The denizens of Canada’s financial districts ended the workweek feeling upbeat on Oct. 29, 2004. Earlier that day, the Supreme Court of Canada announced its eagerly awaited decision in Peoples Department Stores Inc. v. Wise, and the initial reports had been promising.
According to the Canadian business press, the high court ruled that directors and officers do not owe a fiduciary duty to a corporation’s creditors, even when the company is insolvent or on the verge of insolvency. The suit sought to show that Section 122(1)(a) of the Canada Business Corporations Act (CBCA), which requires directors to “act honestly and in good faith with a view to the best interests of the corporation,” created a duty to creditors.
