Been doing a lot of research in a few separate fields of law, and I'm trying to understand how the peices combine in the following presenting what legal tools to solve the matter.


If a contractor produces some IP for a client (e.x. writes software), the client claims they're unable to pay for any of it, then a significant time later the client gets aquired as part of an asset aquisition for an amount less than what's available to pay all creditors (at this point it's more than just the one contractor), what legal tools does the contractor have to get full payment?

Key parts to this equation:

  • It's an asset aquisition
  • No payment has been made for the work
  • There's not enough money to go around (between debts, legal fees, employees, etc.)
  • Contracts signed at the outset of the project assigned the IP of the work to the client

My guess to the answer is:

  1. File a notice in the PPSA (Canadian law) aka a lien. However there was no prior sales agreement stating the work done is collateral. Perhaps this can be assumed because it's not paid for?
  2. Remove the client's access to the IP. This would be a breach to the initial contract according to https://law.stackexchange.com/a/42865 and put the contractor at risk of damages if this causes the aquisition deal to fall through.
  3. Client pays everyone pro rata?
  4. Sue? This could destroy the deal perhaps, or maybe it would put the right pressures to get the money.

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