Ontario’s Bulk Sales Act was repealed on 22 March 2017 by Schedule 3 to the Burden Reduction Act, 2017. An asset buyer no longer runs a statutory creditor process before paying, and no longer risks the voidable sale that came with skipping it. What replaced it is private: searches, two surviving clearance certificates, a declaration and a holdback.
Key takeaways
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Schedule 3 to the Burden Reduction Act, 2017 has one operative sentence: “The Bulk Sales Act is repealed.” Section 12 sets the date — “This Schedule comes into force on the day the Burden Reduction Act, 2017 receives Royal Assent.” The Act was “Assented to March 22, 2017”, and the header on the Bulk Sales Act itself now reads “This Act was repealed on March 22, 2017.”
The Schedule also “makes consequential amendments to other Acts”, and that is where the residue sits: section 6 struck the Act’s row from the Limitations Act, 2002, section 8 rewrote the PPSA, and sections 10 and 11 rewrote two tax cross-references instead of deleting them.
SECTION 02 OF 10
The duty sat on the buyer and bit before money moved. Section 4(1) said the buyer “shall demand of and receive from the seller, and the seller shall deliver to the buyer, a statement verified by the affidavit of the seller in Form 1” — a sworn list of the trade creditors and what each was owed. Only a deposit of “a sum not exceeding 10 per cent of the purchase price” could move first.
The trigger was wide: section 1 defined a sale in bulk as “a sale of stock in bulk out of the usual course of business or trade of the seller”, and section 2 exempted only office-holders — every sale in bulk “except a sale in bulk by an executor”, a receiver or a trustee.
Closing then took one of two routes. Under section 8(1) the buyer could pay the seller directly where the sworn claims fell under $2,500, where the seller swore they were paid, or “if adequate provision has been made for the immediate payment in full of all claims of the unsecured trade creditors of the seller of which the buyer has notice”. Otherwise section 8(2) required consents from creditors representing “not less than 60 per cent in number and amount of the claims that exceed $50”, fourteen days’ notice, and payment of the price to a trustee who “is a trustee for the general benefit of the creditors of the seller”.
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Section 16(1) is the entire enforcement mechanism: “A sale in bulk is voidable unless the buyer has complied with this Act.” Section 16(2) made a buyer whose sale was set aside “personally liable to account to the creditors of the seller for the value thereof”. Section 18 reversed the onus: “the burden of proof that this Act has been complied with is upon the person upholding the sale in bulk”.
What the buyer bought in exchange was speed. Section 19 barred any attack brought later than “within six months after the buyer complies with section 11”, so a compliant buyer was clear half a year after closing. Nothing in Ontario law now gives an asset buyer a cut-off that short.
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The repeal did not make an asset buyer liable for the seller’s trade debt; that was never the rule. Treadstone Law on assumed versus excluded liabilities states the default that liabilities transfer only by agreement, and its note on accounts payable at closing leaves pre-closing invoices with the seller. See assumed liabilities.
What went was the machinery on top of it, and the buyer’s cut-off. Schedule 3, section 6 struck “the row for the Bulk Sales Act” from the Limitations Act, 2002, where the word “bulk” now appears nowhere, so section 4 governs and bars a proceeding “after the second anniversary of the day on which the claim was discovered”. Six months became two years from discovery.
SECTION 05 OF 10
A stranded creditor now uses general law. Fraudulent Conveyances Act section 2 voids a conveyance “made with intent to defeat, hinder, delay or defraud creditors”, and the buyer’s shelter in section 3 is conditional — it protects property “conveyed upon good consideration and in good faith to a person not having at the time of the conveyance to the person notice or knowledge of the intent set forth in that section”. A full price paid in ignorance is safe; a bargain price paid by a buyer who had read the aged payables is not.
Ontario’s Assignments and Preferences Act section 4(1) voids a transfer made “with intent to defeat, hinder, delay or prejudice creditors” by a person on the eve of insolvency. If the seller goes bankrupt, the trustee has Bankruptcy and Insolvency Act section 96, marginal note Transfer at undervalue, reaching back one year against an arm’s-length buyer where “the debtor was insolvent at the time of the transfer”, and five years against one not at arm’s length. See buying before insolvency.
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Nothing makes a seller list its creditors today, so the buyer has to find them. Treadstone Law on the PPSA search before financing a purchase sets out what a search surfaces — equipment lenders, an operating line against inventory and receivables — with land in a separate registry, and its answer on debts the seller swears are paid off asks for a lender payout statement and a registered discharge. Priority is its own subject: registered security against the assets.
The repeal also reached the PPSA. Schedule 3, section 8(1) replaced clause 4(1)(g), which now takes outside the Act “a sale of accounts or chattel paper as part of a sale of the business out of which they arose unless the vendor remains in apparent control of the business after the sale”.
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Ontario froze its tax cross-references instead of deleting them. Retail Sales Tax Act section 6(3) bars a permit-holder from disposing of stock “through a sale in bulk to which the Bulk Sales Act, as it read immediately before it was repealed, would have applied had it not been repealed” without a Minister’s certificate in duplicate covering six taxing statutes. Subsection 6(5) is the buyer’s sentence: fail to obtain that duplicate and “the purchaser is responsible to the Minister for payment to the Minister of all taxes, penalties and interest imposed under the statutes listed in subsection (3)”.
Tobacco Tax Act section 14 does the same for wholesalers. The Ministry of Finance’s Retail Sales Tax guidance warns that “A purchaser that fails to obtain a copy of the Clearance Certificate from the seller could be liable for any taxes, penalties and interest owing by the seller”, and sets a lead time: “All requests for Clearance Certificates must be made in writing, at least two weeks before the sale takes place.” Those two weeks are ministry practice, not statute.
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Workplace insurance arrears follow the business. Workplace Safety and Insurance Act, 1997 section 146, marginal note Obligations of successor employers, applies “when an employer sells, leases, transfers or otherwise disposes of all or part of the employer’s business” other than to a trustee in bankruptcy, receiver, liquidator or CCAA purchaser. Subsection (2) carries the risk in one line: “The person is liable to pay all amounts owing under this Act by the employer immediately before the disposition.”
Subsection (3) adds that “The Board may enforce the obligation against the person as if the person had been the employer at all relevant times.” It bites on a purchase of part of a business, the shape of most small deals. Treadstone Law on the WSIB clearance certificate attributes the exposure to Ontario’s workplace insurance legislation without naming a provision; section 146 is it. Employment obligations: the staff on a sale.
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The nearest descendant of the Form 1 affidavit is a statutory declaration at closing. Treadstone Law on the closing statutory declaration lists among its usual content that “There are no material unpaid trade creditors, liens, or claims beyond what’s been disclosed”. It is signed personally, and sworn to the buyer rather than filed in court, so it produces a claim rather than a public record.
Back it with money and time: a specific indemnity for pre-closing trade payables, a holdback sized to what diligence found, and a survival period long enough for late invoices to arrive: holdback versus vendor note, the CRA’s reassessment window.
Then pay the identified trade payables directly out of the price at closing, on a schedule to the agreement — reproducing the old section 8(1)(c) “adequate provision” route by contract, and ask expressly for a creditor schedule, because Treadstone Law on disclosure schedules covers contracts, litigation, employees and security interests but not debts or payables. Federal transferee liability is separate again: section 160 and GST/HST transferee liability.
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Québec’s civil-law equivalent went first, and the repeal shows on the face of the Code: articles 1767 to 1778 of the Civil Code of Québec each now read “(Repealed)”, and the subdivision heading that once introduced them reads only “Repealed, 2002, c. 19, s. 8.” The consolidated Code does not preserve what that subdivision was called, so this page does not name it.
For the rest of Canada this page claims nothing. Proving no other province retains such a statute would mean reading eleven more statute books, which was not done here; commentary from March 2017 called Ontario the last such regime, and that is orientation, not authority.
No. It was repealed on 22 March 2017 by Schedule 3 to the Burden Reduction Act, 2017. An asset buyer no longer runs a statutory creditor process before paying, and no longer risks the voidable sale that came with skipping it.
Yes, in two tax statutes. The Retail Sales Tax Act and Tobacco Tax Act both still turn on a sale in bulk “as it read immediately before it was repealed”, and a buyer who fails to get the required clearance certificate can be held responsible for the seller’s unpaid taxes, penalties and interest.
Private contractual tools: a statutory declaration at closing that there are no material unpaid trade creditors, a specific indemnity for pre-closing trade payables, a holdback sized to what diligence found, and paying identified trade payables directly out of the price at closing.
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