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
42. The Act is amended by adding the following after section 63:
Marginal note:Removal of directors
64. (1) The court may, on the application of any person interested in the matter, make an order removing from office any director of a debtor 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) if the court is satisfied that the director is unreasonably impairing or is likely to unreasonably impair the possibility of a viable proposal being made in respect of the debtor or is acting or is likely to act inappropriately as a director in the circumstances.
Marginal note:Filling vacancy
(2) The court may, by order, fill any vacancy created under subsection (1).
Marginal note:Security or charge relating to director’s indemnification
64.1 (1) The court may, on the application of a person 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 declaring that the assets of the person are subject to a security or charge, in an amount that the court considers appropriate, in favour of any director or officer of the person to indemnify the director or officer against obligations and liabilities that he or she may incur as a director or an officer of the person after the filing of the notice of intention or the proposal, as the case may be.
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 person.
Marginal note:Restriction — indemnification insurance
(3) The court shall not make the order if in its opinion the person could obtain adequate indemnification insurance for the director or officer at a reasonable cost.
Marginal note:Declaration in cases of gross negligence, etc.
(4) The court shall make an order declaring that the security or charge does not apply in respect of a specific obligation or liability incurred by a director or an officer if it is of the opinion that the obligation or liability was incurred as a result of the director’s or officer’s gross negligence or wilful misconduct or, in the Province of Quebec, the director’s gross or intentional fault.
Marginal note:Court may order security or charge to cover certain costs
64.2 (1) The court may make an order declaring that property of a person, 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) is subject to a security or charge, in an amount that the court considers appropriate, in respect of
(a) the costs of the interim receiver, the receiver-manager and the trustee, including their legal costs;
(b) the person’s costs incurred in relation to the remuneration and expenses of any financial, legal or other experts engaged by the person for the purpose of any proceedings under this Division; and
(c) the costs of any interested party incurred in relation to the remuneration and expenses of any financial, legal or other experts engaged by the party, if the court is satisfied that the incurring of those costs is necessary for the effective participation of the interested party in the proceedings under this Division in relation to the person.
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 person.
43. (1) The portion of subsection 65.1(1) of the Act before paragraph (a) is replaced by the following:
Marginal note:Certain rights limited
65.1 (1) If a notice of intention or a proposal has been filed in respect of an insolvent person, no person may terminate or amend any agreement, including a security agreement, with the insolvent person, or claim an accelerated payment, or a forfeiture of the term, under any agreement, including a security agreement, with the insolvent person, by reason only that
(2) Subsection 65.1(4) of the Act is amended by striking out the word “or” at the end of paragraph (a), by adding the word “or” at the end of paragraph (b) and by adding the following after paragraph (b):
(c) as preventing a lessor of aircraft objects under an agreement with the insolvent person from taking possession of the aircraft objects
(i) if, after the commencement of proceedings under this Act, the insolvent person defaults in protecting or maintaining the aircraft objects in accordance with the agreement,
(ii) 60 days after the commencement of proceedings under this Act unless, during that period, the insolvent person
(A) remedied the default of every other obligation under the agreement, other than a default constituted by the commencement of proceedings under this Act or the breach of a provision in the agreement relating to the insolvent person’s financial condition,
(B) agreed to perform the obligations under the agreement, other than an obligation not to become insolvent or an obligation relating to the insolvent person’s financial condition, until the day on which proceedings under this Act end, and
(C) agreed to perform all the obligations arising under the agreement after the proceedings under this Act end, or
(iii) if, during the period that begins on the expiry of the 60-day period and ends on the day on which proceedings under this Act end, the insolvent person defaults in performing an obligation under the agreement, other than an obligation not to become insolvent or an obligation relating to the insolvent person’s financial condition.
44. The Act is amended by adding the following after section 65.1:
Marginal note:Disclaimer or resiliation of agreements
65.11 (1) 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) may, subject to subsection (3), disclaim or resiliate any agreement to which the debtor is a party on the date the notice of intention or the proposal was filed by giving 30 days notice to the other parties to the agreement in the prescribed manner.
Marginal note:Exceptions
(2) Subsection (1) does not apply in respect of
(a) an eligible financial contract within the meaning of subsection 65.1(8);
(b) a lease referred to in subsection 65.2(1);
(c) a collective agreement;
(d) a financing agreement if the debtor is the borrower; and
(e) a lease of real property or an immovable if the debtor is the lessor.
Marginal note:Party may challenge
(3) Within 15 days after being given notice of the disclaimer or resiliation, a party to the agreement may apply to the court for a declaration that subsection (1) does not apply in respect of the agreement, and the court, on notice to any parties that it may direct, shall, subject to subsection (4), make that declaration.
Marginal note:Circumstances for not making declaration
(4) No declaration under subsection (3) shall be made if the court is satisfied that a viable proposal could not be made in respect of the debtor without the disclaimer or resiliation of the agreement and all other agreements that the debtor has disclaimed or resiliated under subsection (1) or 65.2(1).
Marginal note:Intellectual property
(5) If the debtor has, in any agreement, granted the use of any intellectual property to a party to the agreement, the disclaimer or resiliation of the agreement does not affect the party’s right to use the intellectual property so long as that party continues to perform its obligations in relation to the use of the intellectual property.
Marginal note:Deemed claim of other party
(6) If an agreement is disclaimed or resiliated, every other party to the agreement is deemed to have a claim for damages as an unsecured creditor.
Marginal note:Application for authorization to serve a notice to bargain
65.12 (1) An insolvent person in respect of whom a notice of intention is filed under section 50.4 or a proposal is filed under subsection 62(1) who is a party to a collective agreement and who is unable to reach a voluntary agreement with the bargaining agent to revise any of its provisions may, on giving five days notice to the bargaining agent, apply to the court for an order authorizing the insolvent person to serve a notice to bargain under the laws of the jurisdiction governing collective bargaining between the insolvent person and the bargaining agent.
Marginal note:Conditions for issuance of order
(2) The court may issue the order only if it is satisfied that
(a) the insolvent person would not be able to make a viable proposal, taking into account the terms of the collective agreement;
(b) the insolvent person has made good faith efforts to renegotiate the provisions of the collective agreement; and
(c) the failure to issue the order is likely to result in irreparable damage to the insolvent person.
Marginal note:No delay on vote on proposal
(3) The vote of the creditors in respect of a proposal may not be delayed solely because the period provided in the laws of the jurisdiction governing collective bargaining between the insolvent person and the bargaining agent has not expired.
Marginal note:Claims arising from revision of collective agreement
(4) If the parties to the collective agreement agree to revise the collective agreement after proceedings have been commenced under this Act in respect of the insolvent person, the bargaining agent that is a party to the agreement has a claim, as an unsecured creditor, for an amount equal to the value of concessions granted by the bargaining agent with respect to the remaining term of the collective agreement.
Marginal note:Order to disclose information
(5) On the application of the bargaining agent and on notice to the person to whom the application relates, the court may, subject to any terms and conditions it specifies, make an order requiring the person to make available to the bargaining agent any information specified by the court in the person’s possession or control that relates to the insolvent person’s business or financial affairs and that is relevant to the collective bargaining between the insolvent person and the bargaining agent. The court may make the order only after the insolvent person has been authorized to serve a notice to bargain under subsection (1).
Marginal note:Unrevised collective agreements remain in force
(6) For greater certainty, any collective agreement that the insolvent person and the bargaining agent have not agreed to revise remains in force.
Marginal note:Parties
(7) For the purpose of this section, the parties to a collective agreement are the insolvent person and the bargaining agent who are bound by the collective agreement.
Marginal note:Restriction on disposal of certain assets
65.13 (1) An insolvent person, other than an individual, in respect of whom a notice of intention is filed under section 50.4 or a proposal is filed under subsection 62(1) may not sell or otherwise dispose of assets outside the ordinary course of business unless authorized to do so by a court.
Marginal note:Notice to secured creditors
(2) An insolvent person who applies to the court for the authorization must give notice of the application to all secured creditors who are likely to be affected by the proposed sale or disposal of the assets to which the application relates.
Marginal note:Factors to be considered
(3) In deciding whether to grant the authorization, the court must consider, among other things,
(a) whether the process leading to the proposed sale or disposal of the assets was reasonable in the circumstances;
(b) whether the trustee approved the process leading to the proposed sale or disposal of the assets;
(c) whether the trustee has filed with the court a report stating that in his or her opinion the sale or disposal of the assets is necessary for a viable proposal that will provide a better result for creditors than if the assets were sold or disposed of under a bankruptcy;
(d) the extent to which the creditors were consulted in respect of the proposed sale or disposal;
(e) the effects of the proposed sale or disposal on creditors and other interested parties; and
(f) whether the consideration to be received for the assets is reasonable and fair, taking into account the market value of the assets.
Marginal note:Additional factors
(4) In addition to taking the factors referred to in subsection (3) into account, if the proposed sale or disposal is to a person who is related to the insolvent person, the court may grant the authorization only if it is satisfied that
(a) good faith efforts were made to sell or dispose of the assets to persons who are not related to the person proposing to sell or dispose of them; and
(b) the consideration to be received is superior to the consideration that would be received under all other offers actually received in respect of the assets.
Marginal note:Related persons
(5) For the purpose of subsection (4), a person who is related to the insolvent person includes a person who controls the insolvent person, a director or an officer of the insolvent person and a person who is related to a director or an officer of the insolvent person.
Marginal note:Direction that assets may be disposed of free of charges, etc.
(6) In granting an authorization for the sale or disposal of assets, the court may order that the assets may be sold or disposed of free and clear of any security, charge or other restriction, but if it so orders, it shall also order that the proceeds realized from the sale or disposal of the assets are subject to a security, charge or other restriction in favour of the creditors whose security, charges or other restrictions are affected by the order.
- Date modified: