10 days’ notice before a receiver is appointed is often required where a secured creditor intends to enforce security over all or substantially all of an insolvent person’s business property. Under the BIA, however, the requirement is not absolute, and earlier enforcement or appointment may be permitted in specified circumstances.
When Does the 10-Day Notice Requirement Apply?
Section 244(1) of the Bankruptcy and Insolvency Act requires a secured creditor to send advance notice where it intends to enforce security over all or substantially all of an insolvent person’s inventory, accounts receivable, or other property acquired for or used in relation to the business.
Once that notice is required, BIA s. 244(2) generally prevents the secured creditor from enforcing the security until 10 days have expired after the notice is sent.
The notice requirement is therefore tied to a particular type of secured-creditor enforcement. It should not be treated as a universal rule that every receiver appointment in Ontario must always be preceded by exactly 10 days’ notice.
The BIA also restricts a federal court appointment during that period. Under s. 243(1.1), where a s. 244(1) notice must be sent, the court generally may not appoint a receiver under s. 243(1) until the 10-day period has expired.
For the broader appointment framework, see who can ask the court to appoint a receiver.
What Happens During the 10-Day Period?
The statutory structure separates three related questions.
Notice. The secured creditor must first send the required s. 244(1) notice in the prescribed form and manner.
Enforcement. Where notice is required, s. 244(2) generally prevents enforcement of the security until the 10-day period expires.
Receiver appointment. Section 243(1.1) generally prevents the court from appointing a receiver under s. 243(1) during the same period.
There are exceptions. The insolvent person may consent to earlier enforcement after the notice has been sent, and the court may appoint a receiver before the period expires if it considers earlier appointment appropriate. Section 244 also contains circumstances in which its notice provisions do not apply or cease to apply.
Importantly, s. 244(2.1) prevents a secured creditor from obtaining advance consent to earlier enforcement before the statutory notice has actually been sent. The notice process cannot simply be waived in advance through the original lending or security documents.
Whether a receiver should ultimately be appointed remains a separate question. That issue is addressed in what test the court applies on a receiver appointment motion.
How ME Law Approaches Receivership Notice Issues
ME Law treats the 10-day period as part of the enforcement analysis, not as an isolated calendar calculation. We review whether BIA s. 244 applies to the particular security and property, when and how notice was sent, whether enforcement has already begun, and whether there is a legal basis for seeking earlier court intervention.
For secured creditors, timing can affect the sequencing of demand, enforcement and the receiver application. For debtors and other stakeholders, defective or premature enforcement may require immediate attention. Our Appointment of Receiver Litigation practice addresses these issues in contested receiver applications, including disputes over timing, notice and urgent relief.
Contact ME Law to request a consultation.