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

Marginal note:Intellectual property — sale or disposition

• 246.1 (1) If the insolvent person or the bankrupt is a party to an agreement that grants to another party a right to use intellectual property that is included in a sale or disposition by the receiver, that sale or disposition does not affect that other party’s right to use the intellectual property — including the other party’s right to enforce an exclusive use — during the term of the agreement, including any period for which the other party extends the agreement as of right, as long as the other party continues to perform its obligations under the agreement in relation to the use of the intellectual property.

• Marginal note:Intellectual property — disclaimer or resiliation

  (2) If the insolvent person or the bankrupt is a party to an agreement that grants to another party a right to use intellectual property, the disclaimer or resiliation of that agreement by the receiver does not affect that other party’s right to use the intellectual property — including the other party’s right to enforce an exclusive use — during the term of the agreement, including any period for which the other party extends the agreement as of right, as long as the other party continues to perform its obligations under the agreement in relation to the use of the intellectual property.

Marginal note:Good faith, etc.

247 A receiver shall

• (a) act honestly and in good faith; and

• (b) deal with the property of the insolvent person or the bankrupt in a commercially reasonable manner.

Marginal note:Powers of court

• 248 (1) Where the court, on the application of the Superintendent, the insolvent person, the trustee (in the case of a bankrupt), a receiver or a creditor, is satisfied that the secured creditor, the receiver or the insolvent person is failing or has failed to carry out any duty imposed by sections 244 to 247, the court may make an order, on such terms as it considers proper,

  • (a) directing the secured creditor, receiver or insolvent person, as the case may be, to carry out that duty, or

  • (b) restraining the secured creditor or receiver, as the case may be, from realizing or otherwise dealing with the property of the insolvent person or bankrupt until that duty has been carried out,

  or both.

• Marginal note:Idem

  (2) On the application of the Superintendent, the insolvent person, the trustee (in the case of a bankrupt) or a creditor, made within six months after the statement of accounts was provided to the Superintendent pursuant to subsection 246(3), the court may order the receiver to submit the statement of accounts to the court for review, and the court may adjust, in such manner and to such extent as it considers proper, the fees and charges of the receiver as set out in the statement of accounts.

Marginal note:Receiver may apply to court for directions

249 A receiver may apply to the court for directions in relation to any provision of this Part, and the court shall give, in writing, such directions, if any, as it considers proper in the circumstances.

Marginal note:Right to apply to court

• 250 (1) An application may be made under section 248 or 249 notwithstanding any order of a court as defined in subsection 243(1).

• Marginal note:Where inconsistency

  (2) Where there is any inconsistency between an order made under section 248, or a direction given under section 249, and

  • (a) the security agreement or court order under which the receiver acts or was appointed, or

  • (b) any other order of the court that appointed the receiver,

  the order made under section 248 or the direction given under section 249, as the case may be, prevails to the extent of the inconsistency.

Marginal note:Protection of receivers

251 No action lies against a receiver for loss or damage arising from the sending or providing by the receiver of a notice pursuant to section 245 or a statement or report pursuant to section 246, if done in good faith in compliance or intended compliance with those sections.

Marginal note:Defence available

252 In any proceeding where it is alleged that a secured creditor or a receiver contravened or failed to comply with any provision of this Part, it is a defence if the secured creditor or the receiver, as the case may be, shows that, at the time of the alleged contravention or failure to comply, he had reasonable grounds to believe that the debtor was not insolvent.

PART XIISecurities Firm Bankruptcies

Interpretation

Marginal note:Definitions

253 In this Part,

customer

customer includes

• (a) a person with or for whom a securities firm deals as principal, or agent or mandatary, and who has a claim against the securities firm in respect of a security received, acquired or held by the securities firm in the ordinary course of business as a securities firm from or for a securities account of that person

  • (i) for safekeeping or deposit or in segregation,

  • (ii) with a view to sale,

  • (iii) to cover a completed sale,

  • (iv) pursuant to a purchase,

  • (v) to secure performance of an obligation of that person, or

  • (vi) for the purpose of effecting a transfer,

• (b) a person who has a claim against the securities firm arising out of a sale or wrongful conversion by the securities firm of a security referred to in paragraph (a), and

• (c) a person who has cash or other assets held in a securities account with the securities firm,

but does not include a person who has a claim against the securities firm for cash or securities that, by agreement or operation of law, is part of the capital of the securities firm or a claim that is subordinated to claims of creditors of the securities firm; (client)

customer compensation body

customer compensation body means a prescribed body and includes, unless it is prescribed to be excluded from this definition, the Canadian Investor Protection Fund; (organisme d’indemnisation des clients)

customer name securities

customer name securities means securities that on the date of bankruptcy of a securities firm are held by or on behalf of the securities firm for the account of a customer and are registered or recorded in the appropriate manner in the name of the customer or are in the process of being so registered or recorded, but does not include securities registered or recorded in the appropriate manner in the name of the customer that, by endorsement or otherwise, are negotiable by the securities firm; (valeur mobilière immatriculée)

deferred customer

deferred customer means a customer whose misconduct, either in the customer’s capacity as a customer or otherwise, caused or materially contributed to the insolvency of a securities firm; (client responsable)

eligible financial contract

eligible financial contract[Repealed, 2007, c. 29, s. 101]

hold

hold, in relation to a security, includes holding it in electronic form; (détenir)

net equity

net equity means, with respect to the securities account or accounts of a customer, maintained in one capacity, the net dollar value of the account or accounts, equal to the amount that would be owed by a securities firm to the customer as a result of the liquidation by sale or purchase at the close of business of the securities firm on the date of bankruptcy of the securities firm, of all security positions of the customer in each securities account, other than customer name securities reclaimed by the customer, including any amount in respect of a securities transaction not settled on the date of bankruptcy but settled thereafter, less any indebtedness of the customer to the securities firm on the date of bankruptcy including any amount owing in respect of a securities transaction not settled on the date of bankruptcy but settled thereafter, plus any payment of indebtedness made with the consent of the trustee after the date of bankruptcy; (capitaux nets)

open contractual commitment

open contractual commitment means an enforceable contract of a securities firm to purchase or sell a security that was not completed by payment and delivery on the date of bankruptcy; (contrat en cours)

securities firm

securities firm means a person who carries on the business of buying and selling securities from, to or for a customer, whether or not as a member of an exchange, as principal, or agent or mandatary, and includes any person required to be registered to enter into securities transactions with the public, but does not include a corporate entity that is not a corporation within the meaning of section 2; (courtier en valeurs mobilières)

security

security means any document, instrument or written or electronic record that is commonly known as a security, and includes, without limiting the generality of the foregoing,

• (a) a document, instrument or written or electronic record evidencing a share, participation right or other right or interest in property or in an enterprise, including an equity share or stock, or a mutual fund share or unit,

• (b) a document, instrument or written or electronic record evidencing indebtedness, including a note, bond, debenture, mortgage, hypothec, certificate of deposit, commercial paper or mortgage-backed instrument,

• (c) a document, instrument or written or electronic record evidencing a right or interest in respect of an option, warrant or subscription, or under a commodity future, financial future, or exchange or other forward contract, or other derivative instrument, including an eligible financial contract, and

• (d) such other document, instrument or written or electronic record as is prescribed. (valeur mobilière ou titre)

General

Marginal note:Application of other provisions

• 254 (1) All of the provisions of this Act apply, with such modifications as the circumstances require, in respect of claims by customers for securities and customer name securities as if customers were creditors in respect of such claims.

• Marginal note:Application of transaction provisions

  (2) Sections 95 to 101 apply, with such modifications as the circumstances require, in respect of transactions of a customer with or through a securities firm relating to securities.

• Marginal note:Non-application

  (3) This Part does not apply to proceedings under Part III.

• Marginal note:Termination, netting or setting off or compensation

  (4) Nothing in this Part affects the rights of a party to a contract, including an eligible financial contract, with respect to termination, netting or setting off or compensation.

• Marginal note:Secured creditors

  (5) The operation of this Part is subject to the rights of secured creditors.

Marginal note:Conflicts

255 All the provisions of this Act, in so far as they are applicable, apply in respect of bankruptcies under this Part, but if a conflict arises between the application of the provisions of this Part and the other provisions of this Act, the provisions of this Part prevail.

Marginal note:Applications re securities firm

• 256 (1) In addition to any creditor who may file an application in accordance with sections 43 to 45, an application for a bankruptcy order against a securities firm may be filed by

  • (a) a securities commission established under an enactment of a province, if

    • (i) the securities firm has committed an act of bankruptcy referred to in section 42 or subsection (2) of this section within the six months before the filing of the application and while the securities firm was licensed or registered by the securities commission to carry on business in Canada, and

    • (ii) in the case in which the act of bankruptcy was that referred to in subsection (2), the suspension referred to in that subsection is in effect when the application is filed;

  • (b) a securities exchange recognized by a provincial securities commission, if

    • (i) the securities firm has committed an act of bankruptcy referred to in section 42 or subsection (2) of this section within the six months before the filing of the application and while the securities firm was a member of the securities exchange, and

    • (ii) in the case in which the act of bankruptcy was that referred to in subsection (2), the suspension referred to in that subsection is in effect when the application is filed;

  • (c) a customer compensation body, if

    • (i) the securities firm has committed an act of bankruptcy referred to in section 42 or subsection (2) of this section within the six months before the filing of the application and while the securities firm had customers whose securities accounts were protected, in whole or in part, by the customer compensation body, and

    • (ii) in the case in which the act of bankruptcy was that referred to in subsection (2), the suspension referred to in that subsection is in effect when the application is filed; and

  • (d) a person who, in respect of property of a securities firm, is a receiver within the meaning of subsection 243(2), a receiver-manager, a liquidator or any other person with similar functions appointed under a federal or provincial enactment relating to securities that provides for the appointment of that other person, if the securities firm has committed an act of bankruptcy referred to in section 42 within the six months before the filing of the application.

• Marginal note:Interpretation

  (2) For the purposes of paragraphs (1)(a) to (c),

  • (a) the suspension by a securities commission referred to in paragraph (1)(a) of a securities firm’s registration to trade in securities, or

  • (b) the suspension by a securities exchange referred to in paragraph (1)(b) of a securities firm’s membership in that exchange

  constitutes an act of bankruptcy if the suspension is due to the failure of the firm to meet capital adequacy requirements.

• Marginal note:Service on securities commission

  (3) If

  • (a) a securities exchange files an application under paragraph (1)(b), or

  • (b) a customer compensation body files an application under paragraph (1)(c),

  a copy of the application must be served on the securities commission, if any, having jurisdiction in the locality of the securities firm where the application was filed, before

  • (c) any prescribed interval preceding the hearing of the application, or

  • (d) any shorter interval that may be fixed by the court and that precedes the hearing of the application.