{"id":319,"date":"2025-04-03T19:25:17","date_gmt":"2025-04-03T19:25:17","guid":{"rendered":"https:\/\/blog.readhearsay.ca\/?p=319"},"modified":"2025-04-04T16:48:49","modified_gmt":"2025-04-04T16:48:49","slug":"law-society-doesnt-trump-secured-creditors","status":"publish","type":"post","link":"https:\/\/blog.readhearsay.ca\/index.php\/2025\/04\/03\/law-society-doesnt-trump-secured-creditors\/","title":{"rendered":"Law Society doesn\u2019t trump secured creditors"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><em>Easy Legal Finance v Law Society of Alberta<\/em>, <a href=\"https:\/\/www.canlii.org\/en\/ab\/abca\/doc\/2025\/2025abca112\/2025abca112.html\" target=\"_blank\" rel=\"noreferrer noopener\">2025 ABCA 112<\/a><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The Law Society of Alberta put a firm into receivership after one of the firm\u2019s employees misappropriated more than $419,000 from the firm\u2019s trust account. But the Law Society isn\u2019t the only one worried about the firm\u2019s finances. The firm also owes more than $1.4 million to its senior secured lender \u2014 Easy Legal Finance.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The Law Society tried to pause the interest on Easy Legal Finance\u2019s debt, arguing that the 18% interest rate would drain the money available to other creditors. Alberta\u2019s Court of King\u2019s Bench agreed with that assessment, but the Court of Appeal said the lower court incorrectly applied the \u201cinterest stops rule\u201d.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">According to the Court of Appeal, insolvency courts sometimes pause interest to ensure fairness among <em>creditors in the same class \u2014 <\/em>but secured creditors aren\u2019t in the same class as unsecured creditors.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">That means courts can\u2019t pause the interest on a secured debt during receivership simply because it seems like a fair thing to do.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Even if the Law Society is the party saying it\u2019s the fair thing to do.<\/li>\n<\/ul>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\">\u201cThe [Law Society] has pointed to no case in which the interest stops rule has been applied to a secured creditor\u2019s claim to avoid \u2018skewing of equity\u2019 to the secured creditor, whether in the context of an insolvency or otherwise.\u201d<\/p>\n<cite><a href=\"https:\/\/canlii.ca\/t\/kb894#par39\" target=\"_blank\" rel=\"noreferrer noopener\">Para 39<\/a><\/cite><\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>What happens when a Law Society asks to pause interest during receivership proceedings?<\/p>\n","protected":false},"author":2,"featured_media":327,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[9],"class_list":["post-319","post","type-post","status-publish","format-standard","has-post-thumbnail","category-case-update","tag-abca"],"_links":{"self":[{"href":"https:\/\/blog.readhearsay.ca\/index.php\/wp-json\/wp\/v2\/posts\/319","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.readhearsay.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.readhearsay.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.readhearsay.ca\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.readhearsay.ca\/index.php\/wp-json\/wp\/v2\/comments?post=319"}],"version-history":[{"count":1,"href":"https:\/\/blog.readhearsay.ca\/index.php\/wp-json\/wp\/v2\/posts\/319\/revisions"}],"predecessor-version":[{"id":320,"href":"https:\/\/blog.readhearsay.ca\/index.php\/wp-json\/wp\/v2\/posts\/319\/revisions\/320"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.readhearsay.ca\/index.php\/wp-json\/wp\/v2\/media\/327"}],"wp:attachment":[{"href":"https:\/\/blog.readhearsay.ca\/index.php\/wp-json\/wp\/v2\/media?parent=319"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.readhearsay.ca\/index.php\/wp-json\/wp\/v2\/categories?post=319"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.readhearsay.ca\/index.php\/wp-json\/wp\/v2\/tags?post=319"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}