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Can a Secured Debtor Retain A Business' Goodwill?

I was recently involved in an interesting case in which I obtained a receivership order for a secured creditor of an insolvent dentist.

This case involved two interesting issues. The first was the need to have the Royal College of Dental Surgeons involved to ensure the protection of the patient's private health information. The second issue involved balancing the secured creditor's right to maintain the value of the goodwill of the dentist's practice with the patient's right to choose the dentist he/she wanted.

The dentist felt entitled to offer his services to his existing patients at a new location, while the secured creditor felt that the dentist soliciting his patients would reduce the value of the goodwill in the practice, which was part of their collateral.

While this case resulted in an amicable settlement, the question remains. By allowing debtors to use the goodwill associated with the business, will it be more difficult for them to get financing?

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Ottawa, ON K1Z 8R1

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