What happens if secured creditors disagree about how to split the proceeds from a distressed sale?

This is a priority dispute among the creditors themselves, and it generally doesn't affect a buyer once a proper sale has closed. Ontario's personal property security regime sets out rules for determining priority among competing secured creditors based largely on registration and timing, though certain federal deemed-trust claims — for things like unremitted source deductions or GST/HST — can rank ahead of even a properly registered secured creditor in some circumstances.

Because priority can be genuinely fact-specific and isn't always a straightforward calculation, disputes like this are usually resolved among the creditors, often with the court or the receiver or trustee overseeing the sale involved, and sale proceeds are commonly held back or paid into court pending that resolution rather than distributed immediately. As a buyer who has closed on a properly conducted sale, you're generally insulated from this fight over how the money gets divided afterward — your focus should be on confirming the sale itself was properly authorized, not on how creditors later split the proceeds.