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
66. Sections 11.51 and 11.52 of the Act, as enacted by section 128 of chapter 47 of the Statutes of Canada, 2005, are replaced by the following:
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:1997, c. 12, s. 124
67. Subsections 11.8(1) and (2) of the Act are replaced by the following:
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.
68. Section 12 of the Act, as enacted by section 130 of chapter 47 of the Statutes of Canada, 2005, is replaced by the following:
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.
69. Section 19 of the Act, as enacted by section 131 of chapter 47 of the Statutes of Canada, 2005, is replaced by the following:
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).
70. Subsection 20(3) of the Act, as enacted by section 131 of chapter 47 of the Statutes of Canada, 2005, is repealed.
71. Section 22 of the Act, as enacted by section 131 of chapter 47 of the Statutes of Canada, 2005, is replaced by the following:
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.
72. (1) Subparagraph 23(1)(a)(ii) of the Act, as enacted by section 131 of chapter 47 of the Statutes of Canada, 2005, is replaced by the following:
(ii) within five days after the day on which the order is made,
(A) make the order publicly available in the prescribed manner,
(B) send, in the prescribed manner, a notice to every known creditor who has a claim against the company of more than $1,000 advising them that the order is publicly available, and
(C) prepare a list, showing the names and addresses of those creditors and the estimated amounts of those claims, and make it publicly available in the prescribed manner;
(2) Paragraphs 23(1)(d) to (f) of the Act, as enacted by section 131 of chapter 47 of the Statutes of Canada, 2005, are replaced by the following:
(d) file a report with the court on the state of the company’s business and financial affairs — containing the prescribed information, if any —
(i) without delay after ascertaining a material adverse change in the company’s projected cash-flow or financial circumstances,
(ii) not later than 45 days, or any longer period that the court may specify, after the day on which each of the company’s fiscal quarters ends, and
(iii) at any other time that the court may order;
(d.1) file a report with the court on the state of the company’s business and financial affairs — containing the monitor’s opinion as to the reasonableness of a decision, if any, to include in a compromise or arrangement a provision that sections 38 and 95 to 101 of the Bankruptcy and Insolvency Act do not apply in respect of the compromise or arrangement and containing the prescribed information, if any — at least seven days before the day on which the meeting of creditors referred to in section 4 or 5 is to be held;
(e) advise the company’s creditors of the filing of the report referred to in any of paragraphs (b) to (d.1);
(f) file with the Superintendent of Bankruptcy, in the prescribed manner and at the prescribed time, a copy of the documents specified in the regulations;
(f.1) for the purpose of defraying the expenses of the Superintendent of Bankruptcy incurred in performing his or her functions under this Act, pay the prescribed levy at the prescribed time to the Superintendent for deposit with the Receiver General;
(3) Paragraph 23(1)(j) of the Act, as enacted by section 131 of chapter 47 of the Statutes of Canada, 2005, is replaced by the following:
(j) make the prescribed documents publicly available in the prescribed manner and at the prescribed time and provide the company’s creditors with information as to how they may access those documents; and
(4) Subsection 23(2) of the Act, as enacted by section 131 of chapter 47 of the Statutes of Canada, 2005, is replaced by the following:
Marginal note:Monitor not liable
(2) If the monitor acts in good faith and takes reasonable care in preparing the report referred to in any of paragraphs (1)(b) to (d.1), the monitor is not liable for loss or damage to any person resulting from that person’s reliance on the report.
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