Brown Recycling Ltd was a paper recycling company that received millions of dollars in secured loans from
Question:
Brown Recycling Ltd was a paper recycling company that received millions of dollars in secured loans from the City of Regina. In 2016, Brown went bankrupt, as a result of poor cash flow due to unsatisfactory product quality. At the time of its bankruptcy, Brown had assets with a total market value of $2 million, and total liabilities of $10 million including $1 million of secured debt owed to the City of Regina. Brown also left a contaminated site on the outskirts of the city that regulators estimate will cost over $1 million to clean up. Brown’s trustee in bankruptcy wants to distribute Brown’s remaining assets to creditors, without contributing anything to the remediation of Brown’s contaminated site. The provincial Ministry of the Environment wants the trustee to use the funds realized from the sale of Brown’s assets first to clean up the contaminated site, and to pay creditors only after those costs have been covered. Who should prevail in this battle—the trustee in bankruptcy or the provincial environmental watchdog? Why?
Step by Step Answer:
Canadian Business And The Law
ISBN: 9780176795085
7th Edition
Authors: Philip King Dorothy Duplessis, Shannon O Byrne