Bankruptcy and proposal timelines are being extended during COVID-19

On March 17, 2020, all Ontario courts shuttered as a result of the COVID-19 social isolation measures. There are numerous court-related deadlines – from limitation periods to deadlines to set matters down for trial – that could not be met because nothing could be filed, scheduled, or generally done in court. 

To deal with the deadlines that would be missed the Ontario government passed a regulation that suspended all timelines including limitation periods and the time within which steps had to be taken under the Rules of Civil Procedure.

The Ontario regulation did not help with bankruptcy matters

This dealt with most litigation in Ontario but it left a glaring gap for insolvency lawyers and trustees in bankruptcy. The Bankruptcy and Insolvency Act has many similar timelines but the Ontario regulation did not extend them. Lawyers and trustees had no real way to meet many of these timelines.

Insolvency lawyers and trustees have been in a state of limbo until now. On April 27, 2020, Chief Justice Morawetz made an order in In the Matter of the Proposal of Stephen Francis Podgurski which has the effect of suspending many significant timelines in commercial and consumer proposals and bankruptcy files.

The Podgurksi Order does the following:

1.   It suspends the time for holding a meeting of creditors in any proposal or bankruptcy by 65 days;

2.   Where a bankrupt’s discharge is opposed on the grounds that the bankrupt failed to pay surplus income or the bankrupt could have made a viable proposal, it suspends the time for the trustee to schedule a mediation or to apply to the court for 65 days; and

3.   In a consumer proposal, it orders that the proposal shall not be deemed annulled because of a default until the proposal is at least three months in arrears and in some cases up to six months in arrears.

The Podgurski Order doesn’t suspend all timelines but it deals with the most common ones

There are still a number of timelines under the BIA that have not been suspended, such as the timeline to appeal a trustee’s disallowance of a proof of claim. Insolvency lawyers and trustees are still not in the same position as all other litigators in Ontario. However the Podgurski Order does give a degree of certainty when dealing with some of the more common timelines under the BIA.

Wojtek Jaskiewicz is a commercial litigator and insolvency lawyer with Keyser Mason Ball, LLP. If you have any questions about the timelines under the BIA and the effect of the Podgurski Order, litigation during COVID-19 or insolvency in general, contact Wojtek Jaskiewicz at [email protected] or visit our website at www.kmblaw.com.