Anonymised, illustrative composite. The fleet was worth well past any dollar threshold anyone could name. The exemption that applied had nothing to do with the number and everything to do with how the lender came to own it.
At a glance
An equipment-finance lender held a security interest over the fleet of a mid-size construction-equipment rental company. When the borrower defaulted on its senior facility, rather than seize and liquidate the fleet piecemeal — which would have destroyed most of its going-concern value — the lender and the borrower negotiated a work-out under which the lender took ownership of the whole rental business: the fleet, a handful of yard leases, and the existing rental contracts, continuing to operate it under a receiver-manager while it searched for a buyer.
Someone on the deal team flagged that the lender was, in substance, acquiring an operating business well past any plausible size-of-transaction figure, and asked whether a Competition Act filing was required before the work-out could close. The instinct was reasonable — on the numbers alone, this looked exactly like a notifiable acquisition of assets under s.110(2). The instinct was also based on the wrong question. Part IX does not only test size; several of its exemptions are keyed to how the acquirer came to hold the assets, and this was one of them.
The outstanding secured debt was $61,000,000. The going-concern value of the fleet, on the basis the receiver-manager used to keep operating it, was assessed at just over $70,000,000 — comfortably past the size-of-transaction test on either an asset-value or gross-revenue basis, had this been an ordinary acquisition.
Competition Act s.111(d) exempts “an acquisition of collateral or receivables, or an acquisition resulting from a foreclosure or default or forming part of a debt work-out, made by a creditor in or pursuant to a credit transaction entered into in good faith in the ordinary course of business”. The lender's acquisition of the fleet fits squarely inside that language: it was collateral under an existing credit facility, the acquisition arose directly from the borrower's default, and it formed part of a negotiated debt work-out. The lender did not manufacture the default or engineer the work-out as a disguised way to buy an operating business it otherwise wanted — it was already the secured creditor, acting on a credit relationship that predated any thought of owning the fleet.
That last point is the qualifier that does real work in the text: “entered into in good faith in the ordinary course of business” describes the original credit transaction, not the workout itself. A lender that structured a loan specifically to engineer a foreclosure and acquire a target it could not otherwise buy would not have entered that credit transaction in good faith in the ordinary course of business, and the exemption would not reach it. On these facts, the lending relationship long predated the default, and nobody disputed the good-faith point.
No Competition Act filing was made for the work-out. The lender took over the fleet through its receiver-manager and operated it while marketing the business for sale. Fourteen months later, it sold the business to a strategic buyer — an entirely separate, arm's-length transaction that was tested fresh against s.110 and s.111 on its own facts, since s.111(d)'s exemption covers the creditor's acquisition on default and does not extend to whatever the creditor does with the business afterward.
Treating the work-out as requiring a filing, on the size numbers alone, would have added a filing fee and a 30-day wait under s.123 to a distressed situation where delay itself destroys value — a receivership-adjacent operation where customer and staff attrition accelerate with every week of uncertainty about who is actually running the business. The exemption exists precisely because forcing a merger-review process onto a creditor stepping in to preserve collateral value serves no purpose Part IX is built to serve.
The tell was letting the size of the fleet drive the analysis straight to “this needs a filing” without checking whether a status-based exemption applied first. Several of Part IX's exemptions in s.111 and s.113 do not ask how big a transaction is at all — they ask who the parties are to each other, or how the acquirer came to hold what it holds, and a size-first instinct will miss every one of them.
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