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

Act current to 2017-10-13 and last amended on 2017-09-21. Previous Versions

Marginal note:Postponement of claims — creditor not at arm’s length
  •  (1) A creditor who, at any time before the bankruptcy of a debtor, entered into a transaction with the debtor and who was not at arm’s length with the debtor at that time is not entitled to claim a dividend in respect of a claim arising out of that transaction until all claims of the other creditors have been satisfied, unless the transaction was in the opinion of the trustee or of the court a proper transaction.

  • (2) [Repealed, 2007, c. 36, s. 47]

  • R.S., 1985, c. B-3, s. 137;
  • 2000, c. 12, s. 15;
  • 2005, c. 47, s. 89;
  • 2007, c. 36, s. 47.

 [Repealed, 2007, c. 36, s. 48]

Marginal note:Postponement of claims of silent partners

 Where a lender advances money to a borrower engaged or about to engage in trade or business under a contract with the borrower that the lender shall receive a rate of interest varying with the profits or shall receive a share of the profits arising from carrying on the trade or business, and the borrower subsequently becomes bankrupt, the lender of the money is not entitled to recover anything in respect of the loan until the claims of all other creditors of the borrower have been satisfied.

  • R.S., c. B-3, s. 110.
Marginal note:Postponement of wage claims of officers and directors

 Where a corporation becomes bankrupt, no officer or director thereof is entitled to have his claim preferred as provided by section 136 in respect of wages, salary, commission or compensation for work done or services rendered to the corporation in any capacity.

  • R.S., c. B-3, s. 111.
Marginal note:Postponement of equity claims

 A creditor is not entitled to a dividend in respect of an equity claim until all claims that are not equity claims have been satisfied.

  • 2005, c. 47, s. 90;
  • 2007, c. 36, s. 49.
Marginal note:Claims generally payable rateably

 Subject to this Act, all claims proved in a bankruptcy shall be paid rateably.

  • R.S., c. B-3, s. 112.
Marginal note:Partners and separate properties
  •  (1) Where partners become bankrupt, their joint property shall be applicable in the first instance in payment of their joint debts, and the separate property of each partner shall be applicable in the first instance in payment of his separate debts.

  • Marginal note:Surplus of separate properties

    (2) Where there is a surplus of the separate properties of the partners, it shall be dealt with as part of the joint property.

  • Marginal note:Surplus of joint properties

    (3) Where there is a surplus of the joint property of the partners, it shall be dealt with as part of the respective separate properties in proportion to the right and interest of each partner in the joint property.

  • Marginal note:Different properties

    (4) Where a bankrupt owes or owed debts both individually and as a member of one or more partnerships, the claims shall rank first on the property of the individual or partnership by which the debts they represent were contracted and shall only rank on the other estate or estates after all the creditors of the other estate or estates have been paid in full.

  • Marginal note:Costs out of joint and separate properties

    (5) Where the joint property of any bankrupt partnership is insufficient to defray any costs properly incurred, the trustee may pay such costs as cannot be paid out of the joint property out of the separate property of the bankrupts or one or more of them in such proportion as he may determine, with the consent of the inspectors of the estates out of which the payment is intended to be made, or, if the inspectors withhold or refuse their consent, with the approval of the court.

  • R.S., c. B-3, s. 113.
Marginal note:Interest from date of bankruptcy

 Where there is a surplus after payment of the claims as provided in sections 136 to 142, it shall be applied in payment of interest from the date of the bankruptcy at the rate of five per cent per annum on all claims proved in the bankruptcy and according to their priority.

  • R.S., c. B-3, s. 114.
Marginal note:Right of bankrupt to surplus

 The bankrupt, or the legal personal representative or heirs of a deceased bankrupt, is entitled to any surplus remaining after payment in full of the bankrupt’s creditors with interest as provided by this Act and of the costs, charges and expenses of the bankruptcy proceedings.

  • R.S., 1985, c. B-3, s. 144;
  • 2004, c. 25, s. 71.
Marginal note:Proceeds of liability insurance policy on motor vehicles

 Nothing in this Act affects the right afforded by provincial statute of any person who has a claim against the bankrupt for damages on account of injury to or death of any person, or injury to property, occasioned by a motor vehicle, or on account of injury to property being carried in or on a motor vehicle, to have the proceeds of any liability insurance policy applied in or toward the satisfaction of the claim.

  • R.S., c. B-3, s. 116.
Marginal note:Application of provincial law to lessors’ rights

 Subject to priority of ranking as provided by section 136 and subject to subsection 73(4) and section 84.1, the rights of lessors are to be determined according to the law of the province in which the leased premises are situated.

  • R.S., 1985, c. B-3, s. 146;
  • 2004, c. 25, s. 72(E);
  • 2007, c. 36, s. 50.
Marginal note:Levy payable out of dividends for supervision
  •  (1) For the purpose of defraying the expenses of the supervision by the Superintendent, there shall be payable to the Superintendent for deposit with the Receiver General a levy on all payments, except the costs referred to in subsection 70(2), made by the trustee by way of dividend or otherwise on account of the creditor’s claims, including Her Majesty in right of Canada or of a province claiming in respect of taxes or otherwise.

  • Marginal note:Rate of levy

    (2) The levy referred to in subsection (1) shall be at a rate to be fixed by the Governor in Council and shall be charged proportionately against all payments and deducted therefrom by the trustee before payment is made.

  • R.S., 1985, c. B-3, s. 147;
  • 2005, c. 47, s. 91.

Dividends

Marginal note:Trustee to pay dividends as required
  •  (1) Subject to the retention of such sums as may be necessary for the costs of administration or otherwise, the trustee shall, from time to time as required by the inspectors, declare and distribute dividends among the unsecured creditors entitled thereto.

  • Marginal note:Disputed claims

    (2) Where the validity of any claim has not been determined, the trustee shall retain sufficient funds to provide for payment thereof in the event that the claim is admitted.

  • Marginal note:No action for dividend

    (3) No action for a dividend lies against the trustee, but, if the trustee refuses or fails to pay any dividend after having been directed to do so by the inspectors, the court may, on the application of any creditor, order him to pay it, and also to pay personally interest thereon for the time that it is withheld and the costs of the application.

  • R.S., c. B-3, s. 119.
Marginal note:Notice that final dividend will be made
  •  (1) The trustee may, after the first meeting of the creditors, send a notice, in the prescribed manner, to every person with a claim of which the trustee has notice or knowledge but whose claim has not been proved. The notice must inform the person that, if that person does not prove the claim within a period of 30 days after the sending of the notice, the trustee will proceed to declare a dividend or final dividend without regard to that person’s claim.

  • Marginal note:Court may extend time

    (2) Where a person notified under subsection (1) does not prove the claim within the time limit or within such further time as the court, on proof of merits and satisfactory explanation of the delay in making proof, may allow, the claim of that person shall, notwithstanding anything in this Act, be excluded from all share in any dividend, but a taxing authority may notify the trustee within the period referred to in subsection (1) that it proposes to file a claim as soon as the amount has been ascertained, and the time for filing the claim shall thereupon be extended to three months or such further time as the court may allow.

  • Marginal note:Certain federal claims

    (3) Despite subsection (2), a claim may be filed for an amount payable under the following Acts or provisions within the time limit referred to in subsection (2) — or within three months after the return of income or other evidence of the facts on which the claim is based is filed or comes to the attention of the Minister of National Revenue or, in the case of an amount payable under legislation referred to in paragraph (c), the minister in that province responsible for the legislation:

  • Marginal note:No dividend allowed

    (4) Unless the trustee retains sufficient funds to provide for payment of any claims that may be filed under legislation referred to in subsection (3), no dividend is to be declared until the expiry of three months after the trustee has filed all returns that the trustee is required to file.

  • R.S., 1985, c. B-3, s. 149;
  • 1992, c. 1, s. 20;
  • 1997, c. 12, s. 91;
  • 2005, c. 47, s. 92;
  • 2007, c. 36, s. 51;
  • 2009, c. 33, s. 26.
 
Date modified: