Yes. A court can stop a receiver’s sale or other realization in defined circumstances. Under BIA s. 248(1)(b), the court may restrain realization or other dealing with property where a duty imposed by ss. 244–247 has not been carried out, until that duty is performed.
When Can the Court Restrain a Receiver Under BIA s. 248?
Section 248(1) of the Bankruptcy and Insolvency Act gives the court a specific enforcement power where a secured creditor, receiver, or insolvent person is failing or has failed to perform a duty imposed by ss. 244 to 247.
Those provisions include the secured creditor’s notice obligations, receiver notice and reporting duties, and the receiver’s obligation under s. 247 to act honestly and in good faith and to deal with the debtor’s property in a commercially reasonable manner.
If the court is satisfied that one of those duties has not been carried out, s. 248(1)(b) permits it to restrain the secured creditor or receiver from realizing on or otherwise dealing with the property until the duty has been performed. Section 248(1)(a) also permits the court to order performance of the duty itself.
The persons who may seek relief under s. 248(1) include the Superintendent, the insolvent person, the trustee in bankruptcy, a receiver, and a creditor.
For more on who may bring that application, see Who Can Challenge a Receiver’s Conduct in Ontario?.
Does Section 248 Give Stakeholders a Veto Over Every Sale?
No. Section 248(1)(b) is a targeted statutory remedy. It does not give every stakeholder a general veto over a receiver’s commercial decisions or every proposed sale.
The applicant must connect the requested restraint to a duty imposed by ss. 244–247 that has not been carried out and satisfy the court that relief under s. 248 is available.
A proposed sale in a court-appointed receivership can also raise a separate issue. Depending on the appointment order, the receiver may require further court approval before completing a transaction. A stakeholder may then object on the approval motion and ask the supervising court not to approve the proposed sale or to require changes to the process.
That route is distinct from a restraint under s. 248(1)(b). The first question should therefore be why court intervention is sought: an alleged breach of a statutory duty, a dispute over the receiver’s mandate, or an objection to a transaction requiring court approval.
The receivership appointment order remains critical because it defines the receiver’s realization and sale powers and whether further court approval is required.
What Happens If the Receiver Is Acting Outside Its Authority?
A dispute may also arise where the objection is not primarily about ss. 244–247, but about whether the receiver has exceeded the authority granted by the court.
In that situation, the wording of the appointment order and any subsequent court directions must be examined. Questions about the boundaries of that authority are addressed separately in our Scope of Receiver Powers Disputes practice.
How ME Law Approaches Sale and Realization Challenges
ME Law approaches a proposed restraint or sale objection by identifying the legal basis for intervention first. We examine the appointment order, BIA ss. 244–248, the receiver’s reports, the realization or sale process, the security documents, and the evidence supporting the challenged conduct.
Where the complaint concerns a statutory duty, s. 248 may provide a direct remedy. Where the issue concerns the receiver’s authority or a transaction requiring court approval, the strategy may instead focus on the supervising court and the terms of the appointment order. Our Receivership, Insolvency and Bankruptcy Litigation practice addresses urgent objections, scope-of-authority disputes, and contested realization processes.
Contact ME Law to request a consultation.