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Mar 29, 2017

Repossession Of Goods By Unpaid Suppliers

In cases where unpaid goods have been delivered to a debtor, suppliers may draw upon a remedy under the Bankruptcy and Insolvency Act (BIA). The remedy is strictly regulated by s. 81.1 of the BIA, and applies to debtors who are in receivership or bankruptcy. To make use of this remedy, suppliers must heed a number of conditions and time limits.

The Conditions

Suppliers are only entitled to reclaim their goods if several important conditions are fulfilled. Those conditions set out that the goods:


  • Must be recognizable
  • Must be in the possession of the Licensed Insolvency Trustee or the purchaser
  • Mut be in the same conditions they were upon delivery
  • Must not have been resold
  • Must not be subject to an arm's length sale agreement

A supplier debt must still be outstanding at the time that the demand for repossession is made.

Partially Paid Goods

If the debtor has made some payment towards the goods but a debt still remains outstanding, the supplier can still repossess. However, the supplier may only repossess the goods that equal the unpaid portion of the debt.

Demand To Repossess Goods And Time Limits

The supplier must make a demand to repossess the goods. The supplier has only 15 days to do so from the date that the purchaser becomes bankrupt or that a receiver is appointed to submit the demand. If the supplier has not taken back the goods within the 15 days, the right expires.

A further time limit applies before a supplier may collect. The goods must also have been delivered no later than 30 days before the date of the appointment of the receiver or the debtor became bankrupt, in order to still be eligible make the demand.

With the rules and limits involved, creditors are wise to consult with an experienced insolvency lawyer to ensure that any action taken to collect outstanding debt is compliant with all applicable laws.