Session six: Foreign

Judgements and
Transactions
LAW4024: CREDIT AND COLLECTION
Foreign Judgements

 A debtor owes you money, and you have obtained a judgment for collection in a
different province or country from where the debtor either resides or has assets.
The legal process for pursuing recovery is known as enforcing a foreign
judgment.
 A jurisdiction will respect the laws of another jurisdiction—unless there is good
reason not to do so.
 In the province of British Columbia (BC) foreign judgments are enforceable.
 When all the required steps are completed or “perfected”, the foreign judgment
can be executed upon against the debtor as if it was a local judgment.
Creditors' Remedies

 Once the foreign judgment is recognized, you have access to all the creditors’
remedies in that jurisdiction.
 If the borrower defaults on the loan, secured parties have a variety of remedies
from two sources: the security agreement and the PPSA. The remedies provided
for in security agreements are often broader than those permitted by the PPSA, in
which case the secured party is generally limited to the remedies permitted by the
PPSA.
 Credit agreements normally contain an acceleration clause, which permits the
 creditor to call the entire loan if the debtor misses one payment. This gives the
debtor an incentive to make timely payments and allows the creditor to sue for the
entire debt immediately upon any default by the debtor.
Creditors’ Remedies
 A secured party can enter the borrower’s premises and seize the collateral immediately upon
default by the debtor, although the secured party must not break the law and is generally
required to provide advance notice to the debtor.
 The secured party can then dispose of the collateral (or collect collateral such as accounts
receivable). The proceeds are applied first to the expenses of the secured party in enforcing its
security and then to the unpaid debt. The fees and expenses of the secured party in seizing and
selling collateral can often be considerable. If the amount received by the secured party in
disposing of the collateral (less its costs) exceeds the amount owed by the debtor, the surplus
must be paid to the next secured party in line, if there is one, and then to the debtor.
 If the net proceeds are insufficient to pay the outstanding debt, then the secured party becomes
an unsecured creditor for the deficiency, which is the balance still owing, and has the rights
only of an unsecured creditor in respect to the deficiency.
Limits on Creditors’ Remedies
 Creditors are not expected to obtain the highest possible price, but they must act reasonably.
Creditors must also avoid conflicts of interest created by buying col-lateral themselves or selling
to related businesses at a price less than fair market value.
 The courts have held that secured parties must generally give the debtor reasonable notice before
calling a loan or enforcing their security, even if the credit agreement does not require notice.
 If a secured party is enforcing a security interest against all or substantially all
 of the inventory, accounts receivable, or other assets of a business debtor, the Bankruptcy and
Insolvency Act 20
 requires that the secured party provide the debtor
 with 10 days’ notice of its intention to enforce its security. The notice is in a pre-scribed form
and is commonly known as a “Section 244 Notice.” During the 10-day period, the secured party
cannot take any steps to enforce its security.