Royalties from music publisher belonged to lender of bankrupt

Re Friedman (2008), 49 C.B.R. (5th) 131 (Ont. S.C.J. in bankruptcy)

Mr. Friedman assigned his rights to royalties he would receive from SOCAN, the Canadian copyright collective that administers royalties for tis members, to his music publisher, to secure loan advances to him from the publisher.

At the time of his bankruptcy, he owed the publisher about $3.2 million. The publisher sought payment of the royalties from SOCAN. The bankrupt applied under section 68.1 of the Bankruptcy and Insolvency Act (the “BIA”) on the basis that these royalties were akin to post bankruptcy wages.

The Court held in favour of the secured publisher on the basis that these royalties had been earned from the musician’s activities completed prior to the start of his bankruptcy, such that section 68.1 did not apply.