• Marginal note:Presumptions

  (5) Persons who are related to each other are deemed not to deal with each other at arm’s length while so related. For the purpose of paragraph 95(1)(b) or 96(1)(b), the persons are, in the absence of evidence to the contrary, deemed not to deal with each other at arm’s length.

• Marginal note:Agreement to provide compilation

  (3) The Superintendent may enter into an agreement to provide a compilation of all or part of the information that is contained in the public record.

• Marginal note:Avis au surintendant

  (1.1) S’il demande l’autorisation visée au paragraphe (1), le syndic envoie sans délai une copie de sa demande au surintendant.

Marginal note:Trustee may act for secured creditor

• 13.4 (1) No trustee may, while acting as the trustee of an estate, act for or assist a secured creditor to assert a claim against the estate or to realize or otherwise deal with a security that the secured creditor holds, unless the trustee has obtained a written opinion from independent legal counsel that the security is valid and enforceable against the estate.

Marginal note:Decision affecting licence

• 14.01 (1) If, after making or causing to be made an inquiry or investigation into the conduct of a trustee, it appears to the Superintendent that

• Marginal note:Summons

  (1.1) The Superintendent may, for the purpose of the hearing, issue a summons requiring and commanding any person named in it

  • (a) to appear at the time and place mentioned in it;

  • (b) to testify to all matters within their knowledge relative to the subject matter of the inquiry or investigation into the conduct of the trustee; and

  • (c) to bring and produce any books, records, data, documents or papers — including those in electronic form — in their possession or under their control relative to the subject matter of the inquiry or investigation.

• Marginal note:Effect throughout Canada

  (1.2) A person may be summoned from any part of Canada by virtue of a summons issued under subsection (1.1).

• b) la tenue des investigations ou des enquêtes prévues à l’alinéa 5(3)e);

• Marginal note:Related persons

  (5) For the purpose of subsection (4), in the case of a bankrupt other than an individual, a person who is related to the bankrupt includes

  • (a) a director or officer of the bankrupt;

  • (b) a person who has or has had, directly or indirectly, control in fact of the bankrupt; and

  • (c) a person who is related to a person described in paragraph (a) or (b).

• Marginal note:Factors to be considered

  (6) In deciding whether to grant the authorization, the court is to consider, among other things,

  • (a) whether the process leading to the proposed sale or disposition of the property was reasonable in the circumstances;

  • (b) the extent to which the creditors were consulted;

  • (c) the effects of the proposed sale or disposition on creditors and other interested parties;

  • (d) whether the consideration to be received for the property is reasonable and fair, taking into account the market value of the property;

  • (e) whether good faith efforts were made to sell or otherwise dispose of the property to persons who are not related to the bankrupt; and

  • (f) whether the consideration to be received is superior to the consideration that would be received under any other offer made in accordance with the process leading to the proposed sale or disposition of the property.

Marginal note:Devoirs de l’ancien syndic en cas de substitution

• 36. (1) À la nomination d’un syndic substitué, le syndic qui l’a précédé soumet immédiatement ses comptes au tribunal et remet au syndic substitué tous les biens de l’actif, avec tous les livres, registres et documents du failli et ceux qui sont relatifs à l’administration de l’actif. Il lui remet également un état complet des recettes provenant des biens du failli ou d’autres sources, intérêts y compris, et de ses débours et dépenses, ainsi que de la rémunération qu’il réclame. L’état est accompagné d’un document contenant la description détaillée de tous les biens du failli qui n’ont pas été vendus ou réalisés, où sont indiqués, en plus de leur valeur, le motif pour lequel ils ne l’ont pas été, ainsi que la façon dont il en a été disposé.

• Marginal note:Investigation not precluded

  (8.1) Nothing in subsection (8) is to be construed as preventing an inquiry, investigation or proceeding in respect of a trustee under subsection 14.01(1).

• Marginal note:Place of filing

  (3) An application under subsection (1) is to be filed in a court having jurisdiction in the judicial district of the locality of the debtor.

Marginal note:Order — interim financing

• 50.6 (1) On application by a debtor in respect of whom a notice of intention was filed under section 50.4 or a proposal was filed under subsection 62(1) and on notice to the secured creditors who are likely to be affected by the security or charge, a court may make an order declaring that all or part of the debtor’s property is subject to a security or charge — in an amount that the court considers appropriate — in favour of a person specified in the order who agrees to lend to the debtor an amount 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. The security or charge may not secure an obligation that exists before the order is made.

• Marginal note:Individuals

  (2) In the case of an individual,

  • (a) they may not make an application under subsection (1) unless they are carrying on a business; and

  • (b) only property acquired for or used in relation to the business may be subject to a security or charge.

• Marginal note:Priority

  (3) The court may order that the security or charge rank in priority over the claim of any secured creditor of the debtor.

• Marginal note:Priority — previous orders

  (4) The court may order that the security or charge rank 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

  (5) In deciding whether to make an order, the court is to consider, among other things,

  • (a) the period during which the debtor is expected to be subject to proceedings under this Act;

  • (b) how the debtor’s business and financial affairs are to be managed during the proceedings;

  • (c) whether the debtor’s management has the confidence of its major creditors;

  • (d) whether the loan would enhance the prospects of a viable proposal being made in respect of the debtor;

  • (e) the nature and value of the debtor’s property;

  • (f) whether any creditor would be materially prejudiced as a result of the security or charge; and

  • (g) the trustee’s report referred to in paragraph 50(6)(b) or 50.4(2)(b), as the case may be.

• (d) the proposal is deemed to be accepted by the creditors if, and only if, all classes of unsecured creditors — other than, unless the court orders otherwise, a class of creditors having equity claims — vote for the acceptance of the proposal by a majority in number and two thirds in value of the unsecured creditors of each class present, personally or by proxy, at the meeting and voting on the resolution.

Marginal note:Class — creditors having equity claims

54.1 Despite paragraphs 54(2)(a) and (b), creditors having equity claims are to be in the same class of creditors in relation to those claims unless the court orders otherwise and may not, as members of that class, vote at any meeting unless the court orders otherwise.

• Marginal note:Court may order amendment

  (4) If a court approves a proposal, it may order that the debtor’s constating instrument be amended in accordance with the proposal to reflect any change that may lawfully be made under federal or provincial law.

• Marginal note:Power of court

  (5) Subject to subsections (1) to (1.7), the court may either approve or refuse to approve 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 voted for the acceptance of the proposal.

Marginal note:Security or charge relating to director’s indemnification

• 64.1 (1) On application by a person in respect of whom a notice of intention is filed under section 50.4 or a proposal is filed under subsection 62(1) and on notice to the secured creditors who are likely to be affected by the security or charge, a court may make an order declaring that all or part of the property of the person is 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 they may incur as a director or officer after the filing of the notice of intention or the proposal, as the case may be.

• Marginal note:Priority

  (2) The court may order that the security or charge rank in priority over the claim of any secured creditor of the person.

• Marginal note:Restriction — indemnification insurance

  (3) The court may 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:Negligence, misconduct or fault

  (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 officer if in its opinion the obligation or liability was incurred as a result of the director’s or officer’s gross negligence or wilful misconduct or, in Quebec, the director’s or officer’s gross or intentional fault.

Marginal note:Court may order security or charge to cover certain costs

• 64.2 (1) On notice to the secured creditors who are likely to be affected by the security or charge, the court may make an order declaring that all or part of the property of a person in respect of whom a notice of intention is filed under section 50.4 or a proposal is filed under subsection 62(1) is subject to a security or charge, in an amount that the court considers appropriate, in respect of the fees and expenses of

  • (a) the trustee, including the fees and expenses of any financial, legal or other experts engaged by the trustee in the performance of the trustee’s duties;

  • (b) any financial, legal or other experts engaged by the person for the purpose of proceedings under this Division; and

  • (c) any financial, legal or other experts engaged by any other interested person if the court is satisfied that the security or charge is necessary for the effective participation of that person in proceedings under this Division.

• Marginal note:Priority

  (2) The court may order that the security or charge rank in priority over the claim of any secured creditor of the person.

• Marginal note:Individual

  (3) In the case of an individual,

  • (a) the court may not make the order unless the individual is carrying on a business; and

  • (b) only property acquired for or used in relation to the business may be subject to a security or charge.

“eligible financial contract”

« contrat financier admissible »

“eligible financial contract” means an agreement of a prescribed kind;

Marginal note:Disclaimer or resiliation of agreements

• 65.11 (1) Subject to subsections (3) and (4), a debtor in respect of whom a notice of intention was filed under section 50.4 or a proposal was filed under subsection 62(1) may — on notice given in the prescribed form and manner to the other parties to the agreement and the trustee — disclaim or resiliate any agreement to which the debtor is a party on the day on which the notice of intention or proposal was filed. The debtor may not give notice unless the trustee approves the proposed disclaimer or resiliation.

• Marginal note:Individuals

  (2) In the case of an individual,

  • (a) they may not disclaim or resiliate an agreement under subsection (1) unless they are carrying on a business; and

  • (b) only an agreement in relation to the business may be disclaimed or resiliated.

• Marginal note:Court may prohibit disclaimer or resiliation

  (3) Within 15 days after the day on which the debtor gives notice under subsection (1), a party to the agreement may, on notice to the other parties to the agreement and the trustee, apply to a court for an order that the agreement is not to be disclaimed or resiliated.

• Marginal note:Court ordered disclaimer or resiliation

  (4) If the trustee does not approve the proposed disclaimer or resiliation, the debtor may, on notice to the other parties to the agreement and the trustee, apply to a court for an order that the agreement be disclaimed or resiliated.

• Marginal note:Factors to be considered

  (5) In deciding whether to make the order, the court is to consider, among other things,

  • (a) whether the trustee approved the proposed disclaimer or resiliation;

  • (b) whether the disclaimer or resiliation would enhance the prospects of a viable proposal being made in respect of the debtor; and

  • (c) whether the disclaimer or resiliation would likely cause significant financial hardship to a party to the agreement.

• Marginal note:Date of disclaimer or resiliation

  (6) An agreement is disclaimed or resiliated

  • (a) if no application is made under subsection (3), on the day that is 30 days after the day on which the debtor gives notice under subsection (1);

  • (b) if the court dismisses the application made under subsection (3), on the day that is 30 days after the day on which the debtor gives notice under subsection (1) or any later day fixed by the court; or

  • (c) if the court orders that the agreement is disclaimed or resiliated under subsection (4), on the day that is 30 days after the day on which the debtor gives notice or any later day fixed by the court.

• Marginal note:Intellectual property

  (7) If the debtor has granted a right to use intellectual property to a party to an agreement, the disclaimer or resiliation does not affect the party’s right to use the intellectual property — including the party’s right to enforce an exclusive use — during the term of the agreement, including any period for which the party extends the agreement as of right, as long as the party continues to perform its obligations under the agreement in relation to the use of the intellectual property.

• Marginal note:Loss related to disclaimer or resiliation

  (8) If an agreement is disclaimed or resiliated, a party to the agreement who suffers a loss in relation to the disclaimer or resiliation is considered to have a provable claim.

• Marginal note:Reasons for disclaimer or resiliation

  (9) A debtor shall, on request by a party to the agreement, provide in writing the reasons for the proposed disclaimer or resiliation within five days after the day on which the party requests them.

• Marginal note:Exceptions

  (10) This section 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; or

  • (e) a lease of real property or of an immovable if the debtor is the lessor.

Marginal note:Restriction on disposition of assets

• 65.13 (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) may not sell or otherwise dispose of assets outside the ordinary course of business unless authorized to do so by a court. Despite any requirement for shareholder approval, including one under federal or provincial law, the court may authorize the sale or disposition even if shareholder approval was not obtained.

• Marginal note:Individuals

  (2) In the case of an individual who is carrying on a business, the court may authorize the sale or disposition only if the assets were acquired for or used in relation to the business.

• Marginal note:Notice to secured creditors

  (3) An insolvent person who applies to the court for an authorization shall give notice of the application to the secured creditors who are likely to be affected by the proposed sale or disposition.

• Marginal note:Factors to be considered

  (4) In deciding whether to grant the authorization, the court is to consider, among other things,

  • (a) whether the process leading to the proposed sale or disposition was reasonable in the circumstances;

  • (b) whether the trustee approved the process leading to the proposed sale or disposition;

  • (c) whether the trustee filed with the court a report stating that in their opinion the sale or disposition would be more beneficial to the creditors than a sale or disposition under a bankruptcy;

  • (d) the extent to which the creditors were consulted;

  • (e) the effects of the proposed sale or disposition on the creditors and other interested parties; and

  • (f) whether the consideration to be received for the assets is reasonable and fair, taking into account their market value.

• Marginal note:Additional factors — related persons

  (5) If the proposed sale or disposition is to a person who is related to the insolvent person, the court may, after considering the factors referred to in subsection (4), grant the authorization only if it is satisfied that

  • (a) good faith efforts were made to sell or otherwise dispose of the assets to persons who are not related to the insolvent person; and

  • (b) the consideration to be received is superior to the consideration that would be received under any other offer made in accordance with the process leading to the proposed sale or disposition.

• Marginal note:Related persons

  (6) For the purpose of subsection (5), a person who is related to the insolvent person includes

  • (a) a director or officer of the insolvent person;

  • (b) a person who has or has had, directly or indirectly, control in fact of the insolvent person; and

  • (c) a person who is related to a person described in paragraph (a) or (b).

• Marginal note:Assets may be disposed of free and clear

  (7) The court may authorize a sale or disposition free and clear of any security, charge or other restriction and, if it does, it shall also order that other assets of the insolvent person or the proceeds of the sale or disposition be subject to a security, charge or other restriction in favour of the creditor whose security, charge or other restriction is to be affected by the order.

• Marginal note:Restriction — employers

  (8) The court may grant the authorization only if the court is satisfied that the insolvent person can and will make the payments that would have been required under paragraphs 60(1.3)(a) and (1.5)(a) if the court had approved the proposal.

• Marginal note:When consumer debtor is released from debt

  (2.1) A consumer proposal accepted, or deemed accepted, by the creditors and approved, or deemed approved, by the court does not release the consumer debtor from any particular debt or liability referred to in subsection 178(1) unless the consumer proposal explicitly provides for the compromise of that debt or liability and the creditor in relation to that debt or liability voted for the acceptance of the consumer proposal.

• Marginal note:Deemed annulment — amendment withdrawn or refused

  (2) If an amendment to a consumer proposal filed before the deemed annulment of the consumer proposal under subsection (1) is withdrawn or refused by the creditors or the court, the consumer proposal is deemed to be annulled at the time that the amendment is withdrawn or refused.

• Marginal note:Duties of administrator in relation to deemed annulment

  (3) Without delay after a consumer proposal is deemed to be annulled, the administrator shall

  • (a) file with the official receiver a report in the prescribed form in relation to the deemed annulment; and

  • (b) send a notice to the creditors informing them of the deemed annulment.

• Marginal note:Effects of deemed annulment — consumer proposal made by a bankrupt

  (4) If a consumer proposal made by a bankrupt is deemed to be annulled,

  • (a) the consumer debtor is deemed to have made an assignment on the day on which the consumer proposal is deemed to be annulled;

  • (b) the trustee who is the administrator of the consumer proposal shall, within five days after the day on which the consumer proposal is deemed to be annulled, send notice of the meeting of creditors under section 102, at which meeting the creditors may by ordinary resolution, despite section 14, affirm the appointment of the trustee or appoint another trustee in lieu of that trustee; and

  • (c) the trustee shall, without delay, file with the official receiver, in the prescribed form, a report of the deemed annulment and the official receiver shall, without delay, 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.

• Marginal note:Validity of things done before deemed annulment

  (5) A deemed annulment of a consumer proposal does not prejudice the validity of any sale or disposition of property or payment duly made, or anything duly done under or in pursuance of the consumer proposal and, despite the deemed annulment, a guarantee given under the consumer proposal remains in full force and effect in accordance with its terms.

• Marginal note:Notice of possibility of consumer proposal being automatically revived

  (6) In the case of a deemed annulment of a consumer proposal made by a person other than a bankrupt, if the administrator considers it appropriate to do so in the circumstances, he or she may, with notice to the official receiver, send to the creditors — within 30 days, or any other number of days that is prescribed, after the day on which the consumer proposal was deemed to be annulled — a notice in the prescribed form informing them that the consumer proposal will be automatically revived 60 days, or any other number of days that is prescribed, after the day on which it was deemed to be annulled unless one of them files with the administrator, in the prescribed manner, a notice of objection to the revival.

• Marginal note:Automatic revival

  (7) If the notice is sent by the administrator and no notice of objection is filed during the period referred to in subsection (6), the consumer proposal is automatically revived on the expiry of that period.

• Marginal note:Notice if no automatic revival

  (8) If a notice of objection is filed during the period referred to in subsection (6), the administrator is to send, without delay, to the official receiver and to each creditor a notice in the prescribed form informing them that the consumer proposal is not going to be automatically revived on the expiry of that period.

• Marginal note:Administrator may apply to court to revive consumer proposal

  (9) The administrator may at any time apply to the court, with notice to the official receiver and the creditors, for an order reviving any consumer proposal of a consumer debtor who is not a bankrupt that was deemed to be annulled, and the court, if it considers it appropriate to do so in the circumstances, may make an order reviving the consumer proposal, on any terms that the court considers appropriate.

• Marginal note:Duty of administrator if consumer proposal is revived

  (10) Without delay after a consumer proposal is revived, the administrator shall

  • (a) file with the official receiver a report in the prescribed form in relation to the revival; and

  • (b) send a notice to the creditors informing them of the revival.

• Marginal note:Eligible financial contracts

  (7) Subsection (1) does not apply in respect of an eligible financial contract.

• Marginal note:Existing eligible financial contracts

  (8) For greater certainty, if an eligible financial contract, entered into before a consumer proposal is filed, is terminated on or after the filing of the proposal, the setting off or compensation of obligations — between the consumer debtor and the other parties to the eligible financial contract, in accordance with its provisions — is permitted and, if net termination values determined in accordance with the eligible financial contract are owed by the consumer debtor to another party to the eligible financial contract, the other party is deemed, for the purposes of subsection 69.2(1), to be a creditor of the consumer debtor with a claim provable in bankruptcy in respect of the net termination values.

• Marginal note:Definitions

  (9) In this section, “eligible financial contract” and “net termination value” have the same meanings as in subsection 65.1(8).

Marginal note:Stay of proceedings — notice of intention

• 69. (1) Subject to subsections (2) and (3) and sections 69.4, 69.5 and 69.6, on the filing of a notice of intention under section 50.4 by an insolvent person,

Marginal note:Stay of proceedings — Division I proposals

• 69.1 (1) Subject to subsections (2) to (6) and sections 69.4, 69.5 and 69.6, on the filing of a proposal under subsection 62(1) in respect of an insolvent person,

Marginal note:Suspension des procédures en cas de faillite

• 69.3 (1) Sous réserve des paragraphes (1.1) et (2) et des articles 69.4 et 69.5, à compter de la faillite du débiteur, ses créanciers n’ont aucun recours contre lui ou contre ses biens et ils ne peuvent intenter ou continuer aucune action, mesure d’exécution ou autre procédure en vue du recouvrement de réclamations prouvables en matière de faillite.

Meaning of “regulatory body”

• 69.6 (1) In this section, “regulatory body” means a person or body that has powers, duties or functions relating to the enforcement or administration of an Act of Parliament or of the legislature of a province and includes a person or body that is prescribed to be a regulatory body for the purpose of this Act.

• Marginal note:Regulatory bodies — sections 69 and 69.1

  (2) Subject to subsection (3), no stay provided by section 69 or 69.1 affects a regulatory body’s investigation in respect of an insolvent person or an action, suit or proceeding that is taken in respect of the insolvent person by or before the regulatory body, other than the enforcement of a payment ordered by the regulatory body or the court.

• Marginal note:Exception

  (3) On application by the insolvent person and on notice to the regulatory body and to the persons who are likely to be affected by the order, the court may order that subsection (2) not apply in respect of one or more of the actions, suits or proceedings taken by or before the regulatory body if in the court’s opinion

  • (a) a viable proposal could not be made in respect of the insolvent person if that subsection were to apply; and

  • (b) it is not contrary to the public interest that the regulatory body be affected by the stay provided by section 69 or 69.1.

• Marginal note:Declaration — enforcement of a payment

  (4) If there is a dispute as to whether a regulatory body is seeking to enforce its rights as a creditor, the court may, on application by the insolvent person and on notice to the regulatory body, make an order declaring both that the regulatory body is seeking to enforce its rights as a creditor and that the enforcement of those rights is stayed.

Marginal note:Security for unpaid wages, etc. — bankruptcy

• 81.3 (1) The claim of a clerk, servant, travelling salesperson, labourer or worker who is owed wages, salaries, commissions or compensation by a bankrupt for services rendered during the period beginning on the day that is six months before the date of the initial bankruptcy event and ending on the date of the bankruptcy is secured, as of the date of the bankruptcy, to the extent of $2,000 — less any amount paid for those services by the trustee or by a receiver — by security on the bankrupt’s current assets on the date of the bankruptcy.

• Marginal note:Commissions

  (2) For the purposes of subsection (1), commissions payable when goods are shipped, delivered or paid for, if shipped, delivered or paid for during the period referred to in that subsection, are deemed to have been earned in that period.

• Marginal note:Security for disbursements

  (3) The claim of a travelling salesperson who is owed money by a bankrupt for disbursements properly incurred in and about the bankrupt’s business during the period referred to in subsection (1) is secured, as of the date of the bankruptcy, to the extent of $1,000 — less any amount paid for those disbursements by the trustee or by a receiver — by security on the bankrupt’s current assets on that date.

• Marginal note:Rank of security

  (4) A security under this section ranks above every other claim, right, charge or security against the bankrupt’s current assets — regardless of when that other claim, right, charge or security arose — except rights under sections 81.1 and 81.2 and amounts referred to in subsection 67(3) that have been deemed to be held in trust.

• Marginal note:Liability of trustee

  (5) If the trustee disposes of current assets covered by the security, the trustee is liable for the claim of the clerk, servant, travelling salesperson, labourer or worker to the extent of the amount realized on the disposition of the current assets and is subrogated in and to all rights of the clerk, servant, travelling salesperson, labourer or worker in respect of the amounts paid to that person by the trustee.

• Marginal note:Claims of officers and directors

  (6) No officer or director of the bankrupt is entitled to have a claim secured under this section.

• Marginal note:Non-arm’s length

  (7) A person who, in respect of a transaction, was not dealing at arm’s length with the bankrupt is not entitled to have a claim arising from that transaction secured by this section unless, in the opinion of the trustee, having regard to the circumstances — including the remuneration for, the terms and conditions of and the duration, nature and importance of the services rendered — it is reasonable to conclude that they would have entered into a substantially similar transaction if they had been dealing with each other at arm’s length.

• Marginal note:Proof by delivery

  (8) A claim referred to in this section is proved by delivering to the trustee a proof of claim in the prescribed form.

• Marginal note:Definitions

  (9) The following definitions apply in this section.

  “compensation”

  « rémunération »

  “compensation” includes vacation pay but does not include termination or severance pay.

  “receiver”

  « séquestre »

  “receiver” means a receiver within the meaning of subsection 243(2) or an interim receiver appointed under subsection 46(1), 47(1) or 47.1(1).

Marginal note:Security for unpaid wages, etc. — receivership

• 81.4 (1) The claim of a clerk, servant, travelling salesperson, labourer or worker who is owed wages, salaries, commissions or compensation by a person who is subject to a receivership for services rendered during the six months before the first day on which there was a receiver in relation to the person is secured, as of that day, to the extent of $2,000 — less any amount paid for those services by a receiver or trustee — by security on the person’s current assets that are in the possession or under the control of the receiver.

• Marginal note:Commissions

  (2) For the purposes of subsection (1), commissions payable when goods are shipped, delivered or paid for, if shipped, delivered or paid for during the six-month period referred to in that subsection, are deemed to have been earned in those six months.

• Marginal note:Security for disbursements

  (3) The claim of a travelling salesperson who is owed money by a person who is subject to a receivership for disbursements properly incurred in and about the person’s business during the six months before the first day on which there was a receiver in relation to the person is secured, as of that day, to the extent of $1,000 — less any amount paid for those disbursements by a receiver or trustee — by security on the person’s current assets that are in the possession or under the control of the receiver.

• Marginal note:Rank of security

  (4) A security under this section ranks above every other claim, right, charge or security against the person’s current assets — regardless of when that other claim, right, charge or security arose — except rights under sections 81.1 and 81.2.

• Marginal note:Liability of receiver

  (5) If the receiver takes possession or in any way disposes of current assets covered by the security, the receiver is liable for the claim of the clerk, servant, travelling salesperson, labourer or worker to the extent of the amount realized on the disposition of the current assets and is subrogated in and to all rights of the clerk, servant, travelling salesperson, labourer or worker in respect of the amounts paid to that person by the receiver.

• Marginal note:Claims of officers and directors

  (6) No officer or director of the person who is subject to a receivership is entitled to have a claim secured under this section.

• Marginal note:Non-arm’s length

  (7) A person who, in respect of a transaction, was not dealing at arm’s length with a person who is subject to a receivership is not entitled to have a claim arising from that transaction secured by this section unless, in the opinion of the receiver, having regard to the circumstances — including the remuneration for, the terms and conditions of and the duration, nature and importance of the services rendered — it is reasonable to conclude that they would have entered into a substantially similar transaction if they had been dealing with each other at arm’s length.

• Marginal note:Proof by delivery

  (8) A claim referred to in this section is proved by delivering to the receiver a proof of claim in the prescribed form.

• Marginal note:Definitions

  (9) The following definitions apply in this section.

  “compensation”

  « rémunération »

  “compensation” includes vacation pay but does not include termination or severance pay.

  “person who is subject to a receivership”

  « personne faisant l’objet d’une mise sous séquestre »

  “person who is subject to a receivership” means a person any of whose property is in the possession or under the control of a receiver.

  “receiver”

  « séquestre »

  “receiver” means a receiver within the meaning of subsection 243(2) or an interim receiver appointed under subsection 46(1), 47(1) or 47.1(1).

Marginal note:Assignment of agreements

• 84.1 (1) On application by a trustee and on notice to every party to an agreement, a court may make an order assigning the rights and obligations of a bankrupt under the agreement to any person who is specified by the court and agrees to the assignment.

• Marginal note:Individuals

  (2) In the case of an individual,

  • (a) they may not make an application under subsection (1) unless they are carrying on a business; and

  • (b) only rights and obligations in relation to the business may be assigned.

• Marginal note:Exceptions

  (3) Subsection (1) does not apply in respect of rights and obligations that are not assignable by reason of their nature or that arise under

  • (a) an agreement entered into on or after the date of the bankruptcy;

  • (b) an eligible financial contract within the meaning of subsection 65.1(8); or

  • (c) a collective agreement.

• Marginal note:Factors to be considered

  (4) In deciding whether to make the order, the court is to consider, among other things,

  • (a) whether the person to whom the rights and obligations are to be assigned is able to perform the obligations; and

  • (b) whether it is appropriate to assign the rights and obligations to that person.

• Marginal note:Restriction

  (5) The court may not make the order unless it is satisfied that all monetary defaults in relation to the agreement — other than those arising by reason only of the person’s bankruptcy, insolvency or failure to perform a non-monetary obligation — will be remedied on or before the day fixed by the court.

• Marginal note:Copy of order

  (6) The applicant is to send a copy of the order to every party to the agreement.

Marginal note:Certain rights limited

• 84.2 (1) No person may terminate or amend — or claim an accelerated payment or forfeiture of the term under — any agreement, including a security agreement, with a bankrupt individual by reason only of the individual’s bankruptcy or insolvency.

• Marginal note:Lease

  (2) If the agreement referred to in subsection (1) is a lease, the lessor may not terminate or amend, or claim an accelerated payment or forfeiture of the term under, the lease by reason only of the bankruptcy or insolvency or of the fact that the bankrupt has not paid rent in respect of any period before the time of the bankruptcy.

• Marginal note:Public utilities

  (3) No public utility may discontinue service to a bankrupt individual by reason only of the individual’s bankruptcy or insolvency or of the fact that the bankrupt individual has not paid for services rendered or material provided before the time of the bankruptcy.

• Marginal note:Certain acts not prevented

  (4) Nothing in this section is to be construed as

  • (a) prohibiting a person from requiring payments to be made in cash for goods, services, use of leased property or other valuable consideration provided after the time of the bankruptcy; or

  • (b) requiring the further advance of money or credit.

• Marginal note:Provisions of section override agreement

  (5) Any provision in an agreement that has the effect of providing for, or permitting, anything that, in substance, is contrary to this section is of no force or effect.

• Marginal note:Powers of court

  (6) On application by a party to an agreement or by a public utility, the court may declare that this section does not apply — or applies only to the extent declared by the court — if the applicant satisfies the court that the operation of this section would likely cause the applicant significant financial hardship.

• Marginal note:Eligible financial contracts

  (7) Subsection (1)

  • (a) does not apply in respect of an eligible financial contract within the meaning of subsection 65.1(8); and

  • (b) does not prevent a member of the Canadian Payments Association from ceasing to act as a clearing agent or group clearer for an insolvent person in accordance with the Canadian Payments Act and the by-laws and rules of that Association.

Preferences and Transfers at Undervalue

Marginal note:Preferences

• 95. (1) A transfer of property made, a provision of services made, a charge on property made, a payment made, an obligation incurred or a judicial proceeding taken or suffered by an insolvent person

  • (a) in favour of a creditor who is dealing at arm’s length with the insolvent person, or a person in trust for that creditor, with a view to giving that creditor a preference over another creditor is void as against — or, in Quebec, may not be set up against — the trustee if it is made, incurred, taken or suffered, as the case may be, during the period beginning on the day that is three months before the date of the initial bankruptcy event and ending on the date of the bankruptcy; and

  • (b) in favour of a creditor who is not dealing at arm’s length with the insolvent person, or a person in trust for that creditor, that has the effect of giving that creditor a preference over another creditor is void as against — or, in Quebec, may not be set up against — the trustee if it is made, incurred, taken or suffered, as the case may be, during the period beginning on the day that is 12 months before the date of the initial bankruptcy event and ending on the date of the bankruptcy.

• Marginal note:Preference presumed

  (2) If the transfer, charge, payment, obligation or judicial proceeding referred to in paragraph (1)(a) has the effect of giving the creditor a preference, it is, in the absence of evidence to the contrary, presumed to have been made, incurred, taken or suffered with a view to giving the creditor the preference — even if it was made, incurred, taken or suffered, as the case may be, under pressure — and evidence of pressure is not admissible to support the transaction.

• Marginal note:Exception — margin deposits

  (2.1) In the case of a margin deposit made by a clearing member with a clearing house, the clearing member and the clearing house are deemed to be dealing with each other at arm’s length and subsection (2) does not apply.

Marginal note:Transfer at undervalue

• 96. (1) On application by the trustee, a court may declare that a transfer at undervalue is void as against, or, in Quebec, may not be set up against, the trustee — or order that a party to the transfer or any other person who is privy to the transfer, or all of those persons, pay to the estate the difference between the value of the consideration received by the debtor and the value of the consideration given by the debtor — if

  • (a) the party was dealing at arm’s length with the debtor and

    • (i) the transfer occurred during the period that begins on the day that is one year before the date of the initial bankruptcy event and that ends on the date of the bankruptcy,

    • (ii) the debtor was insolvent at the time of the transfer or was rendered insolvent by it, and

    • (iii) the debtor intended to defraud, defeat or delay a creditor; or

  • (b) the party was not dealing at arm’s length with the debtor and

    • (i) the transfer occurred during the period that begins on the day that is one year before the date of the initial bankruptcy event and ends on the date of the bankruptcy, or

    • (ii) the transfer occurred during the period that begins on the day that is five years before the date of the initial bankruptcy event and ends on the day before the day on which the period referred to in subparagraph (i) begins and

      • (A) the debtor was insolvent at the time of the transfer or was rendered insolvent by it, or

      • (B) the debtor intended to defraud, defeat or delay a creditor.

• Marginal note:Establishing values

  (2) In making the application referred to in this section, the trustee shall state what, in the trustee’s opinion, was the fair market value of the property or services and what, in the trustee’s opinion, was the value of the actual consideration given or received by the debtor, and the values on which the court makes any finding under this section are, in the absence of evidence to the contrary, the values stated by the trustee.

• Meaning of “person who is privy”

  (3) In this section, a “person who is privy” means a person who is not dealing at arm’s length with a party to a transfer and, by reason of the transfer, directly or indirectly, receives a benefit or causes a benefit to be received by another person.

Marginal note:Application of sections 95 to 101

• 101.1 (1) Sections 95 to 101 apply, with any modifications that the circumstances require, to a proposal made under Division I of Part III unless the proposal provides otherwise.

• Marginal note:Interpretation

  (2) For the purposes of subsection (1), a reference in sections 95 to 101

  • (a) to “date of the bankruptcy” is to be read as a reference to “day on which a notice of intention is filed” or, if a notice of intention is not filed, as a reference to “day on which a proposal is filed”; and

  • (b) to “bankrupt”, “insolvent person” or “debtor” is to be read as a reference to “debtor in respect of whom the proposal is filed”.

• Marginal note:Application of sections 95 to 101 if proposal annulled

  (3) If the proposal is annulled by the court under subsection 63(1) or as a result of a bankruptcy order or assignment, sections 95 to 101 apply as though the debtor became bankrupt on the date of the initial bankruptcy event.

• Marginal note:Vote of creditors not dealing at arm’s length

  (6) If the chair is of the opinion that the outcome of a vote was determined by the vote of a creditor who did not deal with the debtor at arm’s length at any time during the period that begins on the day that is one year before the date of the initial bankruptcy event and that ends on the date of the bankruptcy, the chair shall redetermine the outcome by excluding the creditor’s vote. The redetermined outcome is the outcome of the vote unless a court, on application within 10 days after the day on which the chair redetermined the outcome of the vote, considers it appropriate to include the creditor’s vote and determines another outcome.

Marginal note:Court order — interlocutory or permanent

115.1 In an application to revoke or vary a decision that affects or could affect the outcome of a vote, the court may make any order that it considers appropriate, including one that suspends the effect of the vote until the application is determined and one that redetermines the outcome of the vote.

Marginal note:Postponement of equity claims

140.1 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.

Marginal note:Application of provincial law to lessors’ rights

146. 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.

• Marginal note:Powers of court to refuse or suspend discharge or grant conditional discharge

  (2) The court shall, on proof of any of the facts referred to in section 173, which proof may be given orally under oath, by affidavit or otherwise,

• (e) any debt or liability resulting from obtaining property or services by false pretences or fraudulent misrepresentation, other than a debt or liability that arises from an equity claim;

Marginal note:Application for consolidation order

• 219. (1) A debtor who resides in a province in respect of which this Part applies may apply to the clerk of the court having jurisdiction where they reside for a consolidation order.

Marginal note:Application of this Part

• 242. (1) The Governor in Council shall, at the request of the lieutenant governor in council of a province, declare, by order, that this Part applies or ceases to apply, as the case may be, in respect of the province.

• Marginal note:Automatic application

  (2) Subject to an order being made under subsection (1) declaring that this Part ceases to apply in respect of a province, if this Part is in force in the province immediately before that subsection comes into force, this Part applies in respect of the province.

• Marginal note:Forms of cooperation

  (3) For the purpose of this section, cooperation may be provided by any appropriate means, including

  • (a) the appointment of a person to act at the direction of the court;

  • (b) the communication of information by any means considered appropriate by the court;

  • (c) the coordination of the administration and supervision of the debtor’s assets and affairs;

  • (d) the approval or implementation by courts of agreements concerning the coordination of proceedings; and

  • (e) the coordination of concurrent proceedings regarding the same debtor.

• Marginal note:Public policy exception

  (2) Nothing in this Part prevents the court from refusing to do something that would be contrary to public policy.

• b) dans le cas de l’ordonnance visée au paragraphe (2), le demandeur le convainc en outre qu’il a agi et continue d’agir de bonne foi et avec la diligence voulue.

Marginal note:Member of the Canadian Payments Association

11.06 No order may be made under this Act that has the effect of preventing a member of the Canadian Payments Association from ceasing to act as a clearing agent or group clearer for a company in accordance with the Canadian Payments Act or the by-laws or rules of that Association.

Meaning of “regulatory body”

• 11.1 (1) In this section, “regulatory body” means a person or body that has powers, duties or functions relating to the enforcement or administration of an Act of Parliament or of the legislature of a province and includes a person or body that is prescribed to be a regulatory body for the purpose of this Act.

• Marginal note:Regulatory bodies — order under section 11.02

  (2) Subject to subsection (3), no order made under section 11.02 affects a regulatory body’s investigation in respect of the debtor company or an action, suit or proceeding that is taken in respect of the company by or before the regulatory body, other than the enforcement of a payment ordered by the regulatory body or the court.

• Marginal note:Exception

  (3) On application by the company and on notice to the regulatory body and to the persons who are likely to be affected by the order, the court may order that subsection (2) not apply in respect of one or more of the actions, suits or proceedings taken by or before the regulatory body if in the court’s opinion

  • (a) a viable compromise or arrangement could not be made in respect of the company if that subsection were to apply; and

  • (b) it is not contrary to the public interest that the regulatory body be affected by the order made under section 11.02.

• Marginal note:Declaration — enforcement of a payment

  (4) If there is a dispute as to whether a regulatory body is seeking to enforce its rights as a creditor, the court may, on application by the company and on notice to the regulatory body, make an order declaring both that the regulatory body is seeking to enforce its rights as a creditor and that the enforcement of those rights is stayed.

Marginal note:Interim financing

• 11.2 (1) On application by a debtor company and on notice to the secured creditors who are likely to be affected by the security or charge, a court may make an order declaring that all or part of the company’s property is subject to a security or charge — in an amount that the court considers appropriate — in favour of a person specified in the order who agrees to lend to the company an amount approved by the court as being required by the company, having regard to its cash-flow statement. The security or charge may not secure an obligation that exists before the order is made.

• Marginal note:Priority — secured creditors

  (2) The court may order that the security or charge rank in priority over the claim of any secured creditor of the company.

• Marginal note:Priority — other orders

  (3) The court may order that the security or charge rank 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 an order, the court is to consider, among other things,

  • (a) the period during which the company is expected to be subject to proceedings under this Act;

  • (b) how the company’s business and financial affairs are to be managed during the proceedings;

  • (c) whether the company’s management has the confidence of its major creditors;

  • (d) whether the loan would enhance the prospects of a viable compromise or arrangement being made in respect of the company;

  • (e) the nature and value of the company’s property;

  • (f) whether any creditor would be materially prejudiced as a result of the security or charge; and

  • (g) the monitor’s report referred to in paragraph 23(1)(b), if any.

Marginal note:Assignment of agreements

• 11.3 (1) On application by a debtor company and on notice to every party to an agreement and the monitor, the court may make an order assigning the rights and obligations of the company under the agreement to any person who is specified by the court and agrees to the assignment.

• Marginal note:Exceptions

  (2) Subsection (1) does not apply in respect of rights and obligations that are not assignable by reason of their nature or that arise under

  • (a) an agreement entered into on or after the day on which proceedings commence under this Act;

  • (b) an eligible financial contract within the meaning of subsection 11.05(3); or

  • (c) a collective agreement.

• Marginal note:Factors to be considered

  (3) In deciding whether to make the order, the court is to consider, among other things,

  • (a) whether the monitor approved the proposed assignment;

  • (b) whether the person to whom the rights and obligations are to be assigned would be able to perform the obligations; and

  • (c) whether it would be appropriate to assign the rights and obligations to that person.

• Marginal note:Restriction

  (4) The court may not make the order unless it is satisfied that all monetary defaults in relation to the agreement — other than those arising by reason only of the company’s insolvency, the commencement of proceedings under this Act or the company’s failure to perform a non-monetary obligation — will be remedied on or before the day fixed by the court.

• Marginal note:Copy of order

  (5) The applicant is to send a copy of the order to every party to the agreement.

Marginal note:Critical supplier

• 11.4 (1) On application by a debtor company and on notice to the secured creditors who are likely to be affected by the security or charge, the court may make an order declaring a person to be a critical supplier to the company if the court is satisfied that the person is a supplier of goods or services to the company and that the goods or services that are supplied are critical to the company’s continued operation.

• Marginal note:Obligation to supply

  (2) If the court declares a person to be a critical supplier, the court may make an order requiring the person to supply any goods or services specified by the court to the company on any terms and conditions that are consistent with the supply relationship or that the court considers appropriate.

• Marginal note:Security or charge in favour of critical supplier

  (3) If the court makes an order under subsection (2), the court shall, in the order, declare that all or part of the property of the company is subject to a security or charge in favour of the person declared to be a critical supplier, in an amount equal to the value of the goods or services supplied under the terms of the order.

• Marginal note:Priority

  (4) The court may order that the security or charge rank in priority over the claim of any secured creditor of the company.

Marginal note:Security or charge relating to director’s indemnification

• 11.51 (1) On application by a debtor company and on notice to the secured creditors who are likely to be affected by the security or charge, the court may make an order declaring that all or part of the property of the company is subject to a security or charge — in an amount that the court considers appropriate — in favour of any director or officer of the company to indemnify the director or officer against obligations and liabilities that they may incur as a director or officer of the company after the commencement of proceedings under this Act.

• Marginal note:Priority

  (2) The court may order that the security or charge rank in priority over the claim of any secured creditor of the company.

• Marginal note:Restriction — indemnification insurance

  (3) The court may not make the order if in its opinion the company could obtain adequate indemnification insurance for the director or officer at a reasonable cost.

• Marginal note:Negligence, misconduct or fault

  (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 officer if in its opinion the obligation or liability was incurred as a result of the director’s or officer’s gross negligence or wilful misconduct or, in Quebec, the director’s or officer’s gross or intentional fault.

Marginal note:Court may order security or charge to cover certain costs

• 11.52 (1) On notice to the secured creditors who are likely to be affected by the security or charge, the court may make an order declaring that all or part of the property of a debtor company is subject to a security or charge — in an amount that the court considers appropriate — in respect of the fees and expenses of

  • (a) the monitor, including the fees and expenses of any financial, legal or other experts engaged by the monitor in the performance of the monitor’s duties;

  • (b) any financial, legal or other experts engaged by the company for the purpose of proceedings under this Act; and

  • (c) any financial, legal or other experts engaged by any other interested person if the court is satisfied that the security or charge is necessary for their effective participation in proceedings under this Act.

• Marginal note:Priority

  (2) The court may order that the security or charge rank in priority over the claim of any secured creditor of the company.

Marginal note:No personal liability in respect of matters before appointment

• 11.8 (1) Despite anything in federal or provincial law, if a monitor, in that position, carries on the business of a debtor company or continues the employment of a debtor company’s employees, the monitor is not by reason of that fact personally liable in respect of a liability, including one as a successor employer,

  • (a) that is in respect of the employees or former employees of the company or a predecessor of the company or in respect of a pension plan for the benefit of those employees; and

  • (b) that exists before the monitor is appointed or that is calculated by reference to a period before the appointment.

• Marginal note:Status of liability

  (2) A liability referred to in subsection (1) shall not rank as costs of administration.

• Marginal note:Liability of other successor employers

  (2.1) Subsection (1) does not affect the liability of a successor employer other than the monitor.

Marginal note:Fixing deadlines

12. The court may fix deadlines for the purposes of voting and for the purposes of distributions under a compromise or arrangement.

Marginal note:Claims that may be dealt with by a compromise or arrangement

• 19. (1) Subject to subsection (2), the only claims that may be dealt with by a compromise or arrangement in respect of a debtor company are

  • (a) claims that relate to debts or liabilities, present or future, to which the company is subject on the earlier of

    • (i) the day on which proceedings commenced under this Act, and

    • (ii) if the company filed a notice of intention under section 50.4 of the Bankruptcy and Insolvency Act or commenced proceedings under this Act with the consent of inspectors referred to in section 116 of the Bankruptcy and Insolvency Act, the date of the initial bankruptcy event within the meaning of section 2 of that Act; and

  • (b) claims that relate to debts or liabilities, present or future, to which the company may become subject before the compromise or arrangement is sanctioned by reason of any obligation incurred by the company before the earlier of the days referred to in subparagraphs (a)(i) and (ii).

• Marginal note:Exception

  (2) A compromise or arrangement in respect of a debtor company may not deal with any claim that relates to any of the following debts or liabilities unless the compromise or arrangement explicitly provides for the claim’s compromise and the creditor in relation to that debt has voted for the acceptance of the compromise or arrangement:

  • (a) any fine, penalty, restitution order or other order similar in nature to a fine, penalty or restitution order, imposed by a court in respect of an offence;

  • (b) any award of damages by a court in civil proceedings in respect of

    • (i) bodily harm intentionally inflicted, or sexual assault, or

    • (ii) wrongful death resulting from an act referred to in subparagraph (i);

  • (c) any debt or liability arising out of fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity or, in Quebec, as a trustee or an administrator of the property of others;

  • (d) any debt or liability resulting from obtaining property or services by false pretences or fraudulent misrepresentation, other than a debt or liability of the company that arises from an equity claim; or

  • (e) any debt for interest owed in relation to an amount referred to in any of paragraphs (a) to (d).

Marginal note:Company may establish classes

• 22. (1) A debtor company may divide its creditors into classes for the purpose of a meeting to be held under section 4 or 5 in respect of a compromise or arrangement relating to the company and, if it does so, it is to apply to the court for approval of the division before the meeting is held.

• Marginal note:Factors

  (2) For the purpose of subsection (1), creditors may be included in the same class if their interests or rights are sufficiently similar to give them a commonality of interest, taking into account

  • (a) the nature of the debts, liabilities or obligations giving rise to their claims;

  • (b) the nature and rank of any security in respect of their claims;

  • (c) the remedies available to the creditors in the absence of the compromise or arrangement being sanctioned, and the extent to which the creditors would recover their claims by exercising those remedies; and

  • (d) any further criteria, consistent with those set out in paragraphs (a) to (c), that are prescribed.

• Marginal note:Related creditors

  (3) A creditor who is related to the company may vote against, but not for, a compromise or arrangement relating to the company.

Marginal note:Class — creditors having equity claims

22.1 Despite subsection 22(1), creditors having equity claims are to be in the same class of creditors in relation to those claims unless the court orders otherwise and may not, as members of that class, vote at any meeting unless the court orders otherwise.

• Marginal note:Agreement to provide compilation

  (3) The Superintendent of Bankruptcy may enter into an agreement to provide a compilation of all or part of the information that is contained in the public record.

Marginal note:Disclaimer or resiliation of agreements

• 32. (1) Subject to subsections (2) and (3), a debtor company may — on notice given in the prescribed form and manner to the other parties to the agreement and the monitor — disclaim or resiliate any agreement to which the company is a party on the day on which proceedings commence under this Act. The company may not give notice unless the monitor approves the proposed disclaimer or resiliation.

• Marginal note:Court may prohibit disclaimer or resiliation

  (2) Within 15 days after the day on which the company gives notice under subsection (1), a party to the agreement may, on notice to the other parties to the agreement and the monitor, apply to a court for an order that the agreement is not to be disclaimed or resiliated.

• Marginal note:Court-ordered disclaimer or resiliation

  (3) If the monitor does not approve the proposed disclaimer or resiliation, the company may, on notice to the other parties to the agreement and the monitor, apply to a court for an order that the agreement be disclaimed or resiliated.

• Marginal note:Factors to be considered

  (4) In deciding whether to make the order, the court is to consider, among other things,

  • (a) whether the monitor approved the proposed disclaimer or resiliation;

  • (b) whether the disclaimer or resiliation would enhance the prospects of a viable compromise or arrangement being made in respect of the company; and

  • (c) whether the disclaimer or resiliation would likely cause significant financial hardship to a party to the agreement.

• Marginal note:Date of disclaimer or resiliation

  (5) An agreement is disclaimed or resiliated

  • (a) if no application is made under subsection (2), on the day that is 30 days after the day on which the company gives notice under subsection (1);

  • (b) if the court dismisses the application made under subsection (2), on the day that is 30 days after the day on which the company gives notice under subsection (1) or on any later day fixed by the court; or

  • (c) if the court orders that the agreement is disclaimed or resiliated under subsection (3), on the day that is 30 days after the day on which the company gives notice or on any later day fixed by the court.

• Marginal note:Intellectual property

  (6) If the company has granted a right to use intellectual property to a party to an agreement, the disclaimer or resiliation does not affect the party’s right to use the intellectual property — including the party’s right to enforce an exclusive use — during the term of the agreement, including any period for which the party extends the agreement as of right, as long as the party continues to perform its obligations under the agreement in relation to the use of the intellectual property.

• Marginal note:Loss related to disclaimer or resiliation

  (7) If an agreement is disclaimed or resiliated, a party to the agreement who suffers a loss in relation to the disclaimer or resiliation is considered to have a provable claim.

• Marginal note:Reasons for disclaimer or resiliation

  (8) A company shall, on request by a party to the agreement, provide in writing the reasons for the proposed disclaimer or resiliation within five days after the day on which the party requests them.

• Marginal note:Exceptions

  (9) This section does not apply in respect of

  • (a) an eligible financial contract within the meaning of subsection 11.05(3);

  • (b) a collective agreement;

  • (c) a financing agreement if the company is the borrower; or

  • (d) a lease of real property or of an immovable if the company is the lessor.

Marginal note:Certain rights limited

• 34. (1) No person may terminate or amend, or claim an accelerated payment or forfeiture of the term under, any agreement, including a security agreement, with a debtor company by reason only that proceedings commenced under this Act or that the company is insolvent.

• Marginal note:Lease

  (2) If the agreement referred to in subsection (1) is a lease, the lessor may not terminate or amend the lease by reason only that proceedings commenced under this Act, that the company is insolvent or that the company has not paid rent in respect of any period before the commencement of those proceedings.

• Marginal note:Public utilities

  (3) No public utility may discontinue service to a company by reason only that proceedings commenced under this Act, that the company is insolvent or that the company has not paid for services rendered or goods provided before the commencement of those proceedings.

• Marginal note:Certain acts not prevented

  (4) Nothing in this section is to be construed as

  • (a) prohibiting a person from requiring payments to be made in cash for goods, services, use of leased property or other valuable consideration provided after the commencement of proceedings under this Act;

  • (b) requiring the further advance of money or credit; or

  • (c) preventing a lessor of aircraft objects  under an agreement with the company from taking possession of the aircraft objects

    • (i) if, after proceedings commence under this Act, the company defaults in protecting or maintaining the aircraft objects in accordance with the agreement,

    • (ii) 60 days after the day on which proceedings commence under this Act unless, during that period, the company

      • (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 company’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 company’s financial condition, until the proceedings under this Act end, and

      • (C) agreed to perform all of 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 company defaults in performing an obligation under the agreement, other than an obligation not to become insolvent or an obligation relating to the company’s financial condition.

• Marginal note:Provisions of section override agreement

  (5) Any provision in an agreement that has the effect of providing for, or permitting, anything that, in substance, is contrary to this section is of no force or effect.

• Marginal note:Powers of court

  (6) On application by a party to an agreement or by a public utility, the court may declare that this section does not apply — or applies only to the extent declared by the court — if the applicant satisfies the court that the operation of this section would likely cause the applicant significant financial hardship.

• Marginal note:Eligible financial contracts

  (7) Subsection (1)

  • (a) does not apply in respect of an eligible financial contract within the meaning of subsection 11.05(3); and

  • (b) does not prevent a member of the Canadian Payments Association from ceasing to act as a clearing agent or group clearer for an insolvent person in accordance with the Canadian Payments Act or the by-laws or rules of that Association.

Marginal note:Restriction on disposition of business assets

• 36. (1) A debtor company in respect of which an order has been made under this Act may not sell or otherwise dispose of assets outside the ordinary course of business unless authorized to do so by a court. Despite any requirement for shareholder approval, including one under federal or provincial law, the court may authorize the sale or disposition even if shareholder approval was not obtained.

• Marginal note:Notice to creditors

  (2) A company that applies to the court for an authorization is to give notice of the application to the secured creditors who are likely to be affected by the proposed sale or disposition.

• Marginal note:Factors to be considered

  (3) In deciding whether to grant the authorization, the court is to consider, among other things,

  • (a) whether the process leading to the proposed sale or disposition was reasonable in the circumstances;

  • (b) whether the monitor approved the process leading to the proposed sale or disposition;

  • (c) whether the monitor filed with the court a report stating that in their opinion the sale or disposition would be more beneficial to the creditors than a sale or disposition under a bankruptcy;

  • (d) the extent to which the creditors were consulted;

  • (e) the effects of the proposed sale or disposition on the creditors and other interested parties; and

  • (f) whether the consideration to be received for the assets is reasonable and fair, taking into account their market value.

• Marginal note:Additional factors — related persons

  (4) If the proposed sale or disposition is to a person who is related to the company, the court may, after considering the factors referred to in subsection (3), grant the authorization only if it is satisfied that

  • (a) good faith efforts were made to sell or otherwise dispose of the assets to persons who are not related to the company; and

  • (b) the consideration to be received is superior to the consideration that would be received under any other offer made in accordance with the process leading to the proposed sale or disposition.

• Marginal note:Related persons

  (5) For the purpose of subsection (4), a person who is related to the company includes

  • (a) a director or officer of the company;

  • (b) a person who has or has had, directly or indirectly, control in fact of the company; and

  • (c) a person who is related to a person described in paragraph (a) or (b).

• Marginal note:Assets may be disposed of free and clear

  (6) The court may authorize a sale or disposition free and clear of any security, charge or other restriction and, if it does, it shall also order that other assets of the company or the proceeds of the sale or disposition be subject to a security, charge or other restriction in favour of the creditor whose security, charge or other restriction is to be affected by the order.

• Marginal note:Restriction — employers

  (7) The court may grant the authorization only if the court is satisfied that the company can and will make the payments that would have been required under paragraphs 6(4)(a) and (5)(a) if the court had sanctioned the compromise or arrangement.

Preferences and Transfers at Undervalue

Marginal note:Application of sections 38 and 95 to 101 of the Bankruptcy and Insolvency Act

• 36.1 (1) Sections 38 and 95 to 101 of the Bankruptcy and Insolvency Act apply, with any modifications that the circumstances require, in respect of a compromise or arrangement unless the compromise or arrangement provides otherwise.

• Marginal note:Interpretation

  (2) For the purposes of subsection (1), a reference in sections 38 and 95 to 101 of the Bankruptcy and Insolvency Act

  • (a) to “date of the bankruptcy” is to be read as a reference to “day on which proceedings commence under this Act”;

  • (b) to “trustee” is to be read as a reference to “monitor”; and

  • (c) to “bankrupt”, “insolvent person” or “debtor” is to be read as a reference to “debtor company”.

Marginal note:Statutory Crown securities

• 39. (1) In relation to proceedings under this Act in respect of a debtor company, a security provided for in federal or provincial legislation for the sole or principal purpose of securing a claim of Her Majesty in right of Canada or a province or a workers’ compensation body is valid in relation to claims against the company only if, before the day on which proceedings commence, the security is registered under a system of registration of securities that is available not only to Her Majesty in right of Canada or a province or a workers’ compensation body, but also to any other creditor who holds a security, and that is open to the public for information or the making of searches.

• Marginal note:Forms of cooperation

  (3) For the purpose of this section, cooperation may be provided by any appropriate means, including

  • (a) the appointment of a person to act at the direction of the court;

  • (b) the communication of information by any means considered appropriate by the court;

  • (c) the coordination of the administration and supervision of the debtor company’s assets and affairs;

  • (d) the approval or implementation by courts of agreements concerning the coordination of proceedings; and

  • (e) the coordination of concurrent proceedings regarding the same debtor company.

• Marginal note:Public policy exception

  (2) Nothing in this Part prevents the court from refusing to do something that would be contrary to public policy.

Marginal note:Regulations

62. The Governor in Council may make regulations for carrying out the purposes and provisions of this Act, including regulations

• Marginal note:Related persons

  (5) Despite subsection 4(5) of the Bankruptcy and Insolvency Act,

  • (a) for the purposes of paragraph 6(d), an individual is considered to deal at arm’s length with a related person if the Minister is satisfied that, having regard to the circumstances — including the terms and conditions of the individual’s employment with the former employer, their remuneration and the duration, nature and importance of the work performed for the former employer — it is reasonable to conclude that the individual would have entered into a substantially similar contract of employment with the former employer if they had been dealing with each other at arm’s length; and

  • (b) for the purposes of subsection 21(4), individuals who are related to each other are, in the absence of evidence to the contrary, deemed not to deal with each other at arm’s length while so related.

• (a) the individual’s employment terminated in the circumstances prescribed by regulation;

Marginal note:Exceptions

6. An individual is not eligible to receive a payment in respect of any wages earned during a period in which the individual

• (a) was an officer or director of the former employer;

• (b) had a controlling interest within the meaning of the regulations in the business of the former employer;

• (c) occupied a managerial position within the meaning of the regulations with the former employer; or

• (d) was not dealing at arm’s length with

  • (i) an officer or director of the former employer,

  • (ii) a person who had a controlling interest within the meaning of the regulations in the business of the former employer, or

  • (iii) an individual who occupied a managerial position within the meaning of the regulations with the former employer.

Marginal note:Application

8. To receive a payment, an individual is to apply to the Minister in the manner and during the period provided for in the regulations.

Marginal note:Minister’s determination of eligibility

9. If the Minister determines that the applicant is eligible to receive a payment, the Minister shall make the payment.

Marginal note:Notification

10. The Minister is to inform the applicant of their eligibility or ineligibility to receive a payment.

REVIEW BY MINISTER

Marginal note:Request for review

11. An applicant who is informed under section 10 may request a review of their eligibility or ineligibility, as the case may be.

Marginal note:Review

12. The Minister may confirm, vary or rescind a determination of eligibility made under section 9. If the Minister varies the determination, the Minister shall make any payment resulting from the variation.

Marginal note:Review is final

13. Subject to the right of appeal under section 14, the Minister’s confirmation, variation or rescission, as the case may be, is final and may not be questioned or reviewed in any court.

APPEAL TO ADJUDICATOR

Marginal note:Appeal on question of law or jurisdiction

14. The applicant may appeal the decision made by the Minister under section 12 to an adjudicator only on a question of law or jurisdiction.

Marginal note:Appeal on the record

16. The appeal is to be an appeal on the record and no new evidence is admissible.

Marginal note:Adjudicator’s decision

17. The adjudicator may confirm, vary or rescind the decision made by the Minister under section 12. If the adjudicator varies the decision, the Minister shall make any payment resulting from the variation.

Marginal note:No review by certiorari, etc.

19. No order may be made to review, prohibit or restrain and no process entered or proceeding taken to question, review, prohibit or restrain in any court — whether by way of injunction, certiorari, prohibition, quo warranto or otherwise — an action of an adjudicator under this Act.

Marginal note:Decision is final

20. The adjudicator’s decision is final and may not be questioned or reviewed in any court.

ADMINISTRATION

Duties of Trustees and Receivers

Marginal note:General duties

• 21. (1) For the purposes of this Act, a trustee or a receiver, as the case may be, shall

  • (a) identify each individual who is owed wages that were earned during the six months immediately before the date of the bankruptcy or the first day on which there was a receiver in relation to the individual’s employer, as the case may be;

  • (b) determine the amount of wages owing to each individual in respect of those six months;

  • (c) inform each individual other than one who is in a class prescribed by regulation of the existence of the program established by section 4 and of the conditions under which payments may be made under this Act;

  • (d) provide the Minister and each individual other than one who is in a class prescribed by regulation with the information prescribed by regulation in relation to the individual and with the amount of wages owing to the individual in respect of those six months; and

  • (e) inform the Minister of when the trustee is discharged or the receiver completes their duties, as the case may be.

• Marginal note:Compliance with directions

  (2) A trustee or receiver shall comply with any directions of the Minister relating to the administration of this Act.

• Marginal note:Duty to assist

  (3) A person, other than one described in subsection (4), who has or has access to information described in paragraph (1)(d) shall, on request, provide it to the trustee or the receiver, as the case may be.

• Marginal note:Duty to assist — payroll contractors

  (4) In the case of a person who is dealing at arm’s length with and providing payroll services to a bankrupt or insolvent person, they shall provide a description of the information that they do not have access to, an estimate of the cost of providing the information that they have and an estimate of the cost of providing the information that they only have access to.

Marginal note:Fees and expenses

• 22. (1) The trustee’s or receiver’s fees and expenses, in relation to the performance of their duties under this Act, are to be paid out of the estate of the bankrupt employer or the property of the insolvent employer, as the case may be.

• Marginal note:Minister to pay fees and expenses

  (2) The Minister shall, in the circumstances prescribed by regulation, pay the fees or expenses that are prescribed by regulation.

Marginal note:Social Insurance Number

29. No person may knowingly use, communicate or allow to be communicated a Social Insurance Number that was obtained for a purpose related to an application for a payment under this Act except for the purpose of the administration or enforcement of this Act or the Income Tax Act.

Marginal note:Determination of overpayment

• 32. (1) If the Minister determines that an individual received a payment in an amount greater than the amount that they were eligible to receive, the Minister shall send them a notice

  • (a) informing them of the determination; and

  • (b) specifying the amount that they were not eligible to receive.

• Marginal note:Debt due to Her Majesty

  (2) The amount specified in the notice constitutes a debt due to Her Majesty in right of Canada and may be recovered by the Minister of National Revenue.

• Marginal note:Certificate of default

  (3) The amount of any debt referred to in subsection (2) that remains unpaid 30 days after the day on which the notice is sent may be certified by the Minister, and registration of the certificate in the Federal Court has the same effect as a judgment of that Court for the amount specified in the certificate and all related registration costs.

Marginal note:Garnishment

33. If the Minister is of the opinion that a person is or is about to become liable to pay an amount to an individual who is indebted to Her Majesty under section 32, the Minister may, by written notice, order the person to pay to the Receiver General on account of the individual’s liability all or part of the amount otherwise payable to the individual.

Marginal note:No payment or partial payment

34. If the Minister determines that an individual did not receive all or part of a payment that they were eligible to receive, the Minister shall make a payment to them in an amount equal to the amount that they did not receive.

Marginal note:Subrogation

• 36. (1) If a payment is made under this Act to an individual in respect of unpaid wages, Her Majesty in right of Canada is, to the extent of the amount of the payment, subrogated to any rights the individual may have in respect of the unpaid wages against

  • (a) the bankrupt or insolvent employer; and

  • (b) if the bankrupt or insolvent employer is a corporation, a director of the corporation.

• Marginal note:Maintaining an action

  (2) For the purposes of subsection (1), Her Majesty in right of Canada may maintain an action in the name of the individual or Her Majesty in right of Canada.

Marginal note:Amount not assignable

37. An amount that is payable under this Act is not capable of being assigned, charged, attached, anticipated or given as security and any transaction appearing to do so is void or, in Quebec, null.

Offences and Penalties

Marginal note:Offences

• 38. (1) Every person commits an offence who

  • (a) makes a false or misleading entry, or omits to enter a material particular, in any record or book of account that contains information that supports an application under this Act;

  • (b) in relation to an application under this Act, makes a representation that the person knows to be false or misleading;

  • (c) in relation to an application under this Act, makes a declaration that the person knows to be false or misleading because of the nondisclosure of facts;

  • (d) being required under this Act to provide information, does not provide it or makes a representation that the person knows to be false or misleading;

  • (e) obtains a payment under this Act by false pretence;

  • (f) being the payee of any cheque issued as a payment under this Act, knowingly negotiates or attempts to negotiate it knowing that the person is not entitled to the payment or any part of the payment; or

  • (g) participates in, consents to or acquiesces in an act or omission mentioned in any of paragraphs (a) to (f).

• Marginal note:Trustees and receivers

  (2) Every person who fails to comply with any of the requirements of subsection 21(1), (3) or (4) commits an offence.

• Marginal note:Limitation of prosecutions

  (3) A prosecution for an offence under subsection (1) or (2) may be commenced at any time within six years after the day on which the subject matter of the prosecution arose.

• Marginal note:Due diligence

  (4) No person may be convicted of an offence under subsection (2) if the person establishes that they exercised due diligence to prevent the commission of the offence.

Marginal note:Obstruction

• 39. (1) Every person commits an offence who delays or obstructs a person in the exercise of their powers or the performance of their duties under this Act.

• Marginal note:Limitation of prosecutions

  (2) A prosecution for an offence under subsection (1) may be commenced at any time within two years after the day on which the subject matter of the prosecution arose.

Marginal note:Regulations

41. The Governor in Council may make regulations generally for carrying out the purposes of this Act, including regulations

• (a) prescribing amounts for the purposes of subsection 2(1);

• (b) prescribing the circumstances in which employment terminated for the purposes of paragraph 5(a);

• (c) defining “controlling interest” and “managerial position” for the purposes of section 6;

• (d) prescribing amounts for the purposes of subsections 7(1) and (2);

• (e) respecting the allocation of payments to the different components of wages for the purposes of subsection 7(3);

• (f) respecting the period during which and the manner in which applications for payments are to be made under section 8;

• (g) respecting the period during which and the manner in which a review may be requested under section 11 or an appeal may be made under section 14;

• (h) prescribing the classes of individuals that the trustee or receiver is not required to inform under paragraph 21(1)(c) or to whom they are not required to provide information under paragraph 21(1)(d);

• (i) prescribing the information that is to be provided by trustees and receivers to the Minister and to individuals for the purposes of paragraph 21(1)(d) and the period during which and the manner in which that information is to be provided;

• (j) respecting the period during which and the manner in which the information referred to in paragraph 21(1)(c) and subsections 21(3) and (4) is to be provided; and

• (k) prescribing fees and expenses for the purposes of subsection 22(2) and the circumstances in which they are to be paid.

• Marginal note:Payment — equity claims

  (1.7) No proposal that provides for the payment of an equity claim is to be approved by the court unless the proposal provides that all claims that are not equity claims are to be paid in full before the equity claim is to be paid.

103. Section 170.1 of the Act is replaced by the following:

“equity claim”

« réclamation relative à des capitaux propres »

“equity claim” means a claim that is in respect of an equity interest, including a claim for, among others,

• (a) a dividend or similar payment,

• (b) a return of capital,

• (c) a redemption or retraction obligation,

• (d) a monetary loss resulting from the ownership, purchase or sale of an equity interest or from the rescission, or, in Quebec, the annulment, of a purchase or sale of an equity interest, or

• (e) contribution or indemnity in respect of a claim referred to in any of paragraphs (a) to (d);

“equity interest”

« intérêt relatif à des capitaux propres »

“equity interest” means

• (a) in the case of a company other than an income trust, a share in the company — or a warrant or option or another right to acquire a share in the company — other than one that is derived from a convertible debt, and

• (b) in the case of an income trust, a unit in the income trust — or a warrant or option or another right to acquire a unit in the income trust — other than one that is derived from a convertible debt;

126. Section 6 of the Act is replaced by the following:

Marginal note:Wage Earner Protection Program Act

132. The Wage Earner Protection Program Act, as enacted by section 1 of this Act, applies in respect of wages owing by an employer only if

• (a) the employer becomes bankrupt on or after the day on which that section comes into force; or

• (b) all or part of the employer’s property comes into the possession or under the control of a receiver on or after the day on which that section comes into force.

Marginal note:Bankruptcy and Insolvency Act

• 133. (1) An amendment to the Bankruptcy and Insolvency Act that is enacted by any of sections 2 to 5 and 7 to 106, subsection 107(1) and sections 108 to 123 of this Act applies only to a person who, on or after the day on which the amendment comes into force, is described in one of the following paragraphs:

  • (a) the person becomes bankrupt;

  • (b) the person files a notice of intention;

  • (c) the person files a proposal without having filed a notice of intention;

  • (d) a proposal is made in respect of the person without the person having filed a notice of intention;

  • (e) an interim receiver is appointed in respect of the person’s property and all or part of the person’s property comes into the possession or under the control of the interim receiver; or

  • (f) all or part of the person’s property comes into the possession or under the control of a receiver.

• Marginal note:Subsection 107(2)

  (2) The amendment to the Bankruptcy and Insolvency Act that is enacted by subsection 107(2) of this Act applies only to a person who is an undischarged bankrupt on the day on which it comes into force or who becomes bankrupt on or after the day on which it comes into force.

Marginal note:Companies’ Creditors Arrangement Act

134. An amendment to the Companies’ Creditors Arrangement Act that is enacted by any of sections 124 to 131 of this Act applies only to a debtor company in respect of whom proceedings commence under that Act on or after the day on which the amendment comes into force.

137. Paragraph 23(2)(b) of the Canada Pension Plan is replaced by the following:

Employment Insurance Act

138. Paragraph 99(b) of the Employment Insurance Act is replaced by the following:

Income Tax Act

139. The portion of subsection 224(1.2) of the Income Tax Act before paragraph (a) is replaced by the following:

Marginal note:Order in council

141. Sections 1 to 131 and 136 to 139 come into force on a day or days to be fixed by order of the Governor in Council.