commercial borrowers, it has frequently been raised in insolvencies as a defence to enforcement of commercial loan transactions, particularly ones between alternative lenders (that are not regulated financial institutions) and high-risk borrowers. The Criminal Code defines “interest” as including the aggregate of all charges and expenses, such as fees, fines, penalties or commissions (or similar charges or expenses). For these reasons, a contravention of the second branch of the offence (receiving interest at a criminal rate) may be particularly likely to occur, even though the stated interest rate is well below 60%, where a lender has attempted to increase its return on the transaction through upfront fees and charges, and the borrower defaults early in the term of the loan. The change may make challenges to lending transactions even more common in the future. For more on current Canadian insolvency developments, see our twice-yearly publication Insolvency Now at dwpv.com.
The collapse in 2022 of unregulated cryptocurrency exchanges, including Celsius Network, Voyager Digital and FTX (and in Canada, Quadriga), has highlighted the difficulty of characterizing digital assets in an insolvency and determining their owners.
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Doing Business in Canada
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