1E9Ct5D

deficiency claim may be brought against themortgage debtor in the event the saleproceeds are insufficient to retire the debt.ReceivershipsA secured creditor may elect to realize onits security by using its own personnel ormay appoint an agent known as a receiverto manage the realization process. Wherethe secured creditor’s security extends overthe entire business of the debtor or asignificant portion of the business, thereceiver may be appointed to manage thebusiness for a period of time until it can besold as a whole. Alternatively, the receivermay simply be appointed to gather assetsand prepare them for sale.A receiver may be appointed in three ways:1. Privately in the security instrument;2. Under the Rules of Court of aprovince; or3. Under the Bankruptcy andInsolvency Act (the “BIA”).A receiver appointed under a securityinstrument will generally be viewed as anagent of the appointing creditor. A receiverappointed in this manner will generally beresponsible to enforce the security on behalfof the secured creditor. Where a receiver isprivately appointed, the realization processwill be determined by the receiver inconsultation with the creditor.Receivers appointed under either the Rulesof Court or the BIA will initially be appointedby a court in a jurisdiction which generallyhas a substantial connection to the debtorand its business. The application is typicallymade on the instruction of the securedcreditor. However, once appointed, thereceiver will function as an officer of thecourt with responsibilities to all creditors ofthe debtor, not just the secured creditor whomade the initial application. The court willsupervise the receivership process. Thesale process will be subject to courtapproval. The process for appointmentsunder local court rules and the BIA will besimilar. The distinction is largely based onwhether the debtor’s assets are located inone jurisdiction (which would favour anapplication under local court rules) orwhether such assets are located in severaljurisdictions (which would favour anapplication under the BIA).Receivers, regardless of the method ofappointment, must comply with notice andreporting requirements under the BIA andthe PPSA.Secured creditors should note that theymay, in certain circumstances, beconsidered a receiver where they engagetheir own forces in the realization of adebtor’s assets.Builders’ LiensThe liens on the debtor’s assets discussedin the previous section are consensual liens(i.e. they have been provided with theagreement and consent of the debtor).Creditors who supply labour and materials(and, in some cases, assets) in relation tothe improvement of the real or personalproperty of a debtor may also benefit from astatutory lien (usually described as abuilders’ or mechanics’ lien) on suchproperty in the event of non-payment. Theestablishment and perfection of such liensEnforcement of Creditors’ Rights 134