Lessons from Norcon: Private Receivers as an Adequate Alternative Avenue of Relief to Court-Appointed Receivers

Ontario lawyers could be forgiven for thinking that the decades-long trend towards Court-appointed receiverships rather than private receiverships is a Canada-wide phenomenon. According to the Office of the Superintendent of Bankruptcy, there were 140 Court-appointed receivers in Ontario in 2018, compared to 71 private receivers in the province for the same period. By contrast, in Newfoundland and Labrador there were only five Court-appointed receivers in 2018, compared to 14 private receivers in that province for the same period.

A recent decision from the Supreme Court of Newfoundland and Labrador (General Division) in Norcon Marine Services Ltd., (Re), 2019 NLSC 238 (“Norcon”) could help explain the discrepancy between the provinces and may have important implications beyond Newfoundland and Labrador. In Norcon, the Court denied an application for a Court-appointed receivership on the basis that the applicant did not demonstrate that a Court-supervised process was “necessary”. In so deciding, among other reasons, the Court put an emphasis on the availability of a private receivership as an adequate alternative avenue of relief.

Contrasting the two forms of receivership, the Court suggested that future applicants should consider, as part of their receivership application, why a Court-appointed receiver is necessary in circumstances where the remedy of a private receiver is already available to the applicant.