An Act to amend the Bankruptcy and Insolvency Act, the Companies’ Creditors Arrangement Act, the Wage Earner Protection Program Act and chapter 47 of the Statutes of Canada, 2005 (S.C. 2007, c. 36)
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Assented to 2007-12-14
17. (1) Paragraph 50.4(2)(a) of the Act, as enacted by subsection 35(2) of chapter 47 of the Statutes of Canada, 2005, is replaced by the following:
(a) a statement (in this section referred to as a “cash-flow statement”) indicating the projected cash-flow of the insolvent person on at least a monthly basis, prepared by the insolvent person, reviewed for its reasonableness by the trustee under the notice of intention and signed by the trustee and the insolvent person;
Marginal note:1992, c. 27, s. 19
(2) Paragraph 50.4(7)(b) of the English version of the Act is replaced by the following:
(b) shall file a report on the state of the insolvent person’s business and financial affairs — containing the prescribed information, if any —
(i) with the official receiver without delay after ascertaining a material adverse change in the insolvent person’s projected cash-flow or financial circumstances, and
(ii) with the court at or before the hearing by the court of any application under subsection (9) and at any other time that the court may order; and
18. Section 50.6 of the Act, as enacted by section 36 of chapter 47 of the Statutes of Canada, 2005, is replaced by the following:
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.
Marginal note:1992, c. 27, s. 22
19. Paragraph 54(2)(d) of the Act is replaced by the following:
(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.
20. The Act is amended by adding the following after section 54:
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.
21. Section 59 of the Act is amended by adding the following after subsection (3):
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:1992, c. 27, s. 24(2)
22. Subsection 60(5) of the Act is replaced by the following:
Marginal note:Power of court
(5) Subject to subsections (1) to (1.7), the court may either approve or refuse to approve the proposal.
23. Subsection 62(2.1) of the Act, as enacted by subsection 41(2) of chapter 47 of the Statutes of Canada, 2005, is replaced by the following:
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.
24. Sections 64.1 and 64.2 of the Act, as enacted by section 42 of chapter 47 of the Statutes of Canada, 2005, are replaced by the following:
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.
Marginal note:1992, c. 27, s. 30; 1997, c. 12, s. 41(2)
25. The definition “eligible financial contract” in subsection 65.1(8) of the Act is replaced by the following:
“eligible financial contract”
« contrat financier admissible »
“eligible financial contract” means an agreement of a prescribed kind;
26. Section 65.11 of the Act, as enacted by section 44 of chapter 47 of the Statutes of Canada, 2005, is replaced by the following:
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.
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