Wednesday 8 July 2009

Royalties owed to bankrupt musician not "wages"

"Royalties from music publisher belonged to lender of bankrupt", published in the World Media Law Report about six weeks ago, is a note on the Ontario, Canada, decision in Re Friedman (2008), 49 C.B.R. (5th) 131 (Ont. S.C.J. in bankruptcy).

In brief, Friedman assigned his rights to royalties payable by Canadian copyright collecting society SOCAN to his music publisher, as security for loans advanced to him from the publisher. He subsequently became bankrupt, owing the publisher some $3.2 million. When the publisher sought payment to it of the royalties payable to Friedman from SOCAN, Freidman applied under the Bankruptcy and Insolvency Act, s.68(1) for a ruling that those royalties were effectively post-bankruptcy wages which, as such, could not be the subject of an attachment.

Holding for the publisher, the Court considered that the royalties in question had been earned from activities which Friedman had completed before the starting date of his bankruptcy. Accordingly s.68(1) did not apply.

Source: note by Miller Thomson LLP

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