Section 50.6 — Bankruptcy and Insolvency Act: Order — interim financing

On application by a debtor in respect of whom a notice of intention was filed under section 50.4 or a proposal was filed under subsection 62(1) and on notice to the secured creditors who are likely to be affected by the security or charge, a court may make an order declaring that all or part of the debtor’s property is subject to a security or charge —

in an amount that the court considers appropriate —

in favour of a person specified in the order who agrees to lend to the debtor an amount approved by the court as being required by the debtor, having regard to the debtor’s cash-flow statement referred to in paragraph 50(6)(a) or 50.4(2)(a), as the case may be. The security or charge may not secure an obligation that exists before the order is made. In the case of an individual, they may not make an application under subsection (1) unless they are carrying on a business; and only property acquired for or used in relation to the business may be subject to a security or charge. The court may order that the security or charge rank in priority over the claim of any secured creditor of the debtor. The court may order that the security or charge rank in priority over any security or charge arising from a previous order made under subsection (1) only with the consent of the person in whose favour the previous order was made. In deciding whether to make an order, the court is to consider, among other things, the period during which the debtor is expected to be subject to proceedings under this Act; how the debtor’s business and financial affairs are to be managed during the proceedings; whether the debtor’s management has the confidence of its major creditors; whether the loan would enhance the prospects of a viable proposal being made in respect of the debtor; the nature and value of the debtor’s property; whether any creditor would be materially prejudiced as a result of the security or charge; and the trustee’s report referred to in paragraph 50(6)(b) or 50.4(2)(b), as the case may be.