What is Bulk Sales of statutory protection for creditors

Question

What is Bulk Sales of statutory protection for creditors?

Answer 1

A bulk sale is the sale of all, or essentially all, of the assets of a business. Ontario’s Bulk Sales Act (Ontario and Newfoundland and Labrador are the only provinces that have not repealed this legislation in view of comprehensive PPSA) establishes a procedure that makes it difficult for the owner of a business to dispose of stock-in-trade and business fixtures outside the normal business course without the payment or concurrence of trade creditors.

The rationale behind such legislation is that if a debtor sells his stock-in-trade and business fixtures, the cash flow that creditors anticipated would arise from these assets (which formed the basis for extending credit in the first place) would be impaired. Application can be made to a court to exempt a bulk sale from the Bulk Sales Act.