Canadian Bankruptcy Law: A Secured Creditor’s Heaven

Abstract

Abstract Conceptually, bankruptcy law is law for unsecured creditors and insolvent debtors. However, Canadian bankruptcy law has always been very solicitous of the interests of secured creditors. An historical explanation for the ‘handsoff’ approach of Canadian bankruptcy law where security interests are involved can be found in the fact that early Canadian bankruptcy law was largely a copy of tum of the century English bankruptcy law. The English law was drafted at a time when secured financing was relatively uncommon and there was no need to look to bankruptcy law as an important mechanism for protecting unsecured creditors from secret charges held by secured parties or from preferential transfers that did not fall within the conceptual structure of the Statute of Fraudulent Conveyances, 1571.