Canada Transportation Act

Version of section 106 from 2003-01-01 to 2007-06-21:

Marginal note:Scheme may be filed in Federal Court
  •  (1) If a railway company is insolvent, the directors may prepare a scheme of arrangement between the company and its creditors and may file it in the Federal Court.

  • Marginal note:May affect shareholders and capital

    (2) The scheme may include provisions for settling and defining any rights of shareholders of the railway company as among themselves and for raising additional share and loan capital, if necessary.

  • Marginal note:Documents to be filed

    (3) There must be filed with the scheme

    • (a) a declaration in writing to the effect that the railway company is unable to meet its engagements with its creditors; and

    • (b) an affidavit made by the president and directors of the company, or by a majority of them, that the declaration is true to the best of their knowledge.

  • Marginal note:Federal Court may restrain action

    (4) After the scheme is filed, the Federal Court may, on the application of the railway company, restrain any action against the company on any terms that the Federal Court considers appropriate.

  • Marginal note:Limitation

    (5) No order of the Federal Court or any other court restraining action against the railway company affects the right of any person to take possession of the rolling stock of the company as a creditor under a security agreement, bailment, mortgage or hypothec or as a lessor or conditional vendor, whether as trustee or otherwise, unless

    • (a) within 60 days after filing the scheme of arrangement, or any extended period to which the person may agree, the railway company agrees to perform all its obligations under the security agreement, bailment, mortgage, hypothec, lease or conditional sale agreement; and

    • (b) any event that occurred before or after the scheme was filed and that constitutes a default under the security agreement, bailment, mortgage, hypothec, lease or conditional sale agreement is cured before the later of

      • (i) 30 days after the event, and

      • (ii) the end of the period mentioned in paragraph (a).

  • Marginal note:Extension of 60 day period

    (6) An extension of the 60 day period under paragraph (5)(a) does not prejudice the right to take possession of the rolling stock.

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