Security Deposits after CCAA or bankruptcy filing

In a bankruptcy scenario the Trustee would open a new account in their name if hydro is required and the requirement for a security deposit would be based on the trustee’s payment history and therefore is generally not required.

In a CCAA proceeding the company may have to open a new hydro account if required. If a sizable security deposit is required in a CCAA, the debtor can make an application to the court requesting that an order is granted deeming a supplier to be a “critical supplier”. This would mean that the supplier would have to supply their utility as they had before the CCAA began. In such a case, if the electricity supplier is deemed a “critical supplier”, it would not be able to withhold electricity until a deposit is paid. Unless this Court Order is obtained the security deposit would need to be paid.

The Bankruptcy and Insolvency Act does not contain any legislation that would protect a company from having to pay a deposit to open a new hydro account. The Ontario Energy Board outlines the criteria used to determine if a security deposit is charged when opening an account. The criteria according to the Ontario Energy Board is as follows;

-You have received more than 1 disconnection notice in the past year
-You have bounced more than 1 cheque
-You have failed to pay more than one pre-authorized payment
-You have been disconnected over the past year
-You have been subject to a collect trip by the utility
-You have had your deposit applied to your outstanding balance and must pay it back

There is more detailed information on their website: http://www.oeb.ca