CRA considers that the creditor property seizure rule (s. 79.1) does not apply where the creditor gets equity of the debtor

Property seized by a creditor generally is deemed by s. 79.1(6) to have a cost equal to the cost amount of the defaulted debt.  CRA has stated that it considers the s. 79.1 rules to only apply where the seized property was held by the debtor, and that they would not apply where the creditor instead receives shares of, or partnership interests in, the debtor.  CRA gave no guidance on determining the cost of the shares or partnership interests (it wasn't asked).

Neal Armstrong.  Summary of 6 December 2011 TEI Round Table, Q. 14, 2011-0427101C6 under s. 79.1(2).