This enactment amends the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act to provide that the perishable fruits and vegetables sold by a supplier to a purchaser, as well as the proceeds of sale of those fruits and vegetables, are to be held in trust by the purchaser for the supplier in the event that the purchaser has not fully paid for the fruits or vegetables and becomes bankrupt or the subject to a receivership or applies to the court to sanction a compromise or an arrangement.

His Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

Right of unpaid supplier of perishable fruits or vegetables

81.‍7 (1) Subject to this section, if a person (in this section referred to as the “supplier”) has sold to another person (in this section referred to as the “purchaser”) perishable fruits or vegetables for use in relation to the purchaser’s business and the purchaser has not fully paid the supplier, the perishable fruits or vegetables, as well as any of the proceeds of sale, are deemed to be held in trust by the purchaser for the supplier, if

• (a) the supplier has included in their invoice a notice, or has otherwise given notice within 30 days of the receipt by the purchaser of the perishable fruits or vegetables, in the prescribed form and manner, informing the purchaser of their intention to avail themselves of their right as beneficial owner of the perishable fruits or vegetables and the proceeds of sale in case the purchaser becomes bankrupt or subject to a receivership;

• (b) the purchaser has 30 days or less to pay the entire balance owing to the supplier; and

• (c) the purchaser, trustee or receiver does not pay to the supplier the entire balance owing when it becomes due as provided in the invoice.

Clarification — paragraph 67(1)‍(a)

(2) For greater certainty, paragraph 67(1)‍(a) applies once the perishable fruits or vegetables, as well as any of the proceeds of sale, are deemed to be held in trust by the purchaser for the supplier in accordance with subsec­tion (1).

Application to court for directions

(3) The purchaser, trustee or receiver may apply to the court for directions in relation to any matter relating to this section, and the court shall give, in writing, the directions, if any, that it considers proper in the circumstances.

Supplier may appeal to court

(4) If a supplier is aggrieved by any act, omission or decision of the purchaser, trustee or receiver, the supplier may apply to the court and the court may make any order that it considers proper in the circumstances.

Other rights saved

(5) Nothing in subsection (3) or (4) precludes a person from exercising any right that the person may have under subsection 34(1) or section 37.

Provincial law

(6) Laws of general application in relation to trusts and trustees in force in the province in which the purchaser resided or carried on business when the purchaser became bankrupt apply to the trust, and in the event of any inconsistency or conflict between this section and the provisions of any of those laws, the provisions of those laws prevail to the extent of the inconsistency or conflict.

Definitions

(7) The following definitions apply in this section.

perishable fruits or vegetables includes perishable fruits and vegetables that have been repackaged or transformed by the purchaser to the extent that the nature of the fruits or vegetables remains unchanged.‍ (fruits ou légumes périssables)

proceeds of sale means the proceeds from the sale by the purchaser of the perishable fruits or vegetables that are subject to the trust, whether or not those proceeds have been kept by the purchaser in a separate account or have been combined with other funds.‍ (produit de vente)

receiver means a receiver within the meaning of subsection 243(2).‍ (séquestre)

subject to a receivership, in relation to a person, means in respect of whom any property is under the possession or control of a receiver.‍ (mise sous séquestre)

Right of unpaid supplier of perishable fruits or vegetables

8.‍1 (1) Subject to this section, if a person (in this section referred to as the “supplier”) has sold to a debtor company (in this section referred to as the “purchaser”) perishable fruits or vegetables for use in relation to the purchaser’s business and the purchaser has not fully paid the supplier, the perishable fruits or vegetables, as well as any of the proceeds of sale, are deemed to be held in trust by the purchaser for the supplier, if

• (a) the supplier has included in their invoice a notice, or has otherwise given notice within 30 days of the receipt by the purchaser of the perishable fruits or vegetables, in the prescribed form and manner, informing the purchaser of their intention to avail themselves of their right as beneficial owner of the perishable fruits or vegetables and the proceeds of sale in case the purchaser applies to the court to sanction a compromise or an arrangement;

• (b) the purchaser has 30 days or less to pay the entire balance owing to the supplier; and

• (c) the purchaser does not pay to the supplier the entire balance owing when it becomes due as provided in the invoice.

Clarification

(2) For greater certainty, once the perishable fruits or vegetables, as well as any of the proceeds of sale, are deemed to be held in trust by the purchaser for the supplier in accordance with subsection (1), they are not included in the property of the purchaser.

Provincial law

(3) The laws of general application in relation to trusts and trustees in force in the province in which the purchaser resided or carried on business when the purchaser applied to the court to sanction a compromise or an arrangement apply to the trust, and in the event of any inconsistency or conflict between this section and the provisions of any of those laws, the provisions of those laws prevail to the extent of the inconsistency or conflict.

Definitions

(4) The following definitions apply in this section.

perishable fruits or vegetables includes perishable fruits and vegetables that have been repackaged or transformed by the purchaser to the extent that the nature of the fruits or vegetables remains unchanged.‍ (fruits ou légumes périssables)

proceeds of sale means the proceeds from the sale by the purchaser of the perishable fruits or vegetables that are subject to the trust, whether or not those proceeds have been kept by the purchaser in a separate account or have been combined with other funds.‍ (produit de vente)