A Generalized Duty of Good Faith in Insolvency Proceedings: Effective or Meaningless?
Bibliographic record
Abstract
On November 1, 2019, Section 152 of the Budget Implementation Act, 2019, No. 1 (Bill C-97), came into force, implementing a generalized duty of good faith in the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act. The amendments dictate that, “[a]ny interested person in any proceedings under [each] Act shall act in good faith with respect to [either] proceeding[…]”. The amendments also give courts the power, upon the application of any interested person, to make any order they consider appropriate in the circumstances if an interested person fails to act in good faith. The duty of good faith is not defined in the amendments, or in the legislation, nor is its application limited to particular parties or circumstances. That is, the legislative provisions fail to identify the party that needs to act in good faith, the parties to whom the obligation is owed, and the underlying duty being performed. It is thereby a generalized, free-standing, and abstract duty. This paper challenges the effectiveness of such an approach. It argues that the new statutory duty of good faith – being general, free-standing, and abstract – is unworkable and devoid of meaning. It contends that the legislation requires redrafting to expressly identify who owes a duty of good faith, to whom, and in which circumstances. In other words, to have meaning, the duty must be anchored to the parties and their underlying substantive obligations, as that context determines the content of the duty and the standards of behavior required in particular situations. Such context would provide the framework in which courts and parties could determine how to discharge the good faith duty. The concepts used to describe good faith, including fairness, community standards, decency, reasonableness, and honesty, are all sound ideals, but they are also too vague to be effectual without further elucidation and do little to clarify the good faith duty. It may well be that insolvency legislation is in need of an additional duty of good faith. It may, for example, be effective – as some have argued – to impose such a duty on creditors. The addition of this generalized duty is, however, neither useful nor desirable.
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How this classification was reachedexpand
Full frame machine prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. The Gemma side is a direct model label for every work in the frame, read from the title-only record. The Codex side is a classifier learned from the 10,348 direct Codex labels and calibrated to design-weighted sample rates; fields without enough sample support carry no Codex call. Candidate is the union of the two sides; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels.
Distilled classifier scores by category (both heads)
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.057 | 0.113 |
| Meta-epidemiology (narrow) | 0.001 | 0.001 |
| Meta-epidemiology (broad) | 0.001 | 0.001 |
| Bibliometrics | 0.002 | 0.002 |
| Science and technology studies | 0.008 | 0.083 |
| Scholarly communication | 0.032 | 0.045 |
| Open science | 0.005 | 0.014 |
| Research integrity | 0.018 | 0.021 |
| Insufficient payload (model declined to judge) | 0.008 | 0.003 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; a candidate call from one source (direct Gemma or distilled Codex), not a consensus.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".