goes into receivership, or seeks court protection to restructure debt. If the seller follows set steps and is still unpaid, the produce and the money from selling it are held in trust for the seller and do not go to other creditors (BIA new section after s.81.6; CCAA new section after s.8).

• Unpaid sellers get first claim to the produce and its sale proceeds, ahead of other creditors, if they gave proper notice and payment terms were 30 days or less (BIA new s.(1)(a)-(c); CCAA new s.(1)(a)-(c)).
• The trust covers the produce even if repackaged or lightly transformed, and also covers commingled sale proceeds (BIA new s.(7); CCAA new s.(4)).
• Assets in the trust are not part of the bankruptcy or restructuring estate (BIA s.67(1)(a) reference in new s.(2); CCAA new s.(2)).
• Courts can give directions, and suppliers can ask the court to resolve disputes (BIA new s.(3)-(4)).
• Provincial trust law applies and prevails in case of conflict with these new sections (BIA new s.(6); CCAA new s.(3)).

What it means for you#

• Households

  • No direct change. This bill sets creditor priorities during insolvency. It does not set prices or consumer rules. Data on indirect price impacts is unavailable.

• Farmers and other produce suppliers

  • If you sell perishable fruits or vegetables on terms of 30 days or less, include a notice on the invoice (or give notice within 30 days of the buyer’s receipt) in the prescribed form stating you intend to use this trust if the buyer becomes insolvent (BIA new s.(1)(a); CCAA new s.(1)(a)).
  • If the buyer does not pay on the due date and then becomes bankrupt, goes into receivership, or seeks court protection to restructure, the produce and related sale proceeds are deemed held in trust for you (BIA new s.(1); CCAA new s.(1)).
  • You may apply to court if you are aggrieved by an act, omission, or decision of the buyer, trustee, or receiver (BIA new s.(4)).

• Buyers of produce (wholesalers, retailers, processors using raw produce)

  • If you buy perishable fruits or vegetables on terms of 30 days or less and fail to pay when due, the goods and their sale proceeds may be subject to a trust for the unpaid supplier if the supplier gave timely notice (BIA new s.(1); CCAA new s.(1)).
  • In insolvency or restructuring, property subject to this trust is excluded from your estate and cannot be used to pay other creditors (BIA s.67(1)(a) via new s.(2); CCAA new s.(2)).
  • You, a trustee, or a receiver can ask the court for directions on how to apply these rules (BIA new s.(3)).

• Secured and unsecured lenders

  • In an insolvency or restructuring, produce and related sale proceeds covered by this trust are not available to satisfy your claims, even if commingled with other funds (BIA new s.(7) and s.(2); CCAA new s.(2), s.(4)).
  • Priority for these trust assets is ahead of other claims because they are not property of the debtor’s estate (BIA s.67(1)(a) via new s.(2); CCAA new s.(2)).

• Insolvency professionals and courts

  • Trustees, receivers, and monitors must identify trust assets and handle them for the benefit of unpaid suppliers who met the notice and term conditions (BIA new s.(1)-(2), s.(7); CCAA new s.(1)-(2), s.(4)).
  • Courts may receive applications for directions or disputes from purchasers, trustees, receivers, or suppliers (BIA new s.(3)-(4)).

• Effective date

  • The coming-into-force date is not provided in the text supplied. Data unavailable.

Expenses#

Estimated net cost: Data unavailable (no direct appropriations in the bill text).

• The bill creates no new program spending or appropriations. It changes creditor priorities in insolvency law (Bill Short Title and amendments).
• Possible administrative or court-processing costs are not discussed in the bill. Data unavailable.
• No official fiscal note identified. Data unavailable.

Proponents' View#

• It protects cash flow for growers and shippers, who often deliver produce before payment and face high loss risk when buyers fail (BIA new s.(1); CCAA new s.(1)).
• It gives a clear, fast remedy: a simple invoice notice within 30 days and 30-days-or-less payment terms create the trust if non-payment occurs, without requiring separate security registrations (BIA new s.(1)(a)-(c)).
• The trust follows the goods and proceeds even if repackaged or commingled, which matches how produce moves through the supply chain (BIA new s.(7); CCAA new s.(4)).
• Trust assets are excluded from the estate, so recovery is more certain and quicker for unpaid suppliers (BIA s.67(1)(a) via new s.(2); CCAA new s.(2)).
• The scope is narrow: only perishable fruits and vegetables, only short payment terms, and only when timely notice is given, which limits broader market impact (BIA new s.(1)(a)-(b); CCAA new s.(1)(a)-(b)).

Opponents' View#

• It reduces the pool of assets available to other creditors, including secured lenders, because trust property is excluded from the estate, which could shift losses to them (BIA s.67(1)(a) via new s.(2); CCAA new s.(2)).
• It may increase complexity and costs in insolvency due to tracing commingled proceeds and determining when repackaging or transformation has left the “nature” unchanged, leading to more disputes (BIA new s.(7); CCAA new s.(4)).
• By giving a super-priority-like outcome to one sector, it could raise uncertainty for credit markets serving buyers of produce; lenders may adjust terms or monitoring to manage trust exposure. Data unavailable.
• Different provincial trust laws will apply and prevail in case of conflict, which could create uneven outcomes across provinces and increase legal uncertainty (BIA new s.(6); CCAA new s.(3)).
• Compliance risks exist for suppliers: missing the 30-day notice window or using payment terms longer than 30 days would forfeit the trust protection, which could lead to litigation over proper notice and timing (BIA new s.(1)(a)-(b); CCAA new s.(1)(a)-(b)).