Ontario Finally Repeals Bulk Sales Act
By: Andrew Cooley
The Bulk Sales Act (Ontario) has finally been repealed. Parties to asset purchase transactions in Ontario now no longer need to consider compliance with this legislation, which was viewed as overly burdensome and unnecessary. Ontario was the last province to repeal its bulk sales legislation.
Prior to its repeal, the legislation generally applied to any sale of assets on Ontario. It was intended to protect unpaid trade creditors by requiring buyers and sellers to ensure that all trade creditors of the seller had been paid prior to a sale of all or substantially all of the seller’s assets. The legislation imposed severe penalties for non-compliance, including giving a creditor the ability to void a transaction. Buyers and sellers would often address the legislation by providing for a waiver of compliance and indemnification of the buyer for any consequences of non-compliance.