Written by: Edward D. (Ned) Brown
Date: September 1, 2016
Scenario: You intend to sell your businesses' assets to a new owner. In addition to the "hard" assets, you hold certain patents which are necessary to operate the business. You and the buyer agree that you will continue to hold the patents pending payment of the balance owed to you, and in the meantime, you will "licence" the use of the patents to the purchaser. Once the purchaser pays the balance of what it owes to you, then you will absolutely transfer and assign the patents to it. If the purchaser reneges, you reserve the right to cancel the licence and continue to hold the patents solely for yourself.
What can and should you do to protect your interests? What happens if the purchaser becomes insolvent before paying you the balance it owes, and has a "proposal" approved for it under the Canada Bankruptcy and Insolvency Act?
Please click here for a commentary on this matter which relates to an actual recent case (March of 2015, British Columbia Court of Appeal) in which these matters were discussed.