Tag archives: security interest

Harmonizing cash collateral perfection rules between Canada and the U.S.

In secured financing transactions, cash is a popular and useful form of collateral. It is fully liquid, readily available and transferrable, and its value is always known. A debtor holding cash in a deposit account may wish or be required to use it as collateral for obligations such as loans, repurchases and derivative transactions. In order to maintain a perfected security interest in this cash collateral, a lender or agent will need to adhere to the applicable methods of perfection as set forth under the applicable provincial personal property security legislation (the “PPSA”). For the reasons outlined below, … Continue Reading

“Shop-in-shop” retail: perfecting your security interest

In today’s business world, we continue to see creative interconnection among businesses. These arrangements are often motivated by a desire for companies to attain certain benefits of M&A transactions (such as synergies) without incurring certain costs (such as loss of autonomy and heightened transactional expenses). In the retail sector, a “shop-in-shop” business arrangement has become a common occurrence, where characteristically, a large retailer (herein referred to as a “licensor”) will license physical square footage in its retail store to another retailer (herein referred to as a “licensee”) to sell goods. These types of arrangements enable licensees to operate what would … Continue Reading

Transitioning to the PPSA’s new rules

In a previous blog post, we discussed the amendments to the rules under the Ontario Personal Property Security Act (the PPSA) which determine the location of the debtor for certain types of collateral and the jurisdiction for registration.  In this post we explore the transitional rules which will apply to security agreements made before December 31, 2015.

As described in the previous post, as of December 31, 2015 new Ontario debtor location rules (the New Rules) determine the jurisdiction in which a filing must be made for security interests where the underlying collateral consists of:

  • An intangible
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Where to register under the PPSA’s new debtor location rules

Changes to Ontario’s Personal Property Security Act (the PPSA) may have an effect on M&A transactions that involve certain security interests. This two-part post will explore how the PPSA’s changes affect security agreements entered into both before and after December 31, 2015.

Background

On December 31, 2015 new rules came into force (the New Rules) that determine a debtor’s location for the purposes of choosing the jurisdiction in which to register a security agreement. As these amendments to the PPSA were first proposed in 2006, they come as no surprise to practitioners but secured parties should be aware … Continue Reading

Behind the perfection certificate (Part II): the asset purchase transaction certification

In our previous post on March 31, 2015, we considered perfection certificates in the context of a share purchase transaction/ amalgamation/ name change certification. In this post, we continue to explore perfection certifications but in the context of a post-M&A or leveraged finance acquisition debtor.

Perfection certification: the debtor has acquired all its assets in the ordinary course of business.

Under the Personal Property Security Act (Ontario) (the OPPSA), and the personal property security acts of most other jurisdictions in Canada, a creditor can maintain priority over an asset if title to the asset is transferred and the … Continue Reading

Behind the perfection certificate (Part I): the share purchase transaction certification

Over the next few weeks, we will go in depth into a few certifications contained in most perfection certificates in the context of a post-M&A or leveraged finance acquisition debtor.

A perfection certificate is the first step in any secured lending transaction and a time consuming task for debtors (and their counsel) to complete. Lenders and their counsel rely on the information contained in a perfection certificate to determine what steps they need to take in order to perfect (i.e., render effective against third parties) a creditor’s security interest and whether there are any pre-existing creditors that need … Continue Reading

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