Restrictions on tax authorities’ ability to set off certain claims in insolvency proceedings confirmed

By Jean-Guillaume Shooner and Joseph Reynaud (April 13, 2023, 12:04 PM EDT) -- On Dec. 22, 2022, in a ruling cited as Arrangement relatif à Bloom Lake, 2022 QCCA 1740, the Court of Appeal of Québec upheld a Superior Court decision which stated that Goods and Services Tax (GST) and Quebec Sales Tax (QST) input tax credits and refunds claimed by an insolvent company (ITC/ITR claim) in connection with damage payments arising from agreements disclaimed in the course of proceedings under the Companies’ Creditors Arrangement Act (CCAA) constitute “post-filing claims” which cannot be set off against pre-filing amounts owed to the tax authorities. Post-filing claims are claims arising after the issuance of an initial order pursuant to the CCAA (“filing date”)....