An Act to establish the Wage Earner Protection Program Act, to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act and to make consequential amendments to other Acts (S.C. 2005, c. 47)
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Assented to 2005-11-25
35. (1) The portion of subsection 50.4(1) of the English version of the Act before paragraph (a) is replaced by the following:
Marginal note:Notice of intention
50.4 (1) Before filing a copy of a proposal with a licensed trustee, an insolvent person may file a notice of intention, in the prescribed form, with the official receiver in the insolvent person’s locality, stating
(2) Paragraph 50.4(2)(a) of the Act is replaced by the following:
(a) a statement indicating, on a weekly basis, the projected cash-flow of the insolvent person (in this section referred to as the “cash-flow statement”), prepared by the insolvent person, reviewed for its reasonableness by the trustee under the notice of intention, and signed by the trustee and the insolvent person;
(3) Subsection 50.4(6) of the Act is replaced by the following:
Marginal note:Trustee to notify creditors
(6) Within five days after the filing of a notice of intention under subsection (1), the trustee named in the notice shall send to every known creditor, in the prescribed manner, a copy of the notice including all of the information referred to in paragraphs (1) (a) to (c).
(4) Subsection 50.4(7) of the Act is amended by striking out the word “and” at the end of paragraph (a), by adding the word “and” at the end of paragraph (b) and by adding the following after paragraph (b):
(c) shall send a report about the material adverse change to the creditors without delay after ascertaining the change.
(5) Paragraph 50.4(8)(b) of the Act is replaced by the following:
(b) the trustee shall, without delay, file with the official receiver, in the prescribed form, a report of the deemed assignment;
(b.1) the official receiver shall issue a certificate of assignment, in the prescribed form, which has the same effect for the purposes of this Act as an assignment filed under section 49; and
(6) The portion of subsection 50.4(9) of the Act before paragraph (a) is replaced by the following:
Marginal note:Extension of time for filing proposal
(9) The insolvent person may, before the expiry of the 30-day period referred to in subsection (8) or of any extension granted under this subsection, apply to the court for an extension, or further extension, as the case may be, of that period, and the court, on notice to any interested persons that the court may direct, may grant the extensions, not exceeding 45 days for any individual extension and not exceeding in the aggregate five months after the expiry of the 30-day period referred to in subsection (8), if satisfied on each application that
36. The Act is amended by adding the following after section 50.5:
Marginal note:Interim financing
50.6 (1) A court may, on the application of a debtor, other than an individual, in respect of whom a notice of intention has been filed under section 50.4 or a proposal has been filed under subsection 62(1), make an order, on any conditions that the court considers appropriate, declaring that the debtor’s property is subject to a security or charge in favour of any person specified in the order who agrees to lend to the debtor an amount that is approved by the court as being required by the debtor, having regard to the debtor’s cash-flow statement referred to in paragraph 50(6)(a) or 50.4(2)(a), as the case may be,
(a) for the period of 30 days after the filing of the notice of intention;
(b) for the period of 30 days after the filing of the proposal, if no notice of intention has been filed under section 50.4 in respect of the debtor; or
(c) for any period specified in the order, if notice of the application has been given to the secured creditors likely to be affected by the security or charge.
Marginal note:Rank
(2) The court may specify in the order that the security or charge ranks in priority over the claim of any secured creditor of the debtor.
Marginal note:Other orders
(3) The court may, in the order, specify that the security or charge ranks in priority over any security or charge arising from a previous order made under subsection (1) only with the consent of the person in whose favour the previous order was made.
Marginal note:Factors to be considered
(4) In deciding whether to make the order, the court must consider, among other things,
(a) the period the debtor is expected to be subject to proceedings under this Act;
(b) how the debtor’s business and financial affairs are to be governed during the proceedings;
(c) whether the debtor’s management has the confidence of its major creditors;
(d) whether the loan agreement will enhance the debtor’s prospects as a going concern if the proposal is approved;
(e) the nature and value of the debtor’s property;
(f) whether any creditor will be materially prejudiced as a result of the debtor’s continued operations; and
(g) if notice of the application was given to the secured creditors, whether the debtor has provided a cash-flow statement for the period ending 120 days after the making of the application for the order.
37. (1) Subparagraph 54(2)(a)(i) of the Act is replaced by the following:
(i) all unsecured creditors, other than a creditor having a claim against the debtor arising from the rescission of a purchase or sale of a share or unit of the debtor — or a claim for damages arising from the purchase or sale of a share or unit of the debtor, and
(2) Section 54 of the Act is amended by adding the following after subsection (4):
Marginal note:Limitation regarding vote on a proposal
(5) Unless the court orders otherwise, a vote on a proposal may not be held until all disallowances of claims that could have an impact on the outcome of the vote have been dealt with by the court or until all appeal periods have elapsed.
Marginal note:Claims acquired after filing of notice of intention or proposal
(6) No person is entitled to vote on a claim acquired after the filing of a notice of intention in respect of a debtor or, if no such notice was filed, after the filing of a proposal in respect of the debtor, unless the entire claim is acquired.
38. Paragraph 57(b) of the Act is replaced by the following:
(b) the trustee shall, without delay, file with the official receiver, in the prescribed form, a report of the deemed assignment;
(b.1) the official receiver shall issue a certificate of assignment, in the prescribed form, which has the same effect for the purposes of this Act as an assignment filed under section 49; and
39. (1) Paragraph 60(1.3)(a) of the Act is replaced by the following:
(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
(2) Section 60 of the Act is amended by adding the following after subsection (1.4):
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; 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; 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.
40. Paragraph 61(2)(b) of the Act is replaced by the following:
(b) the trustee shall, without delay, file with the official receiver, in the prescribed form, a report of the deemed assignment;
(b.1) the official receiver shall issue a certificate of assignment, in the prescribed form, which has the same effect for the purposes of this Act as an assignment filed under section 49; and
41. (1) Subsection 62(1) of the Act is replaced by the following:
Marginal note:Filing of proposal
62. (1) If a proposal is made in respect of an insolvent person, the trustee shall file with the official receiver a copy of the proposal and the prescribed statement of affairs.
(2) Subsection 62(2) of the Act is replaced by the following:
Marginal note:On whom approval binding
(2) Subject to subsection (2.1), a proposal accepted by the creditors and approved by the court is binding on creditors in respect of
(a) all unsecured claims; and
(b) the secured claims in respect of which the proposal was made and that were in classes in which the secured creditors voted for the acceptance of the proposal by a majority in number and two thirds in value of the secured creditors present, or represented by a proxyholder, at the meeting and voting on the resolution to accept the proposal.
Marginal note:When insolvent person is released from debt
(2.1) A proposal accepted by the creditors and approved by the court does not release the insolvent person from any particular debt or liability referred to in subsection 178(1) unless the proposal explicitly provides for the compromise of that debt or liability and the creditor in relation to that debt or liability has assented to the proposal.
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