Bankruptcy and Insolvency Act (R.S.C., 1985, c. B-3)

Act current to 2014-08-05 and last amended on 2013-04-01. Previous Versions

Marginal note:Application for court approval

 On acceptance of a proposal by the creditors, the trustee shall

  • (a) within five days after the acceptance, apply to the court for an appointment for a hearing of the application for the court’s approval of the proposal;

  • (b) send a notice of the hearing of the application, in the prescribed manner and at least fifteen days before the date of the hearing, to the debtor, to every creditor who has proved a claim, whether secured or unsecured, to the person making the proposal and to the official receiver;

  • (c) forward a copy of the report referred to in paragraph (d) to the official receiver at least ten days before the date of the hearing; and

  • (d) at least two days before the date of the hearing, file with the court, in the prescribed form, a report on the proposal.

  • R.S., 1985, c. B-3, s. 58;
  • 1992, c. 1, s. 20, c. 27, s. 23;
  • 1997, c. 12, s. 35.
Marginal note:Court to hear report of trustee, etc.
  •  (1) The court shall, before approving the proposal, hear a report of the trustee in the prescribed form respecting the terms thereof and the conduct of the debtor, and, in addition, shall hear the trustee, the debtor, the person making the proposal, any opposing, objecting or dissenting creditor and such further evidence as the court may require.

  • Marginal note:Court may refuse to approve the proposal

    (2) Where the court is of the opinion that the terms of the proposal are not reasonable or are not calculated to benefit the general body of creditors, the court shall refuse to approve the proposal, and the court may refuse to approve the proposal whenever it is established that the debtor has committed any one of the offences mentioned in sections 198 to 200.

  • Marginal note:Reasonable security

    (3) Where any of the facts mentioned in section 173 are proved against the debtor, the court shall refuse to approve the proposal unless it provides reasonable security for the payment of not less than fifty cents on the dollar on all the unsecured claims provable against the debtor’s estate or such percentage thereof as the court may direct.

  • Marginal note:Court may order amendment

    (4) If a court approves a proposal, it may order that the debtor’s constating instrument be amended in accordance with the proposal to reflect any change that may lawfully be made under federal or provincial law.

  • R.S., 1985, c. B-3, s. 59;
  • 1997, c. 12, s. 36;
  • 2000, c. 12, s. 10;
  • 2007, c. 36, s. 21.
Marginal note:Priority of claims
  •  (1) No proposal shall be approved by the court that does not provide for the payment in priority to other claims of all claims directed to be so paid in the distribution of the property of a debtor and for the payment of all proper fees and expenses of the trustee on and incidental to the proceedings arising out of the proposal or in the bankruptcy.

  • Marginal note:Certain Crown claims

    (1.1) Unless Her Majesty consents, no proposal shall be approved by the court that does not provide for the payment in full to Her Majesty in right of Canada or a province, within six months after court approval of the proposal, of all amounts that were outstanding at the time of the filing of the notice of intention or of the proposal, if no notice of intention was filed, and are of a kind that could be subject to a demand under

    • (a) subsection 224(1.2) of the Income Tax Act;

    • (b) any provision of the Canada Pension Plan or of the Employment Insurance Act that refers to subsection 224(1.2) of the Income Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, or a premium under Part VII.1 of that Act, and of any related interest, penalties or other amounts; or

    • (c) any provision of provincial legislation that has a similar purpose to subsection 224(1.2) of the Income Tax Act, or that refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, where the sum

      • (i) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or

      • (ii) is of the same nature as a contribution under the Canada Pension Plan if the province is a “province providing a comprehensive pension plan” as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a “provincial pension plan” as defined in that subsection.

  • Marginal note:Idem

    (1.2) No proposal shall be approved by the court if, at the time the court hears the application for approval, Her Majesty in right of Canada or a province satisfies the court that the debtor is in default on any remittance of an amount referred to in subsection (1.1) that became due after the filing

    • (a) of the notice of intention; or

    • (b) of the proposal, if no notice of intention was filed.

  • Marginal note:Proposals by employers

    (1.3) No proposal in respect of an employer shall be approved by the court unless

    • (a) it provides for payment to the employees and former employees, immediately after court approval of the proposal, of amounts at least equal to the amounts that they would be qualified to receive under paragraph 136(1)(d) if the employer became bankrupt on the date of the filing of the notice of intention, or proposal if no notice of intention was filed, as well as wages, salaries, commissions or compensation for services rendered after that date and before the court approval of the proposal, together with, in the case of travelling salespersons, disbursements properly incurred by them in and about the bankrupt’s business during the same period; and

    • (b) the court is satisfied that the employer can and will make the payments as required under paragraph (a).

  • Marginal note:Voting on proposal

    (1.4) For the purpose of voting on any question relating to a proposal in respect of an employer, no person has a claim for an amount referred to in paragraph (1.3)(a).

  • Marginal note:Proposals by employers — prescribed pension plans

    (1.5) No proposal in respect of an employer who participates in a prescribed pension plan for the benefit of its employees shall be approved by the court unless

    • (a) the proposal provides for payment of the following amounts that are unpaid to the fund established for the purpose of the pension plan:

      • (i) an amount equal to the sum of all amounts that were deducted from the employees’ remuneration for payment to the fund,

      • (ii) if the prescribed pension plan is regulated by an Act of Parliament,

        • (A) an amount equal to the normal cost, within the meaning of subsection 2(1) of the Pension Benefits Standards Regulations, 1985, that was required to be paid by the employer to the fund, and

        • (B) an amount equal to the sum of all amounts that were required to be paid by the employer to the fund under a defined contribution provision, within the meaning of subsection 2(1) of the Pension Benefits Standards Act, 1985,

        • (C) an amount equal to the sum of all amounts that were required to be paid by the employer to the administrator of a pooled registered pension plan, as defined in subsection 2(1) of the Pooled Registered Pension Plans Act, and

      • (iii) in the case of any other prescribed pension plan,

        • (A) an amount equal to the amount that would be the normal cost, within the meaning of subsection 2(1) of the Pension Benefits Standards Regulations, 1985, that the employer would be required to pay to the fund if the prescribed plan were regulated by an Act of Parliament, and

        • (B) an amount equal to the sum of all amounts that would have been required to be paid by the employer to the fund under a defined contribution provision, within the meaning of subsection 2(1) of the Pension Benefits Standards Act, 1985, if the prescribed plan were regulated by an Act of Parliament,

        • (C) an amount equal to the sum of all amounts that would have been required to be paid by the employer in respect of a prescribed plan, if it were regulated by the Pooled Registered Pension Plans Act; and

    • (b) the court is satisfied that the employer can and will make the payments as required under paragraph (a).

  • Marginal note:Non-application of subsection (1.5)

    (1.6) Despite subsection (1.5), the court may approve a proposal that does not allow for the payment of the amounts referred to in that subsection if it is satisfied that the relevant parties have entered into an agreement, approved by the relevant pension regulator, respecting the payment of those amounts.

  • Marginal note:Payment — equity claims

    (1.7) No proposal that provides for the payment of an equity claim is to be approved by the court unless the proposal provides that all claims that are not equity claims are to be paid in full before the equity claim is to be paid.

  • Marginal note:Payment to trustee

    (2) All moneys payable under the proposal shall be paid to the trustee and, after payment of all proper fees and expenses mentioned in subsection (1), shall be distributed by him to the creditors.

  • Marginal note:Distribution of promissory notes, stock, etc., of debtor

    (3) Where the proposal provides for the distribution of property in the nature of promissory notes or other evidence of obligations by or on behalf of the debtor or, when the debtor is a corporation, shares in the capital stock of the corporation, the property shall be dealt with in the manner prescribed in subsection (2) as nearly as may be.

  • Marginal note:Section 147 applies

    (4) Section 147 applies to all distributions made to the creditors by the trustee pursuant to subsection (2) or (3).

  • Marginal note:Power of court

    (5) Subject to subsections (1) to (1.7), the court may either approve or refuse to approve the proposal.

  • R.S., 1985, c. B-3, s. 60;
  • 1992, c. 27, s. 24;
  • 1997, c. 12, s. 37;
  • 2000, c. 30, s. 144;
  • 2005, c. 47, s. 39;
  • 2007, c. 36, ss. 22, 99;
  • 2009, c. 33, s. 22;
  • 2012, c. 16, s. 79.