Short Title

Marginal note:Short title

1 This Act may be cited as the Bankruptcy and Insolvency Act.

Interpretation

Marginal note:Definitions

2 In this Act,

affidavit

affidavit

affidavit includes statutory declaration and solemn affirmation; (affidavit)

aircraft objects

biens aéronautiques

aircraft objects has the same meaning as in subsection 2(1) of the International Interests in Mobile Equipment (aircraft equipment) Act; (biens aéronautiques)

application

Version anglaise seulement

application, with respect to a bankruptcy application filed in a court in the Province of Quebec, means a motion; (Version anglaise seulement)

assignment

cession

assignment means an assignment filed with the official receiver; (cession)

bank

banque

bank means

• (a) every bank and every authorized foreign bank within the meaning of section 2 of the Bank Act,

• (b) every other member of the Canadian Payments Association established by the Canadian Payments Act, and

• (c) every local cooperative credit society, as defined in subsection 2(1) of the Act referred to in paragraph (b), that is a member of a central cooperative credit society, as defined in that subsection, that is a member of that Association; (banque)

bankrupt

failli

bankrupt means a person who has made an assignment or against whom a bankruptcy order has been made or the legal status of that person; (failli)

bankruptcy

faillite

bankruptcy means the state of being bankrupt or the fact of becoming bankrupt; (faillite)

child

child[Repealed, 2000, c. 12, s. 8]

claim provable in bankruptcy, provable claim or claim provable

réclamation prouvable en matière de faillite ou réclamation prouvable

claim provable in bankruptcy, provable claim or claim provable includes any claim or liability provable in proceedings under this Act by a creditor; (réclamation prouvable en matière de faillite ou réclamation prouvable)

common-law partner

conjoint de fait

common-law partner, in relation to an individual, means a person who is cohabiting with the individual in a conjugal relationship, having so cohabited for a period of at least one year; (conjoint de fait)

common-law partnership

union de fait

common-law partnership means the relationship between two persons who are common-law partners of each other; (union de fait)

corporation

personne morale

corporation includes any company or legal person incorporated by or under an Act of Parliament or of any province, and any incorporated company, wherever incorporated, that is authorized to carry on business in Canada or that has an office or property in Canada, but does not include banks, authorized foreign banks within the meaning of section 2 of the Bank Act, insurance companies, trust companies, loan companies or railway companies; (personne morale)

court

tribunal

court, except in paragraphs 178(1)(a) and (a.1) and sections 204.1 to 204.3 and subject to subsection 243(1), means the court having jurisdiction in bankruptcy or a judge thereof, and includes a registrar when exercising the powers of the court conferred on a registrar under this Act; (tribunal)

creditor

créancier

creditor means a person having a claim, unsecured, preferred by virtue of priority under section 136 or secured, provable as a claim under this Act; (créancier)

date of the initial bankruptcy event

ouverture de la faillite

date of the initial bankruptcy event, in respect of a person, means the earliest of the date of filing of or making of

• (a) an assignment by or in respect of the person,

• (b) a proposal by or in respect of the person,

• (c) a notice of intention by the person,

• (d) the first application for a bankruptcy order against the person, in any case

  • (i) referred to in paragraph 50.4(8)(a) or 57(a) or subsection 61(2), or

  • (ii) in which a notice of intention to make a proposal has been filed under section 50.4 or a proposal has been filed under section 62 in respect of the person and the person files an assignment before the court has approved the proposal, or

• (e) the application in respect of which a bankruptcy order is made, in the case of an application other than one referred to in paragraph (d); (ouverture de la faillite)

debtor

débiteur

debtor includes an insolvent person and any person who, at the time an act of bankruptcy was committed by him, resided or carried on business in Canada and, where the context requires, includes a bankrupt; (débiteur)

eligible financial contract

contrat financier admissible

eligible financial contract means an agreement of a prescribed kind; (contrat financier admissible)

executing officer

huissier- exécutant

executing officer includes a sheriff, a bailiff and any officer charged with the execution of a writ or other process under this Act or any other Act or proceeding with respect to any property of a debtor; (huissier- exécutant)

financial collateral

garantie financière

financial collateral means any of the following that is subject to an interest, or in the Province of Quebec a right, that secures payment or performance of an obligation in respect of an eligible financial contract or that is subject to a title transfer credit support agreement:

• (a) cash or cash equivalents, including negotiable instruments and demand deposits,

• (b) securities, a securities account, a securities entitlement or a right to acquire securities, or

• (c) a futures agreement or a futures account; (garantie financière)

General Rules

Règles générales

General Rules means the General Rules referred to in section 209; (Règles générales)

insolvent person

personne insolvable

insolvent person means a person who is not bankrupt and who resides, carries on business or has property in Canada, whose liabilities to creditors provable as claims under this Act amount to one thousand dollars, and

• (a) who is for any reason unable to meet his obligations as they generally become due,

• (b) who has ceased paying his current obligations in the ordinary course of business as they generally become due, or

• (c) the aggregate of whose property is not, at a fair valuation, sufficient, or, if disposed of at a fairly conducted sale under legal process, would not be sufficient to enable payment of all his obligations, due and accruing due; (personne insolvable)

legal counsel

conseiller juridique

legal counsel means any person qualified, in accordance with the laws of a province, to give legal advice; (conseiller juridique)

locality of a debtor

localité d’un débiteur

locality of a debtor means the principal place

• (a) where the debtor has carried on business during the year immediately preceding his bankruptcy,

• (b) where the debtor has resided during the year immediately preceding his bankruptcy, or

• (c) in cases not coming within paragraph (a) or (b), where the greater portion of the property of the debtor is situated; (localité d’un débiteur)

Minister

ministre

Minister means the Minister of Industry; (ministre)

net termination value

valeurs nettes dues à la date de résiliation

net termination value means the net amount obtained after netting or setting off or compensating the mutual obligations between the parties to an eligible financial contract in accordance with its provisions; (valeurs nettes dues à la date de résiliation)

official receiver

séquestre officiel

official receiver means an officer appointed under subsection 12(2); (séquestre officiel)

person

personne

person includes a partnership, an unincorporated association, a corporation, a cooperative society or an organization, the successors of a partnership, association, corporation, society or organization, and the heirs, executors, liquidators of the succession, administrators or other legal representative of a person, according to the law of that part of Canada to which the context extends; (personne)

prescribed

prescrit

prescribed

• (a) in the case of the form of a document that is by this Act to be prescribed and the information to be given therein, means prescribed by directive issued by the Superintendent under paragraph 5(4)(e), and

• (b) in any other case, means prescribed by the General Rules; (prescrit)

property

bien

property means any type of property, whether situated in Canada or elsewhere, and includes money, goods, things in action, land and every description of property, whether real or personal, legal or equitable, as well as obligations, easements and every description of estate, interest and profit, present or future, vested or contingent, in, arising out of or incident to property; (bien)

proposal

proposition concordataire ou proposition

proposal means

• (a) in any provision of Division I of Part III, a proposal made under that Division, and

• (b) in any other provision, a proposal made under Division I of Part III or a consumer proposal made under Division II of Part III

and includes a proposal or consumer proposal, as the case may be, for a composition, for an extension of time or for a scheme or arrangement; (proposition concordataire ou proposition)

public utility

entreprise de service public

public utility includes a person or body who supplies fuel, water or electricity, or supplies telecommunications, garbage collection, pollution control or postal services; (entreprise de service public)

resolution or ordinary resolution

résolution ou résolution ordinaire

resolution or ordinary resolution means a resolution carried in the manner provided by section 115; (résolution ou résolution ordinaire)

secured creditor

créancier garanti

secured creditor means a person holding a mortgage, hypothec, pledge, charge or lien on or against the property of the debtor or any part of that property as security for a debt due or accruing due to the person from the debtor, or a person whose claim is based on, or secured by, a negotiable instrument held as collateral security and on which the debtor is only indirectly or secondarily liable, and includes

• (a) a person who has a right of retention or a prior claim constituting a real right, within the meaning of the Civil Code of Québec or any other statute of the Province of Quebec, on or against the property of the debtor or any part of that property, or

• (b) any of

  • (i) the vendor of any property sold to the debtor under a conditional or instalment sale,

  • (ii) the purchaser of any property from the debtor subject to a right of redemption, or

  • (iii) the trustee of a trust constituted by the debtor to secure the performance of an obligation,

  if the exercise of the person’s rights is subject to the provisions of Book Six of the Civil Code of Québec entitled Prior Claims and Hypothecs that deal with the exercise of hypothecary rights; (créancier garanti)

settlement

disposition

settlement includes a contract, covenant, transfer, gift and designation of beneficiary in an insurance contract, to the extent that the contract, covenant, transfer, gift or designation is gratuitous or made for merely nominal consideration; (disposition)

sheriff

sheriff[Repealed, 2004, c. 25, s. 7]

special resolution

résolution spéciale

special resolution means a resolution decided by a majority in number and three-fourths in value of the creditors with proven claims present, personally or by proxy, at a meeting of creditors and voting on the resolution; (résolution spéciale)

Superintendent

surintendant

Superintendent means the Superintendent of Bankruptcy appointed under subsection 5(1); (surintendant)

Superintendent of Financial Institutions

surintendant des institutions financières

Superintendent of Financial Institutions means the Superintendent of Financial Institutions appointed under subsection 5(1) of the Office of the Superintendent of Financial Institutions Act; (surintendant des institutions financières)

title transfer credit support agreement

accord de transfert de titres pour obtention de crédit

title transfer credit support agreement means an agreement under which an insolvent person or a bankrupt has provided title to property for the purpose of securing the payment or performance of an obligation of the insolvent person or bankrupt in respect of an eligible financial contract; (accord de transfert de titres pour obtention de crédit)

trustee or licensed trustee

syndic ou syndic autorisé

trustee or licensed trustee means a person who is licensed or appointed under this Act. (syndic ou syndic autorisé)

Marginal note:Time or date of bankruptcy

2.1 For the purposes of this Act, the bankruptcy or putting into bankruptcy of a person occurs at the time or date of

• (a) the granting of a bankruptcy order against the person;

• (b) the filing of an assignment by or in respect of the person; or

• (c) the event that causes an assignment by the person to be deemed.

Marginal note:Superintendent’s division office

2.2 Any notification, document or other information that is required by this Act to be given, forwarded, mailed, sent or otherwise provided to the Superintendent, other than an application for a licence under subsection 13(1), shall be given, forwarded, mailed, sent or otherwise provided to the Superintendent at the Superintendent’s division office as specified in directives of the Superintendent.

Marginal note:Reviewable transaction

• 3 (1) For the purposes of this Act, a person who has entered into a transaction with another person otherwise than at arm’s length shall be deemed to have entered into a reviewable transaction.

• Marginal note:Question of fact

  (2) It is a question of fact whether persons not related to one another within the meaning of section 4 were at a particular time dealing with each other at arm’s length.

• Marginal note:Presumption

  (3) Persons related to each other within the meaning of section 4 shall be deemed not to deal with each other at arm’s length while so related.

Marginal note:Definitions

• 4 (1) In this section,

  related group

  groupe lié

  related group means a group of persons each member of which is related to every other member of the group; (groupe lié)

  unrelated group

  groupe non lié

  unrelated group means a group of persons that is not a related group. (groupe non lié)

• Marginal note:Definition of "related persons"

  (2) For the purposes of this Act, persons are related to each other and are related persons if they are

  • (a) individuals connected by blood relationship, marriage, common-law partnership or adoption;

  • (b) a corporation and

    • (i) a person who controls the corporation, if it is controlled by one person,

    • (ii) a person who is a member of a related group that controls the corporation, or

    • (iii) any person connected in the manner set out in paragraph (a) to a person described in subparagraph (i) or (ii); or

  • (c) two corporations

    • (i) controlled by the same person or group of persons,

    • (ii) each of which is controlled by one person and the person who controls one of the corporations is related to the person who controls the other corporation,

    • (iii) one of which is controlled by one person and that person is related to any member of a related group that controls the other corporation,

    • (iv) one of which is controlled by one person and that person is related to each member of an unrelated group that controls the other corporation,

    • (v) one of which is controlled by a related group a member of which is related to each member of an unrelated group that controls the other corporation, or

    • (vi) one of which is controlled by an unrelated group each member of which is related to at least one member of an unrelated group that controls the other corporation.

• Marginal note:Relationships

  (3) For the purposes of this section,

  • (a) where two corporations are related to the same corporation within the meaning of subsection (2), they shall be deemed to be related to each other;

  • (b) where a related group is in a position to control a corporation, it shall be deemed to be a related group that controls the corporation whether or not it is part of a larger group by whom the corporation is in fact controlled;

  • (c) a person who has a right under a contract, in equity or otherwise, either immediately or in the future and either absolutely or contingently, to, or to acquire, shares in a corporation, or to control the voting rights of shares in a corporation, shall, except where the contract provides that the right is not exercisable until the death of an individual designated therein, be deemed to have the same position in relation to the control of the corporation as if he owned the shares;

  • (d) where a person owns shares in two or more corporations, he shall, as shareholder of one of the corporations, be deemed to be related to himself as shareholder of each of the other corporations;

  • (e) persons are connected by blood relationship if one is the child or other descendant of the other or one is the brother or sister of the other;

  • (f) persons are connected by marriage if one is married to the other or to a person who is connected by blood relationship or adoption to the other;

  • (f.1) persons are connected by common-law partnership if one is in a common-law partnership with the other or with a person who is connected by blood relationship or adoption to the other; and

  • (g) persons are connected by adoption if one has been adopted, either legally or in fact, as the child of the other or as the child of a person who is connected by blood relationship, otherwise than as a brother or sister, to the other.

Her Majesty

Marginal note:Binding on Her Majesty

4.1 This Act is binding on Her Majesty in right of Canada or a province.

PART IAdministrative Officials

Superintendent

Marginal note:Appointment

• 5 (1) The Governor in Council shall appoint a Superintendent of Bankruptcy to hold office during pleasure who shall be paid such salary as the Governor in Council may fix.

• Marginal note:Extent of supervision

  (2) The Superintendent shall supervise the administration of all estates and matters to which this Act applies.

• Marginal note:Duties

  (3) The Superintendent shall, without limiting the authority conferred by subsection (2),

  • (a) receive applications for licences to act as trustees under this Act and issue licences to persons whose applications have been approved;

  • (b) [Repealed, 1992, c. 27, s. 5]

  • (c) where not otherwise provided for, require the deposit of one or more continuing guaranty bonds or continuing suretyships as security for the due accounting of all property received by trustees and for the due and faithful performance by them of their duties in the administration of estates to which they are appointed, in any amount that the Superintendent may determine, which amount may be increased or decreased as the Superintendent may deem expedient, and the security shall be in a form satisfactory to the Superintendent and may be enforced by the Superintendent for the benefit of the creditors;

  • (d) [Repealed, 1992, c. 27, s. 5]

  • (e) from time to time make or cause to be made such inspection or investigation of estates or other matters to which this Act applies, including the conduct of a trustee or a trustee acting as a receiver or interim receiver, as the Superintendent may deem expedient and for the purpose of the inspection or investigation the Superintendent or any person appointed by the Superintendent for the purpose shall have access to and the right to examine and make copies of all books, records, data, including data in electronic form, documents and papers pertaining or relating to any estate or other matter to which this Act applies;

  • (f) receive and keep a record of all complaints from any creditor or other person interested in any estate and make such specific investigations with regard to such complaints as the Superintendent may determine; and

  • (g) examine trustees' accounts of receipts and disbursements and final statements.

• Marginal note:Powers of Superintendent

  (4) The Superintendent may

  • (a) intervene in any matter or proceeding in court, where the Superintendent considers it expedient to do so, as if the Superintendent were a party thereto;

  • (b) issue, to official receivers, trustees, administrators of consumer proposals made under Division II of Part III and persons who provide counselling pursuant to this Act, directives with respect to the administration of this Act and, without restricting the generality of the foregoing, directives requiring them

    • (i) to keep such records as the Superintendent may require, and

    • (ii) to provide the Superintendent with such information as the Superintendent may require;

  • (c) issue such directives as may be necessary to give effect to any decision made by the Superintendent pursuant to this Act or to facilitate the carrying out of the purposes and provisions of this Act and the General Rules, including, without limiting the generality of the foregoing, directives relating to the powers, duties and functions of trustees, of receivers and of administrators as defined in section 66.11;

  • (d) issue directives governing the criteria to be applied by the Superintendent in determining whether a trustee licence is to be issued to a person and governing the qualifications and activities of trustees; and

  • (e) issue directives prescribing the form of any document that is by this Act to be prescribed and the information to be given therein.

• Marginal note:Compliance with directives

  (5) Every person to whom a directive is issued by the Superintendent under paragraph (4)(b) or (c) shall comply with the directive in the manner and within the time specified therein.

• Marginal note:Directives

  (6) A directive issued by the Superintendent under this section shall be deemed not to be a statutory instrument within the meaning and for the purposes of the Statutory Instruments Act.

Marginal note:Outside investigations

• 6 (1) The Superintendent may engage such persons as the Superintendent may deem advisable to conduct any inspection or investigation or to take any other necessary action outside of the office of the Superintendent, and the cost and expenses thereof shall, when certified by the Superintendent, be payable out of the appropriation for the office of the Superintendent.

• Marginal note:Superintendent may examine bank account

  (2) The Superintendent, or any one duly authorized by him in writing on his behalf, is entitled to have access to and to examine and make copies of the banking accounts of a trustee in which estate funds may have been deposited, and, when required, all deposit slips, cancelled cheques or other documents relating thereto in the custody of the bank or the trustee shall be produced for examination.

• Marginal note:Superintendent may examine records and documents

  (3) The Superintendent, or anyone duly authorized in writing by or on behalf of the Superintendent, may with the leave of the court granted on an ex parte application examine the books, records, documents and deposit accounts of a trustee or any other person designated in the order granting that leave for the purpose of tracing or discovering the property or funds of an estate when there are reasonable grounds to believe or suspect that the property or funds of an estate have not been properly disclosed or dealt with and for that purpose may under a warrant from the court enter on and search any premises.

• Marginal note:Court order re payments from accounts

  (4) Where the Superintendent, on ex parte application, satisfies the court that it is necessary and in the public interest to do so, the court may issue an order directing a deposit-taking institution that holds a deposit account of a trustee or such other person as is designated in the order not to make payments out of the account until such time as the court otherwise directs.

7 and 8 [Repealed, 1992, c. 27, s. 6]

Marginal note:Appointment of employees

9 Such employees as are required to assist the Superintendent to perform his functions under this Act shall be appointed in accordance with the Public Service Employment Act.

Marginal note:Investigations or inquiries by Superintendent

• 10 (1) Where, on information supplied by an official receiver, trustee or other person, the Superintendent suspects, on reasonable grounds, that a person has, in connection with any estate or matter to which this Act applies, committed an offence under this Act or any other Act of Parliament, the Superintendent may, if it appears to the Superintendent that the alleged offence might not otherwise be investigated, make or cause to be made such inquiries or investigations as the Superintendent deems expedient with respect to the conduct, dealings and transactions of the debtor concerned, the causes of the bankruptcy or insolvency of the debtor and the disposition of the property of the debtor.

• (2) [Repealed, 1992, c. 27, s. 7]

• Marginal note:Examination

  (3) If, on the application of the Superintendent or the Superintendent’s authorized representative, a subpoena has been issued by the court, the Superintendent may, for the purpose of an investigation under subsection (1), examine or cause to be examined under oath before the registrar of the court or other authorized person, the debtor, any person who the Superintendent suspects, on reasonable grounds, has knowledge of the affairs of the debtor, or any person who is or has been an agent or a mandatary, or a clerk, a servant, an officer, a director or an employee of the debtor, with respect to the conduct, dealings and transactions of the debtor, the causes of the bankruptcy or insolvency of the debtor, and the disposition of the property of the debtor, and may order any person liable to be so examined to produce any books, records, papers or documents in the person’s possession or under the control of the person relating to the debtor and the conduct, dealings and transactions of the debtor, the causes of the bankruptcy or insolvency of the debtor or the disposition of the debtor’s property.

• Marginal note:Questions

  (4) A person being examined pursuant to this section is bound to answer all questions relating to the conduct, dealings and transactions of the debtor, the causes of the debtor’s bankruptcy or insolvency and the disposition of the debtor’s property.

• Marginal note:Privilege of witness

  (5) Where a person being examined pursuant to this section objects to answering any question on the ground that his answer may tend to criminate him or may tend to establish his liability to a civil proceeding at the instance of the Crown or of any person and if, but for this section or section 5 of the Canada Evidence Act, he would have been excused from answering that question, the answer so given shall not be used or admitted in evidence against him in any proceeding, civil or criminal, thereafter taking place other than a prosecution for perjury in the giving of that evidence.

• Marginal note:Compliance

  (6) No person shall hinder, molest or interfere with any person doing anything that he is authorized by or pursuant to this section to do, or prevent or attempt to prevent any person doing any such thing, and, notwithstanding any other Act or law, every person shall, unless he is unable to do so, do everything he is required by or pursuant to this section to do.

• Marginal note:Copies

  (7) Where any book, record, paper or other document is examined or produced in accordance with this section, the person by whom it is examined or to whom it is produced or the Superintendent may make or cause to be made one or more copies thereof, and a document purporting to be certified by the Superintendent or a person thereunto authorized by him to be a copy made pursuant to this section is admissible in evidence and has the same probative force as the original document would have if it were proven in the ordinary way.

Marginal note:Reporting offence to provincial authority

• 11 (1) Where after an investigation pursuant to section 10 or otherwise the Superintendent has obtained evidence of an offence having been committed in connection with an estate or matter to which this Act applies, the Superintendent shall report the alleged offence to the deputy attorney general of the province concerned or to such person as is duly designated by that deputy attorney general for that purpose.

• Marginal note:Costs and expenses

  (2) Notwithstanding section 136, a recovery made as the result of any inquiries or investigation made or caused to be made pursuant to section 10 shall be applied to the reimbursement of any costs and expenses incurred by the Superintendent thereon, not being ordinary costs or expenses of the office of the Superintendent, and the balance thereafter remaining in respect of the recovery shall be made available for the benefit of the creditors of the debtor.

Public Records

Marginal note:Public records

• 11.1 (1) The Superintendent shall keep, or cause to be kept, in such form as the Superintendent deems appropriate and for the prescribed period, a public record of

  • (a) proposals,

  • (b) bankruptcies,

  • (c) licences issued to trustees by the Superintendent, and appointments or designations of administrators made by the Superintendent, and

  • (d) notices sent to the Superintendent by receivers pursuant to subsection 245(1)

  and, on request therefor and on payment of such fee as may be prescribed, shall provide, or cause to be provided, any information contained in that public record.

• Marginal note:Other records

  (2) The Superintendent shall keep, or cause to be kept, in such form as the Superintendent deems appropriate and for the prescribed period, such other records relating to the administration of this Act as the Superintendent deems advisable.

Official Receivers

Marginal note:Bankruptcy districts and divisions

• 12 (1) Each of the provinces constitutes one bankruptcy district for the purposes of this Act but the Governor in Council may divide any bankruptcy district into two or more bankruptcy divisions and name or number them.

• Marginal note:Official receivers

  (2) The Governor in Council shall appoint one or more official receivers in each bankruptcy division who shall be deemed to be officers of the court and shall have and perform the duties and responsibilities specified by this Act and the General Rules.

• Marginal note:Report to Superintendent

  (3) The official receiver shall make a report to the Superintendent, in the prescribed form, of every bankruptcy originating in his division, and he shall also notify the Superintendent of any subsequent increase or decrease in the security filed by the trustee.

• Marginal note:Registrar to act for official receiver

  (4) In the absence or illness of the official receiver or pending the appointment of a successor when the office is vacant, the registrar of the court shall perform the duties of the official receiver.

Trustees

Licensing of Trustees

Marginal note:Application for licence

• 13 (1) A person who wishes to obtain a licence to act as a trustee shall file with the Superintendent an application for a licence in the prescribed form.

• Marginal note:Conditions of eligibility

  (2) The Superintendent, after such investigation concerning an applicant for a licence to act as a trustee as the Superintendent considers necessary, may issue the licence if the Superintendent is satisfied, having regard to the criteria referred to in paragraph 5(4)(d), that the applicant is qualified to obtain the licence.

• Marginal note:Non-eligibility

  (3) The Superintendent may refuse to issue a licence to an applicant who is insolvent or has been convicted of an indictable offence.

Marginal note:Form of licence

13.1 A licence shall

• (a) be in the prescribed form;

• (b) specify the bankruptcy district or part thereof in which the trustee is entitled to act; and

• (c) be subject to such conditions and limitations as the Superintendent considers appropriate and may specify therein.

Marginal note:Fees payable

• 13.2 (1) Prior to the issue of a licence, the applicant shall pay such fees as may be prescribed.

• Marginal note:Idem

  (2) On the December 31 following the day on which a licence is issued, and on December 31 in each year thereafter, the trustee shall pay such fees as may be prescribed.

• Marginal note:When licence invalid

  (3) A licence ceases to be valid on the failure of the trustee to pay a fee in accordance with subsection (2) or if the trustee becomes bankrupt.

• Marginal note:Superintendent may reinstate licence

  (4) Where a licence has ceased to be valid by reason of

  • (a) failure to pay fees, the Superintendent may reinstate it where the trustee pays the outstanding fees together with a prescribed penalty amount and provides a reasonable written explanation of the failure to pay them in accordance with subsection (2); or

  • (b) the trustee becoming bankrupt, the Superintendent may, on written representations made by the trustee, reinstate the licence subject to such conditions and limitations as the Superintendent considers appropriate and may specify therein.

• Marginal note:Suspension or cancellation

  (5) A licence may be suspended or cancelled by the Superintendent

  • (a) if the trustee is convicted of an indictable offence;

  • (b) if the trustee has failed to comply with any of the conditions or limitations to which the licence is subject;

  • (c) if the trustee has ceased to act as a trustee; or

  • (d) at the request of the trustee.

• Marginal note:Notice of intended decision

  (6) Notice of an intended decision under subsection (5) shall be in writing setting out the Superintendent’s reasons therefor and shall be sent to the trustee at least ten days before the decision takes effect.

• Marginal note:Conditions

  (7) If a licence ceases to be valid by virtue of subsection (3) or is suspended or cancelled under subsection (5), the Superintendent may impose on the trustee any requirements that the Superintendent considers appropriate, including a requirement that the trustee provide security for the protection of an estate.

• Marginal note:Non-application of procedure

  (8) For greater certainty, section 14.02 does not apply in respect of a suspension or cancellation of a licence under subsection (5).

Conduct of Trustees

Marginal note:Where trustee is not qualified to act

• 13.3 (1) Except with the permission of the court and on such conditions as the court may impose, no trustee shall act as trustee in relation to the estate of a debtor

  • (a) where the trustee is, or at any time during the two preceding years was,

    • (i) a director or officer of the debtor,

    • (ii) an employer or employee of the debtor or of a director or officer of the debtor,

    • (iii) related to the debtor or to any director or officer of the debtor, or

    • (iv) the auditor, accountant or legal counsel, or a partner or an employee of the auditor, accountant or legal counsel, of the debtor; or

  • (b) where the trustee is

    • (i) the trustee under a trust indenture issued by the debtor or any person related to the debtor, or the holder of a power of attorney under an act constituting a hypothec within the meaning of the Civil Code of Québec that is granted by the debtor or any person related to the debtor, or

    • (ii) related to the trustee, or the holder of a power of attorney, referred to in subparagraph (i).

• Marginal note:Where disclosure required

  (2) No trustee shall act as a trustee in relation to the estate of a debtor where the trustee is already

  • (a) the trustee in the bankruptcy of, or in a proposal concerning, any person related to the debtor, or

  • (b) the receiver or the liquidator of the property of any person related to the debtor,

  without making, at the time of being appointed as trustee in relation to the estate of the debtor and at the first meeting of creditors, full disclosure of that fact and of the potential conflict of interest.

Marginal note:Trustee may act for secured creditor on certain conditions

• 13.4 (1) No trustee shall, while acting as the trustee of an estate, act for or assist a secured creditor of the estate to assert any claim against the estate or to realize or otherwise deal with the security that the secured creditor holds, unless the trustee has obtained a written opinion of a legal counsel who does not act for the secured creditor that the security is valid and enforceable as against the estate.

• Marginal note:Notification by trustee

  (1.1) Forthwith on commencing to act for or assist a secured creditor of the estate in the manner set out in subsection (1), a trustee shall notify the Superintendent and the creditors or the inspectors

  • (a) that the trustee is acting for the secured creditor;

  • (b) of the basis of any remuneration from the secured creditor; and

  • (c) of the opinion referred to in subsection (1).

• Marginal note:Trustee to provide opinion

  (2) Within two days after receiving a request therefor, a trustee shall provide the Superintendent with a copy of the opinion referred to in subsection (1) and shall also provide a copy to each creditor who has made a request therefor.

Marginal note:Code of ethics

13.5 A trustee shall comply with such code of ethics respecting the conduct of trustees as may be prescribed.

Marginal note:Persons disqualified from working for trustee

13.6 A trustee shall not engage the services of a person whose trustee licence has been cancelled under paragraph 13.2(5)(a) or subsection 14.01(1).

Appointment and Substitution of Trustees

Marginal note:Appointment of trustee by creditors

14 The creditors may, at any meeting by special resolution, appoint or substitute another licensed trustee for the trustee named in an assignment, a bankruptcy order or a proposal, or otherwise appointed or substituted.

Marginal note:Decision affecting licence

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

  • (a) a trustee has not properly performed the duties of a trustee or has been guilty of any improper management of an estate,

  • (b) a trustee has not fully complied with this Act, the General Rules, directives of the Superintendent or any law with regard to the proper administration of any estate, or

  • (c) it is in the public interest to do so,

  the Superintendent may do one or more of the following:

  • (d) cancel or suspend the licence of the trustee;

  • (e) place such conditions or limitations on the licence as the Superintendent considers appropriate including a requirement that the trustee successfully take an exam or enrol in a proficiency course, and

  • (f) require the trustee to make restitution to the estate of such amount of money as the estate has been deprived of as a result of the trustee’s conduct.

• Marginal note:Application to former trustees

  (1.1) This section and section 14.02 apply, in so far as they are applicable, in respect of former trustees, with such modifications as the circumstances require.

• Marginal note:Delegation

  (2) The Superintendent may delegate by written instrument, on such terms and conditions as are therein specified, any or all of the Superintendent’s powers, duties and functions under subsection (1), subsection 13.2(5), (6) or (7) or section 14.02 or 14.03.

• Marginal note:Notification to trustees

  (3) Where the Superintendent delegates in accordance with subsection (2), the Superintendent or the delegate shall

  • (a) where there is a delegation in relation to trustees generally, give written notice of the delegation to all trustees; and

  • (b) whether or not paragraph (a) applies, give written notice of the delegation of a power to any trustee who may be affected by the exercise of that power, either before the power is exercised or at the time the power is exercised.

Marginal note:Notice of proposed decision to trustee

• 14.02 (1) Where the Superintendent intends to exercise any of the powers referred to in subsection 14.01(1), the Superintendent shall send the trustee written notice of the powers that the Superintendent intends to exercise and the reasons therefor and afford the trustee a reasonable opportunity for a hearing.

• Marginal note:Procedure at hearing

  (2) At a hearing referred to in subsection (1), the Superintendent

  • (a) has the power to administer oaths;

  • (b) is not bound by any legal or technical rules of evidence in conducting the hearing;

  • (c) shall deal with the matters set out in the notice of the hearing as informally and expeditiously as the circumstances and a consideration of fairness permit; and

  • (d) shall cause a summary of any oral evidence to be made in writing.

• Marginal note:Record

  (3) The notice referred to in subsection (1) and, where applicable, the summary of oral evidence referred to in paragraph (2)(d), together with such documentary evidence as the Superintendent receives in evidence, form the record of the hearing and the record and the hearing are public, unless the Superintendent is satisfied that personal or other matters that may be disclosed are of such a nature that the desirability of avoiding public disclosure of those matters, in the interest of a third party or in the public interest, outweighs the desirability of the access by the public to information about those matters.

• Marginal note:Decision

  (4) The decision of the Superintendent after a hearing referred to in subsection (1), together with the reasons therefor, shall be given in writing to the trustee not later than three months after the conclusion of the hearing, and is public.

• Marginal note:Review by Federal Court

  (5) A decision of the Superintendent given pursuant to subsection (4) is deemed to be a decision of a federal board, commission or other tribunal that may be reviewed and set aside pursuant to the Federal Courts Act.

Marginal note:Conservatory measures

• 14.03 (1) The Superintendent may, for the protection of an estate in the circumstances referred to in subsection (2),

  • (a) direct a person to deal with property of the estate described in the direction in such manner as may be indicated in the direction, including the continuation of the administration of the estate;

  • (b) direct any person to take such steps as the Superintendent considers necessary to preserve the books, records, data, including data in electronic form, and documents of the estate;

  • (c) direct a bank or other depository not to pay out funds held to the credit of the estate except in accordance with the direction; and

  • (d) direct the official receiver not to appoint the trustee in respect of any new estates until a decision is made under subsection 13.2(5) or 14.01(1).

• Marginal note:Circumstances

  (2) The circumstances in which the Superintendent is authorized to exercise the powers set out in subsection (1) are where

  • (a) an estate is left without a trustee by the death, removal or incapacity of the trustee;

  • (b) the Superintendent makes or causes to be made any investigation pursuant to paragraph 5(3)(e);

  • (c) the Superintendent exercises any of the powers set out in section 14.01;

  • (d) the fees referred to in subsection 13.2(2) have not been paid in respect of the trustee’s licence;

  • (e) a trustee becomes insolvent;

  • (f) a trustee is convicted of an indictable offence or has failed to comply with any of the conditions or limitations to which the trustee’s licence is subject; or

  • (g) a circumstance referred to in paragraph 13.2(5)(c) or (d) exists and the Superintendent is considering cancelling the licence under subsection 13.2(5).

• Marginal note:Contents and effect of direction

  (3) A direction given pursuant to subsection (1)

  • (a) shall state the statutory authority pursuant to which the direction is given;

  • (b) is binding on the person to whom it is given; and

  • (c) is, in favour of the person to whom it is given, conclusive proof of the facts set out therein.

• Marginal note:Liability ceases on compliance

  (4) A person who complies with a direction given pursuant to subsection (1) is not liable for any act done by the person only to comply with the direction.

Marginal note:Removal and appointment

14.04 The court, on the application of any interested person, may for cause remove a trustee and appoint another licensed trustee in the trustee’s place.

Marginal note:Where there is no licensed trustee, etc.

14.05 Where a debtor resides or carries on business in a locality in which there is no licensed trustee, and no licensed trustee can be found who is willing to act as trustee, the court or the official receiver may appoint a responsible person residing in the locality of the debtor to administer the estate of the debtor, and that person, for that purpose, has all the powers of a licensed trustee under this Act, and the provisions of this Act apply to that person as if a licence had been issued to that person under paragraph 5(3)(a).

Marginal note:No trustee is bound to act

• 14.06 (1) No trustee is bound to assume the duties of trustee in matters relating to assignments, bankruptcy orders or proposals, but having accepted an appointment in relation to those matters the trustee shall, until discharged or another trustee is appointed in the trustee’s stead, perform the duties required of a trustee under this Act.

• Marginal note:Application

  (1.1) In subsections (1.2) to (6), a reference to a trustee means a trustee in a bankruptcy or proposal and includes an interim receiver or a receiver within the meaning of subsection 243(2).

• Marginal note:Non-liability in respect of certain matters

  (1.2) Notwithstanding anything in any federal or provincial law, where a trustee carries on in that position the business of the debtor or continues the employment of the debtor’s employees, the trustee is not by reason of that fact personally liable in respect of any claim against the debtor or related to a requirement imposed on the debtor to pay an amount where the claim arose before or upon the trustee’s appointment.

• Marginal note:Status of claim ranking

  (1.3) A claim referred to in subsection (1.2) shall not rank as costs of administration.

• Marginal note:Liability in respect of environmental matters

  (2) Notwithstanding anything in any federal or provincial law, a trustee is not personally liable in that position for any environmental condition that arose or environmental damage that occurred

  • (a) before the trustee’s appointment; or

  • (b) after the trustee’s appointment unless it is established that the condition arose or the damage occurred as a result of the trustee’s gross negligence or wilful misconduct or, in the Province of Quebec, the trustee’s gross or intentional fault.

• Marginal note:Reports, etc., still required

  (3) Nothing in subsection (2) exempts a trustee from any duty to report or make disclosure imposed by a law referred to in that subsection.

• Marginal note:Non-liability re certain orders

  (4) Notwithstanding anything in any federal or provincial law but subject to subsection (2), where an order is made which has the effect of requiring a trustee to remedy any environmental condition or environmental damage affecting property involved in a bankruptcy, proposal or receivership, the trustee is not personally liable for failure to comply with the order, and is not personally liable for any costs that are or would be incurred by any person in carrying out the terms of the order,

  • (a) if, within such time as is specified in the order, within ten days after the order is made if no time is so specified, within ten days after the appointment of the trustee, if the order is in effect when the trustee is appointed, or during the period of the stay referred to in paragraph (b), the trustee

    • (i) complies with the order, or

    • (ii) on notice to the person who issued the order, abandons, disposes of or otherwise releases any interest in any real property, or any right in any immovable, affected by the condition or damage;

  • (b) during the period of a stay of the order granted, on application made within the time specified in the order referred to in paragraph (a), within ten days after the order is made or within ten days after the appointment of the trustee, if the order is in effect when the trustee is appointed, by

    • (i) the court or body having jurisdiction under the law pursuant to which the order was made to enable the trustee to contest the order, or

    • (ii) the court having jurisdiction in bankruptcy for the purposes of assessing the economic viability of complying with the order; or

  • (c) if the trustee had, before the order was made, abandoned or renounced or been divested of any interest in any real property, or any right in any immovable, affected by the condition or damage.

• Marginal note:Stay may be granted

  (5) The court may grant a stay of the order referred to in subsection (4) on such notice and for such period as the court deems necessary for the purpose of enabling the trustee to assess the economic viability of complying with the order.

• Marginal note:Costs for remedying not costs of administration

  (6) If the trustee has abandoned or renounced any interest in any real property, or any right in any immovable, affected by the environmental condition or environmental damage, claims for costs of remedying the condition or damage shall not rank as costs of administration.

• Marginal note:Priority of claims

  (7) Any claim by Her Majesty in right of Canada or a province against the debtor in a bankruptcy, proposal or receivership for costs of remedying any environmental condition or environmental damage affecting real property or an immovable of the debtor is secured by security on the real property or immovable affected by the environmental condition or environmental damage and on any other real property or immovable of the debtor that is contiguous with that real property or immovable and that is related to the activity that caused the environmental condition or environmental damage, and the security

  • (a) is enforceable in accordance with the law of the jurisdiction in which the real property or immovable is located, in the same way as a mortgage, hypothec or other security on real property or immovables; and

  • (b) ranks above any other claim, right, charge or security against the property, despite any other provision of this Act or anything in any other federal or provincial law.

• Marginal note:Claim for clean-up costs

  (8) Despite subsection 121(1), a claim against a debtor in a bankruptcy or proposal for the costs of remedying any environmental condition or environmental damage affecting real property or an immovable of the debtor shall be a provable claim, whether the condition arose or the damage occurred before or after the date of the filing of the proposal or the date of the bankruptcy.

Marginal note:Effect of defect or irregularity in appointment

14.07 No defect or irregularity in the appointment of a trustee vitiates any act done by the trustee in good faith.

Corporations as Trustees

Marginal note:Majority of officers and directors must hold licences

14.08 A body corporate may hold a licence as a trustee only if a majority of its directors and a majority of its officers hold licences as trustees.

Marginal note:Acts of body corporate

14.09 A body corporate that holds a licence as a trustee may perform the duties and exercise the powers of a trustee only through a director or officer of the body corporate who holds a licence as a trustee.

Marginal note:Not carrying on business of trust company

14.1 Every body corporate that is incorporated by or under an Act of Parliament and that holds a licence as a trustee may carry on the business of a trustee anywhere in Canada and shall not, in respect of its operations as a trustee, be construed to be carrying on the business of a trust company.

Official Name

Marginal note:Official name in bankruptcy and proposal proceedings

15 The official name of a trustee acting in bankruptcy proceedings is “The Trustee of the Estate of (insert name of the bankrupt), a bankrupt”, and the official name of a trustee acting with respect to a proposal by an insolvent person is “The Trustee acting in re the proposal of (insert the name of the debtor)”.

Status of Trustee

Marginal note:Declaration

15.1 A trustee is deemed to be a trustee for the purposes of the definition trustee in section 2 of the Criminal Code.

Duties and Powers of Trustees

Marginal note:Security to be given by trustee

• 16 (1) Every trustee duly appointed shall, as soon as they are appointed, give security in cash or by bond or suretyship of a guaranty company satisfactory to the official receiver for the due accounting for, the payment and the transfer of all property received by the trustee as trustee and for the due and faithful performance of the trustee’s duties.

• Marginal note:Security to be given by trustee

  (2) The security required to be given under subsection (1) shall be given to the official receiver in favour of the creditors generally and may be enforced by any succeeding trustee or by any one of the creditors on behalf of all by direction of the court, and may be increased or reduced by the official receiver.

• Marginal note:Trustee to take possession and make inventory

  (3) The trustee shall, as soon as possible, take possession of the deeds, books, records and documents and all property of the bankrupt and make an inventory, and for the purpose of making an inventory the trustee is entitled to enter, subject to subsection (3.1), on any premises on which the deeds, books, records, documents or property of the bankrupt may be, even if they are in the possession of an executing officer, a secured creditor or other claimant to them.

• Marginal note:Warrant required to enter

  (3.1) Where the premises referred to in subsection (3) are occupied by a person other than the bankrupt, the trustee may not enter the premises without the consent of that other person except under the authority of a warrant issued under section 189.

• Marginal note:Trustee to be receiver

  (4) The trustee shall, in relation to and for the purpose of acquiring or retaining possession of the property of the bankrupt, be in the same position as if he were a receiver of the property appointed by the court, and the court may on his application enforce the acquisition or retention accordingly.

• Marginal note:Right of trustee to books of account, etc.

  (5) No person is, as against the trustee, entitled to withhold possession of the books of account belonging to the bankrupt or any papers or documents, including material in electronic form, relating to the accounts or to any trade dealings of the bankrupt or to set up any lien or right of retention thereon.

Marginal note:Property to be delivered to trustee

• 17 (1) Where a person has in his possession or power any property of the bankrupt that he is not by law entitled to retain as against the bankrupt or the trustee, that person shall deliver the property to the trustee.

• Marginal note:Power to act anywhere

  (2) For the purpose of obtaining possession of and realizing on the property of the bankrupt, a trustee has power to act as such anywhere.

Marginal note:Conservatory measures

18 The trustee may when necessary in the interests of the estate of the bankrupt

• (a) take conservatory measures and summarily dispose of property that is perishable or likely to depreciate rapidly in value; and

• (b) carry on the business of the bankrupt until the date fixed for the first meeting of creditors.

Marginal note:Legal advice or action before first meeting

• 19 (1) The trustee may prior to the first meeting of creditors obtain such legal advice and take such court proceedings as he may consider necessary for the recovery or protection of the property of the bankrupt.

• Marginal note:In case of emergency

  (2) In the case of an emergency where the necessary authority cannot be obtained from the inspectors in time to take appropriate action, the trustee may obtain such legal advice and institute such legal proceedings and take such action as he may deem necessary in the interests of the estate of the bankrupt.

• Marginal note:Verifying bankrupt’s statement

  (3) The trustee shall verify the bankrupt’s statement of affairs.

Marginal note:Divesting property by trustee

• 20 (1) The trustee may, with the permission of the inspectors, divest all or any part of the trustee’s right, title or interest in any real property or immovable of the bankrupt by a notice of quit claim or renunciation by the trustee, and the official in charge of the land titles or registry office, as the case may be, where title to the real property or immovable is registered shall accept and register in the land register the notice when tendered for registration.

• Marginal note:Registration of notice

  (2) Registration of a notice under subsection (1) operates as a discharge or release of any documents previously registered in the land register by or on behalf of the trustee with respect to the property referred to in the notice.

Marginal note:Initiating criminal proceedings

21 The trustee may initiate such criminal proceedings as may be authorized by the creditors, the inspectors or the court against any person believed to have committed an offence under this Act.

Marginal note:Duties regarding returns

22 The trustee is not liable to make any return that the bankrupt was required to make more than one year prior to the commencement of the calendar year, or the fiscal year of the bankrupt where that is different from the calendar year, in which he became a bankrupt.

Marginal note:Trustee to permit inspection of records

23 The trustee shall at all reasonable times permit any authorized person to inspect the books and papers of the bankrupt in order to prepare or verify returns that the bankrupt is by statute required to file.

Marginal note:Insuring property

• 24 (1) The trustee shall forthwith temporarily insure and keep insured in his official name all the insurable property of the bankrupt, for such amount and against such hazards as he may deem advisable until the inspectors are appointed, whereupon the inspectors shall determine the amount for which and the hazards against which the bankrupt’s property shall be insured by the trustee.

• Marginal note:Losses payable to trustee

  (2) All insurance covering property of the bankrupt in force at the date of the bankruptcy shall in the event of loss suffered, without any notice to the insurer or other action on the part of the trustee and notwithstanding any statute or rule of law or contract or provision to a contrary effect, become payable immediately to the trustee as if the name of the trustee were written in the policy or contract of insurance as that of the insured or as if no change of title or ownership had come about and the trustee were the insured.

Marginal note:Trust account

• 25 (1) Subject to subsections (1.1) and (1.2), a trustee shall forthwith deposit in a bank all moneys received for an estate in a separate trust account for each estate.

• Marginal note:Other banks must be insured

  (1.1) The trustee may deposit moneys pursuant to subsection (1) in a deposit-taking institution, other than a bank as defined in section 2, only if deposits held by that institution are insured or guaranteed under a provincial or federal enactment that provides depositors with protection against the loss of money on deposit with that institution.

• Marginal note:Foreign moneys

  (1.2) Where moneys referred to in subsection (1) are situated in a country other than Canada, the trustee may, where authorized by the Superintendent, deposit the moneys in a financial institution in that country that is similar to a bank.

• Marginal note:Permission needed for certain acts

  (1.3) The trustee shall not withdraw any money from the trust account of an estate without the permission in writing of the inspectors or, on application, the court, except for the payment of dividends and charges incidental to the administration of the estate.

• Marginal note:Payment by cheque

  (2) All payments made by a trustee under subsection (1) shall be made by cheque drawn on the estate account or in such manner as is specified in directives of the Superintendent.

• Marginal note:Not in private account

  (3) The trustee shall not deposit any sums received by the trustee in the trustee’s official capacity as a trustee in any banking account kept by the trustee for the trustee’s personal use.

Marginal note:Books to be kept by trustee

• 26 (1) The trustee shall keep proper books and records of the administration of each estate to which he is appointed, in which shall be entered a record of all moneys received or disbursed by him, a list of all creditors filing claims, the amount and disposition of those claims, a copy of all notices sent out, the original signed copy of all minutes, proceedings had, and resolutions passed at any meeting of creditors or inspectors, court orders and all such other matters or proceedings as may be necessary to give a complete account of his administration of the estate.

• Marginal note:Trustee’s records to be property of estate

  (2) The estate books, records and documents relating to the administration of an estate are deemed to be the property of the estate, and, in the event of any change of trustee, shall forthwith be delivered to the substituted trustee.

• Marginal note:Records may be inspected

  (3) The trustee shall permit the books, records and documents referred to in subsection (2) to be inspected and copies of them made by the Superintendent, the bankrupt or any creditor or their representative at any reasonable time.

Marginal note:Reports by trustee

• 27 (1) The trustee shall from time to time report,

  • (a) when required by the inspectors, to every creditor,

  • (b) when required by any specific creditor, to the creditor, and

  • (c) when required by the Superintendent, to the Superintendent or the creditors,

  showing the condition of the bankrupt’s estate, the moneys on hand, if any, and particulars of any property remaining unsold.

• Marginal note:Disbursements

  (2) The trustee is entitled to charge against the estate of the bankrupt, for the preparation and delivery of any report referred to in subsection (1), only his actual disbursements.

Marginal note:Documents to be forwarded to Superintendent

• 28 (1) The trustee shall, forthwith after their receipt or preparation, mail to the Superintendent true copies of the documents referred to in section 155 and a true copy of

  • (a) the notice referred to in section 102,

  • (b) the statement referred to in paragraph 158(d),

  • (c) the trustee’s final statement of receipts and disbursements and the dividend sheet, and

  • (d) every order made by the court on the application for discharge of a bankrupt or annulling any bankruptcy,

  and file a copy of the documents referred to in paragraphs (b) and (c) in the court.

• Marginal note:Notices, etc., to be forwarded to Superintendent

  (2) The trustee shall forward promptly to the Superintendent copies of all notices, reports and statements sent by him to the creditors and, when required, copies of such other documents as the Superintendent may specify.

Marginal note:Duty of trustee on expiration of licence or removal

• 29 (1) Where

  • (a) the licence of a trustee has been cancelled or suspended, or has ceased to be valid by reason of failure to pay fees,

  • (b) a trustee has been removed from continuing the administration of an estate, or

  • (c) a trustee dies or becomes incapacitated,

  the trustee or the legal representative of the trustee shall, within such time as is fixed by the Superintendent, prepare and forward to the Superintendent a detailed financial statement of the receipts and disbursements together with a list of and report on the unadministered property of every estate under the trustee’s administration for which the trustee has not been discharged, and shall forward to such other trustee as may be appointed in the trustee’s stead or, pending the appointment of the other trustee, to the official receiver all the remaining property of every estate under the trustee’s administration together with all the books, records and documents relating thereto.

• Marginal note:Report to be filed before discharge

  (2) Every trustee before proceeding to his discharge shall, unless he has already done so, prepare and file the reports referred to in sections 170 and 171 and forward a copy of each to the Superintendent.

Marginal note:Powers exercisable by trustee with permission of inspectors

• 30 (1) The trustee may, with the permission of the inspectors, do all or any of the following things:

  • (a) sell or otherwise dispose of for such price or other consideration as the inspectors may approve all or any part of the property of the bankrupt, including the goodwill of the business, if any, and the book debts due or growing due to the bankrupt, by tender, public auction or private contract, with power to transfer the whole thereof to any person or company, or to sell the same in parcels;

  • (b) lease any real property or immovable;

  • (c) carry on the business of the bankrupt, in so far as may be necessary for the beneficial administration of the estate of the bankrupt;

  • (d) bring, institute or defend any action or other legal proceeding relating to the property of the bankrupt;

  • (e) employ a barrister or solicitor or, in the Province of Quebec, an advocate, or employ any other representative, to take any proceedings or do any business that may be sanctioned by the inspectors;

  • (f) accept as the consideration for the sale of any property of the bankrupt a sum of money payable at a future time, subject to such stipulations as to security and otherwise as the inspectors think fit;

  • (g) incur obligations, borrow money and give security on any property of the bankrupt by mortgage, hypothec, charge, lien, assignment, pledge or otherwise, such obligations and money borrowed to be discharged or repaid with interest out of the property of the bankrupt in priority to the claims of the creditors;

  • (h) compromise and settle any debts owing to the bankrupt;

  • (i) compromise any claim made by or against the estate;

  • (j) divide in its existing form among the creditors, according to its estimated value, any property that from its peculiar nature or other special circumstances cannot be readily or advantageously sold;

  • (k) elect to retain for the whole part of its unexpired term, or to assign, surrender, disclaim or resiliate any lease of, or other temporary interest or right in, any property of the bankrupt; and

  • (l) appoint the bankrupt to aid in administering the estate of the bankrupt in such manner and on such terms as the inspectors may direct.

• Marginal note:Permission limited to particular thing or class

  (2) The permission given for the purposes of subsection (1) is not a general permission to do all or any of the things mentioned in that subsection, but is only a permission to do the particular thing or things or class of thing or things that the permission specifies.

Marginal note:Borrowing powers with permission of court

• 31 (1) With the permission of the court, an interim receiver or a trustee, prior to the appointment of inspectors, may make necessary or advisable advances, incur obligations, borrow money and give security on the property of the debtor in such amounts, on such terms and on such property as may be authorized by the court and those advances, obligations and money borrowed shall be repaid out of the property of the debtor in priority to the claims of the creditors.

• Marginal note:Security under Bank Act

  (2) For the purpose of giving security under section 427 of the Bank Act, the trustee or interim receiver if authorized to carry on the business of the bankrupt is deemed to be a person engaged in the class of business previously carried on by the bankrupt.

• Marginal note:Limit of obligations and carrying on of business

  (3) The creditors or inspectors may by resolution limit the amount of the obligations that may be incurred, the advances that may be made or moneys that may be borrowed by the trustee and may limit the period of time during which the business of the bankrupt may be carried on by the trustee.

• Marginal note:Debts deemed to be debts of estate

  (4) All debts incurred and credit received in carrying on the business of a bankrupt are deemed to be debts incurred and credit received by the estate of the bankrupt.

Marginal note:Trustee not obliged to carry on business

32 The trustee is not under obligation to carry on the business of the bankrupt where in his opinion the realizable value of the property of the bankrupt is insufficient to protect him fully against possible loss occasioned by so doing and the creditors or inspectors, on demand made by the trustee, neglect or refuse to secure him against such possible loss.

Marginal note:Reimbursement of trustee’s advances

• 33 (1) The court may make an order providing for the sale of any or all of the assets of the estate of the bankrupt, either by tender, private sale or public auction, setting out the terms and conditions of the sale and directing that the proceeds therefrom shall be used for the purpose of reimbursing the trustee in respect of any costs that may be owing to him or of any moneys he may have advanced for the benefit of the estate.

• Marginal note:Court may vest property in trustee

  (2) If no bid is received for the assets of the estate of the bankrupt sufficient to reimburse the trustee, the court may make an order vesting in the trustee personally all assets of the estate and on the making of the order the rights and interests of the creditors and of the bankrupt to the assets shall be determined and ended.

Marginal note:Trustee may apply to court for directions

• 34 (1) A trustee may apply to the court for directions in relation to any matter affecting the administration of the estate of a bankrupt and the court shall give in writing such directions, if any, as to it appear proper in the circumstances.

• Marginal note:To report to court after three years

  (2) Where an estate has not been fully administered within three years after the bankruptcy, the trustee shall, if requested to do so by the Superintendent, report that fact to the court as soon as practicable thereafter, and the court shall make such order as it considers fit to expedite the administration.

Marginal note:Redirection of mail

• 35 (1) Subject to subsection (2), the trustee may, by sending to the Canada Post Corporation

  • (a) a notice in the prescribed form, and

  • (b) a copy of the trustee’s certificate of appointment,

  request that any mail addressed to a bankrupt that is directed to any place referred to in the notice be redirected or sent by the Canada Post Corporation to the trustee or to such other person as the trustee may designate and when Canada Post Corporation receives those documents, it shall so redirect or send that mail.

• Marginal note:Permission for residence

  (2) A notice referred to in subsection (1) may refer to a bankrupt’s residence only where the trustee has, on application, obtained permission from the court.

• Marginal note:Limitation of time

  (3) Where a bankrupt is an individual, a notice referred to in subsection (1) is operative only during the three month period immediately following the date of bankruptcy unless the court, on application, extends that period on such terms as the court considers fit.

Marginal note:Duty of former trustee on substitution

• 36 (1) On the appointment of a substituted trustee, the former trustee shall forthwith pass his accounts before the court and deliver to the substituted trustee all the property of the estate, together with all books, records and documents of the bankrupt and of the administration.

• Marginal note:Duty of substituted trustee

  (2) A substituted trustee shall

  • (a) [Repealed, 1992, c. 27, s. 14]

  • (b) if appointed by the creditors, file with the court a copy of the minutes of the meeting signed by the chairman;

  • (c) notify the Superintendent of his appointment;

  • (d) if required by the inspectors, register a notice of the appointment in the land register of any land titles or registry office where the assignment or bankruptcy order has been registered; and

  • (e) as soon as funds are available, pay to the former trustee his remuneration and disbursements as approved by the court.

Marginal note:Appeal to court against trustee

37 Where the bankrupt or any of the creditors or any other person is aggrieved by any act or decision of the trustee, he may apply to the court and the court may confirm, reverse or modify the act or decision complained of and make such order in the premises as it thinks just.

Marginal note:Proceeding by creditor when trustee refuses to act

• 38 (1) Where a creditor requests the trustee to take any proceeding that in his opinion would be for the benefit of the estate of a bankrupt and the trustee refuses or neglects to take the proceeding, the creditor may obtain from the court an order authorizing him to take the proceeding in his own name and at his own expense and risk, on notice being given the other creditors of the contemplated proceeding, and on such other terms and conditions as the court may direct.

• Marginal note:Transfer to creditor

  (2) On an order under subsection (1) being made, the trustee shall assign and transfer to the creditor all his right, title and interest in the chose in action or subject-matter of the proceeding, including any document in support thereof.

• Marginal note:Benefits belong to creditor

  (3) Any benefit derived from a proceeding taken pursuant to subsection (1), to the extent of his claim and the costs, belongs exclusively to the creditor instituting the proceeding, and the surplus, if any, belongs to the estate.

• Marginal note:Trustee may institute proceeding

  (4) Where, before an order is made under subsection (1), the trustee, with the permission of the inspectors, signifies to the court his readiness to institute the proceeding for the benefit of the creditors, the order shall fix the time within which he shall do so, and in that case the benefit derived from the proceeding, if instituted within the time so fixed, belongs to the estate.

Remuneration of Trustee

Marginal note:To be voted by creditors

• 39 (1) The remuneration of the trustee shall be such as is voted to the trustee by ordinary resolution at any meeting of creditors.

• Marginal note:Not to exceed 7½ per cent

  (2) Where the remuneration of the trustee has not been fixed under subsection (1), the trustee may insert in his final statement and retain as his remuneration, subject to increase or reduction as hereinafter provided, a sum not exceeding seven and one-half per cent of the amount remaining out of the realization of the property of the debtor after the claims of the secured creditors have been paid or satisfied.

• Marginal note:For carrying on debtor’s business or in case of a proposal

  (3) Where the business of the debtor has been carried on by the trustee or under his supervision, he may be allowed such special remuneration for such services as the creditors or the inspectors may by resolution authorize, and, in the case of a proposal, such special remuneration as may be agreed to by the debtor, or in the absence of agreement with the debtor such amount as may be approved by the court.

• Marginal note:Successive trustees

  (4) In the case of two or more trustees acting in succession, the remuneration shall be apportioned between the trustees in accordance with the services rendered by each, and in the absence of agreement between the trustees the court shall determine the amount payable to each.

• Marginal note:Court may increase or reduce

  (5) On application by the trustee, a creditor or the debtor and on notice to such parties as the court may direct, the court may make an order increasing or reducing the remuneration.

Discharge of Trustee

Marginal note:Disposal of unrealizable property

• 40 (1) With the permission of the inspectors, any property of a bankrupt found incapable of realization shall be returned to the bankrupt prior to the trustee’s application for discharge.

• Marginal note:Final disposition of property

  (2) Where a trustee is unable to dispose of any property as provided in this section, the court may make such order as it may consider necessary.

Marginal note:Application to court

• 41 (1) When a trustee has completed the duties required of him with respect to the administration of the property of a bankrupt, he shall apply to the court for a discharge.

• Marginal note:Discharge of trustee

  (2) The court may discharge a trustee with respect to any estate on full administration thereof or, for sufficient cause, before full administration.

• Marginal note:When another trustee has been appointed

  (3) A trustee when replaced by another trustee is entitled to be discharged if he has accounted to the satisfaction of the inspectors and the court for all property that came to his hands, and a period of three months has elapsed after the date of the replacement without any undisposed of claim or objection having been made by the bankrupt or any creditor.

• Marginal note:When estate deemed fully administered

  (4) When a trustee’s accounts have been approved by the inspectors and taxed by the court and all objections, applications, oppositions, motions and appeals have been settled or disposed of and all dividends have been paid, the estate is deemed to have been fully administered.

• Marginal note:Objections to be filed with court and trustee

  (5) Any interested person desiring to object to the discharge of a trustee shall, at least five days prior to the date of the hearing, file notice of objection with the registrar of the court setting out the reasons for the objection and serve a copy of the notice on the trustee.

• Marginal note:Court may grant discharge

  (6) The court shall consider the objection filed under subsection (5) and may grant or withhold a discharge accordingly or give such directions as it may deem proper in the circumstances.

• Marginal note:Fraud or breach of trust

  (7) Nothing in or done under authority of this section relieves or discharges or shall be deemed to relieve or discharge a trustee from the results of any fraud.

• Marginal note:Effect of discharge of trustee

  (8) The discharge of a trustee discharges him from all liability

  • (a) in respect of any act done or default made by him in the administration of the property of the bankrupt, and

  • (b) in relation to his conduct as trustee,

  but any discharge may be revoked by the court on proof that it was obtained by fraud or by suppression or concealment of any material fact.

• Marginal note:Investigation not precluded

  (8.1) Nothing in subsection (8) shall be construed to prevent an investigation or a proceeding in respect of a trustee under subsection 14.01(1).

• Marginal note:Security released

  (9) The discharge of a trustee under this section operates as a release of the security provided pursuant to subsection 16(1).

• Marginal note:Trustee remains

  (10) Notwithstanding his discharge, the trustee remains the trustee of the estate for the performance of such duties as may be incidental to the full administration of the estate.

• Marginal note:Appointment of trustee by court to complete administration

  (11) The court, on being satisfied that there are assets that have not been realized or distributed, may, on the application of any interested person, appoint a trustee to complete the administration of the estate of the bankrupt, and the trustee shall be governed by the provisions of this Act, in so far as they are applicable.

PART IIBankruptcy Orders and Assignments

Acts of Bankruptcy

Marginal note:Acts of bankruptcy

• 42 (1) A debtor commits an act of bankruptcy in each of the following cases:

  • (a) if in Canada or elsewhere he makes an assignment of his property to a trustee for the benefit of his creditors generally, whether it is an assignment authorized by this Act or not;

  • (b) if in Canada or elsewhere the debtor makes a fraudulent gift, delivery or transfer of the debtor’s property or of any part of it;

  • (c) if in Canada or elsewhere the debtor makes any transfer of the debtor’s property or any part of it, or creates any charge on it, that would under this Act be void or, in the Province of Quebec, null as a fraudulent preference;

  • (d) if, with intent to defeat or delay his creditors, he departs out of Canada, or, being out of Canada, remains out of Canada, or departs from his dwelling-house or otherwise absents himself;

  • (e) if the debtor permits any execution or other process issued against the debtor under which any of the debtor’s property is seized, levied on or taken in execution to remain unsatisfied until within five days after the time fixed by the executing officer for the sale of the property or for fifteen days after the seizure, levy or taking in execution, or if any of the debtor’s property has been sold by the executing officer, or if the execution or other process has been held by the executing officer for a period of fifteen days after written demand for payment without seizure, levy or taking in execution or satisfaction by payment, or if it is returned endorsed to the effect that the executing officer can find no property on which to levy or to seize or take, but if interpleader or opposition proceedings have been instituted with respect to the property seized, the time elapsing between the date at which the proceedings were instituted and the date at which the proceedings are finally disposed of, settled or abandoned shall not be taken into account in calculating the period of fifteen days;

  • (f) if he exhibits to any meeting of his creditors any statement of his assets and liabilities that shows that he is insolvent, or presents or causes to be presented to any such meeting a written admission of his inability to pay his debts;

  • (g) if he assigns, removes, secretes or disposes of or attempts or is about to assign, remove, secrete or dispose of any of his property with intent to defraud, defeat or delay his creditors or any of them;

  • (h) if he gives notice to any of his creditors that he has suspended or that he is about to suspend payment of his debts;

  • (i) if he defaults in any proposal made under this Act; and

  • (j) if he ceases to meet his liabilities generally as they become due.

• Marginal note:Unauthorized assignments are void or null

  (2) Every assignment of an insolvent debtor’s property other than an assignment authorized by this Act, made by an insolvent debtor for the general benefit of their creditors, is void or, in the Province of Quebec, null.

Application for Bankruptcy Order

Marginal note:Bankruptcy application

• 43 (1) Subject to this section, one or more creditors may file in court an application for a bankruptcy order against a debtor if it is alleged in the application that

  • (a) the debt or debts owing to the applicant creditor or creditors amount to one thousand dollars; and

  • (b) the debtor has committed an act of bankruptcy within the six months preceding the filing of the application.

• Marginal note:If applicant creditor is a secured creditor

  (2) If the applicant creditor referred to in subsection (1) is a secured creditor, they shall in their application either state that they are willing to give up their security for the benefit of the creditors, in the event of a bankruptcy order being made against the debtor, or give an estimate of the value of the applicant creditor’s security, and in the latter case they may be admitted as an applicant creditor to the extent of the balance of the debt due to them after deducting the value so estimated, in the same manner as if they were an unsecured creditor.

• Marginal note:Affidavit

  (3) The application shall be verified by affidavit of the applicant or by someone duly authorized on their behalf having personal knowledge of the facts alleged in the application.

• Marginal note:Consolidation of applications

  (4) If two or more applications are filed against the same debtor or against joint debtors, the court may consolidate the proceedings or any of them on any terms that the court thinks fit.

• Marginal note:Place of filing

  (5) The application shall be filed in the court having jurisdiction in the judicial district of the locality of the debtor.

• Marginal note:Proof of facts, etc.

  (6) At the hearing of the application, the court shall require proof of the facts alleged in the application and of the service of the application, and, if satisfied with the proof, may make a bankruptcy order.

• Marginal note:Dismissal of application

  (7) If the court is not satisfied with the proof of the facts alleged in the application or of the service of the application, or is satisfied by the debtor that the debtor is able to pay their debts, or that for other sufficient cause no order ought to be made, it shall dismiss the application.

• Marginal note:Dismissal with respect to some respondents only

  (8) If there are more respondents than one to an application, the court may dismiss the application with respect to one or more of them, without prejudice to the effect of the application as against the other or others of them.

• Marginal note:Appointment of trustee

  (9) On a bankruptcy order being made, the court shall appoint a licensed trustee as trustee of the property of the bankrupt, having regard, as far as the court considers just, to the wishes of the creditors.

• Marginal note:Stay of proceedings if facts denied

  (10) If the debtor appears at the hearing of the application and denies the truth of the facts alleged in the application, the court may, instead of dismissing the application, stay all proceedings on the application on any terms that it may see fit to impose on the applicant as to costs or on the debtor to prevent alienation of the debtor’s property and for any period of time that may be required for trial of the issue relating to the disputed facts.

• Marginal note:Stay of proceedings for other reasons

  (11) The court may for other sufficient reason make an order staying the proceedings under an application, either altogether or for a limited time, on any terms and subject to any conditions that the court may think just.

• Marginal note:Security for costs

  (12) Applicants who are resident out of Canada may be ordered to give security for costs to the debtor, and proceedings under the application may be stayed until the security is furnished.

• Marginal note:Bankruptcy order on another application

  (13) If proceedings on an application have been stayed or have not been prosecuted with due diligence and effect, the court may, if by reason of the delay or for any other cause it is considered just, substitute or add as applicant any other creditor to whom the debtor may be indebted in the amount required by this Act and make a bankruptcy order on the application of the other creditor, and shall, immediately after making the order, dismiss on any terms that it may consider just the application in the stayed or non-prosecuted proceedings.

• Marginal note:Withdrawing application

  (14) An application shall not be withdrawn without the leave of the court.

• Marginal note:Application against one partner

  (15) Any creditor whose claim against a partnership is sufficient to entitle the creditor to present a bankruptcy application may present an application against any one or more partners of the firm without including the others.

• Marginal note:Court may consolidate proceedings

  (16) If a bankruptcy order has been made against one member of a partnership, any other application against a member of the same partnership shall be filed in or transferred to the same court, and the court may give any directions for consolidating the proceedings under the applications that it thinks just.

• Marginal note:Continuance of proceedings on death of debtor

  (17) If a debtor against whom an application has been filed dies, the proceedings shall, unless the court otherwise orders, be continued as if the debtor were alive.

Marginal note:Application against estate or succession

• 44 (1) Subject to section 43, an application for a bankruptcy order may be filed against the estate or succession of a deceased debtor.

• Marginal note:Personal liability

  (2) After service of an application for a bankruptcy order on the executor or administrator of the estate of a deceased debtor, or liquidator of the succession of a deceased debtor, the person on whom the order was served shall not make payment of any moneys or transfer any property of the deceased debtor, except as required for payment of the proper funeral and testamentary expenses, until the application is disposed of; otherwise, in addition to any penalties to which the person may be subject, the person is personally liable for the payment or transfer.

• Marginal note:Act done in good faith

  (3) Nothing in this section invalidates any payment or transfer of property made or any act or thing done, in good faith, by the executor, administrator of the estate or liquidator of the succession before the service of an application referred to in subsection (2).

Marginal note:Costs of application

• 45 (1) If a bankruptcy order is made, the costs of the applicant shall be taxed and be payable out of the estate, unless the court otherwise orders.

• Marginal note:Insufficient proceeds

  (2) If the proceeds of the estate are not sufficient for the payment of any costs incurred by the trustee, the court may order the costs to be paid by the applicant.

Interim Receiver

Marginal note:Appointment of interim receiver

• 46 (1) The court may, if it is shown to be necessary for the protection of the estate of a debtor, at any time after the filing of an application for a bankruptcy order and before a bankruptcy order is made, appoint a licensed trustee as interim receiver of the property or any part of the property of the debtor and direct the interim receiver to take immediate possession of the property or any part of it on an undertaking being given by the applicant that the court may impose with respect to interference with the debtor’s legal rights and with respect to damages in the event of the application being dismissed.

• Marginal note:Powers of interim receiver

  (2) The interim receiver appointed under subsection (1) may, under the direction of the court, take conservatory measures and summarily dispose of property that is perishable or likely to depreciate rapidly in value and exercise such control over the business of the debtor as the court deems advisable, but the interim receiver shall not unduly interfere with the debtor in the carrying on of his business except as may be necessary for conservatory purposes or to comply with the order of the court.

Marginal note:Appointment of interim receiver

• 47 (1) Where the court is satisfied that a notice is about to be sent or has been sent under subsection 244(1), the court may, subject to subsection (3), appoint a trustee as interim receiver of all or any part of the debtor’s property that is subject to the security to which the notice relates, for such term as the court may determine.

• Marginal note:Directions to interim receiver

  (2) The court may direct an interim receiver appointed under subsection (1) to do any or all of the following:

  • (a) take possession of all or part of the debtor’s property mentioned in the appointment;

  • (b) exercise such control over that property, and over the debtor’s business, as the court considers advisable; and

  • (c) take such other action as the court considers advisable.

• Marginal note:When appointment may be made

  (3) An appointment of an interim receiver may be made under subsection (1) only if it is shown to the court to be necessary for the protection of

  • (a) the debtor’s estate; or

  • (b) the interests of the creditor who sent the notice under subsection 244(1).

Marginal note:Appointment of interim receiver

• 47.1 (1) Where a notice of intention has been filed under section 50.4 or a proposal has been filed under subsection 62(1), the court may at any time thereafter, subject to subsection (3), appoint as interim receiver of all or any part of the debtor’s property, for such term as the court may determine,

  • (a) the trustee under the notice of intention or proposal;

  • (b) another trustee; or

  • (c) the trustee under the notice of intention or proposal and another trustee jointly.

• Marginal note:Directions to interim receiver

  (2) The court may direct an interim receiver appointed under subsection (1) to do any or all of the following:

  • (a) carry out the duties set out in subsection 50(10) or 50.4(7), in substitution for the trustee referred to in that subsection or jointly with that trustee;

  • (b) take possession of all or part of the debtor’s property mentioned in the order of the court;

  • (c) exercise such control over that property, and over the debtor’s business, as the court considers advisable; and

  • (d) take such other action as the court considers advisable.

• Marginal note:When appointment may be made

  (3) An appointment of an interim receiver may be made under subsection (1) only if it is shown to the court to be necessary for the protection of

  • (a) the debtor’s estate; or

  • (b) the interests of one or more creditors, or of the creditors generally.

Marginal note:Orders respecting fees and expenses

• 47.2 (1) If an appointment of an interim receiver is made under section 47 or 47.1, the court may make any order respecting the payment of fees and disbursements of the interim receiver that it considers proper, including an order giving the interim receiver security, ranking ahead of any or all secured creditors, over any or all of the assets of the debtor in respect of the interim receiver’s claim for fees or disbursements, but the court shall not make such an order unless it is satisfied that all secured creditors who would be materially affected by the order were given reasonable advance notification and an opportunity to make representations to the court.

• Marginal note:Meaning of disbursements

  (2) In subsection (1), "disbursements" do not include payments made in operating a business of the debtor.

• Marginal note:Accounts, discharge of interim receivers

  (3) With respect to interim receivers appointed under section 46, 47 or 47.1,

  • (a) the form and content of their accounts,

  • (b) the procedure for the preparation and taxation of those accounts, and

  • (c) the procedure for the discharge of the interim receiver

  shall be as prescribed.

Marginal note:Application of sections 43 to 46

48 Sections 43 to 46 do not apply to individuals whose principal occupation and means of livelihood is fishing, farming or the tillage of the soil or to any individual who works for wages, salary, commission or hire at a rate of compensation not exceeding twenty-five hundred dollars per year and does not on their own account carry on business.

Assignments

Marginal note:Assignment for general benefit of creditors

• 49 (1) An insolvent person or, if deceased, the executor or administrator of their estate or the liquidator of the succession, with the leave of the court, may make an assignment of all the insolvent person’s property for the general benefit of the insolvent person’s creditors.

• Marginal note:Sworn statement

  (2) The assignment made under subsection (1) shall be accompanied by a sworn statement in the prescribed form showing the property of the debtor divisible among his creditors, the names and addresses of all his creditors and the amounts of their respective claims and the nature of each, whether secured, preferred or unsecured.

• Marginal note:Filing of assignment

  (3) The assignment made under subsection (1) shall be offered to the official receiver in the locality of the debtor, and it is inoperative until filed with that official receiver, who shall refuse to file the assignment unless it is in the prescribed form or to the like effect and accompanied by the sworn statement required by subsection (2).

• Marginal note:Appointment of trustee

  (4) Where the official receiver files the assignment made under subsection (1), he shall appoint as trustee a licensed trustee whom he shall, as far as possible, select by reference to the wishes of the most interested creditors if ascertainable at the time, and the official receiver shall complete the assignment by inserting therein as grantee the name of the trustee.

• Marginal note:Cancellation of assignment

  (5) Where the official receiver is unable to find a licensed trustee who is willing to act, the official receiver shall, after giving the bankrupt five days notice, cancel the assignment.

• Marginal note:Procedure in small estates

  (6) Where the bankrupt is not a corporation and in the opinion of the official receiver the realizable assets of the bankrupt, after the claims of secured creditors are deducted, will not exceed five thousand dollars or such other amount as is prescribed, the provisions of this Act relating to the summary administration of estates shall apply.

• Marginal note:Future property not to be considered

  (7) In the determination of the realizable assets of a bankrupt for the purposes of subsection (6), no regard shall be had to any property that may be acquired by the bankrupt or devolve on the bankrupt before the bankrupt’s discharge.

• Marginal note:Where subsection (6) ceases to apply

  (8) The official receiver may direct that subsection (6) shall cease to apply in respect of the bankrupt where the official receiver determines that

  • (a) the realizable assets of the bankrupt, after the claims of secured creditors are deducted, exceed five thousand dollars or the amount prescribed, as the case may be, or

  • (b) the costs of realization of the assets of the bankrupt are a significant proportion of the realizable value of the assets,

  and the official receiver considers that such a direction is appropriate.

PART IIIProposals

DIVISION IGeneral Scheme for Proposals

Marginal note:Who may make a proposal

• 50 (1) Subject to subsection (1.1), a proposal may be made by

  • (a) an insolvent person;

  • (b) a receiver, within the meaning of subsection 243(2), but only in relation to an insolvent person;

  • (c) a liquidator of an insolvent person’s property;

  • (d) a bankrupt; and

  • (e) a trustee of the estate of a bankrupt.

• Marginal note:Where proposal may not be made

  (1.1) A proposal may not be made under this Division with respect to a debtor in respect of whom a consumer proposal has been filed under Division II until the administrator under the consumer proposal has been discharged.

• Marginal note:To whom proposal made

  (1.2) A proposal must be made to the creditors generally, either as a mass or separated into classes as provided in the proposal, and may also be made to secured creditors in respect of any class or classes of secured claim, subject to subsection (1.3).

• Marginal note:Idem

  (1.3) Where a proposal is made to one or more secured creditors in respect of secured claims of a particular class, the proposal must be made to all secured creditors in respect of secured claims of that class.

• Marginal note:Classes of secured claims

  (1.4) Secured claims may be included in the same class if the interests or rights of the creditors holding those claims are sufficiently similar to give them a commonality of interest, taking into account

  • (a) the nature of the debts giving rise to the claims;

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

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

  • (d) the treatment of the claims under the proposal, and the extent to which the claims would be paid under the proposal; and

  • (e) such further criteria, consistent with those set out in paragraphs (a) to (d), as are prescribed.

• Marginal note:Court may determine classes

  (1.5) The court may, on application made at any time after a notice of intention or a proposal is filed, determine, in accordance with subsection (1.4), the classes of secured claims appropriate to a proposal, and the class into which any particular secured claim falls.

• Marginal note:Creditors' response

  (1.6) Subject to section 50.1 as regards included secured creditors, any creditor may respond to the proposal as made to the creditors generally, by filing with the trustee a proof of claim in the manner provided for in

  • (a) sections 124 to 126, in the case of unsecured creditors; or

  • (b) sections 124 to 134, in the case of secured creditors.

• Marginal note:Effect of filing proof of claim

  (1.7) Hereinafter in this Division, a reference to an unsecured creditor shall be deemed to include a secured creditor who has filed a proof of claim under subsection (1.6), and a reference to an unsecured claim shall be deemed to include that secured creditor’s claim.

• Marginal note:Voting

  (1.8) All questions relating to a proposal, except the question of accepting or refusing the proposal, shall be decided by ordinary resolution of the creditors to whom the proposal was made.

• Marginal note:Documents to be lodged

  (2) Subject to section 50.4, proceedings for a proposal shall be commenced in the case of an insolvent person by lodging with a licensed trustee, and in the case of a bankrupt by lodging with the trustee of the estate, a copy of the proposal in writing setting out the terms of the proposal and the particulars of any securities or sureties proposed, signed by the person making the proposal and the proposed sureties if any, and

  • (a) if the person in respect of whom the proposal is made is bankrupt, the statement of affairs referred to in section 158; or

  • (b) if the person in respect of whom the proposal is made is not bankrupt, a statement showing the financial position of the person at the date of the proposal, verified by affidavit as being correct to the belief and knowledge of the person making the proposal.

• Marginal note:Approval of inspectors

  (3) A proposal made in respect of a bankrupt shall be approved by the inspectors before any further action is taken thereon.

• Marginal note:Proposal, etc., not to be withdrawn

  (4) No proposal or any security, guarantee or suretyship tendered with the proposal may be withdrawn pending the decision of the creditors and the court.

• Marginal note:Assignment not prevented

  (4.1) Subsection (4) shall not be construed as preventing an insolvent person in respect of whom a proposal has been made from subsequently making an assignment.

• Marginal note:Duties of trustee

  (5) The trustee shall make or cause to be made such an appraisal and investigation of the affairs and property of the debtor as to enable the trustee to estimate with reasonable accuracy the financial situation of the debtor and the cause of the debtor’s financial difficulties or insolvency and report the result thereof to the meeting of the creditors.

• Marginal note:Trustee to file cash-flow statement

  (6) The trustee shall, when filing a proposal under subsection 62(1) in respect of an insolvent person, file with the proposal

  • (a) a statement indicating the projected cash-flow of the insolvent person (in this section referred to as the "cash-flow statement"), or a revised cash-flow statement where a cash-flow statement had previously been filed under subsection 50.4(2) in respect of that insolvent person, prepared by the person making the proposal, reviewed for its reasonableness by the trustee and signed by the trustee and the person making the proposal;

  • (b) a report on the reasonableness of the cash-flow statement, in the prescribed form, prepared and signed by the trustee; and

  • (c) a report containing prescribed representations by the person making the proposal regarding the preparation of the cash-flow statement, in the prescribed form, prepared and signed by the person making the proposal.

• Marginal note:Creditors may obtain statement

  (7) Subject to subsection (8), any creditor may obtain a copy of the cash-flow statement on request made to the trustee.

• Marginal note:Exception

  (8) The court may order that a cash-flow statement or any part thereof not be released to some or all of the creditors pursuant to subsection (7) where it is satisfied that

  • (a) such release would unduly prejudice the insolvent person; and

  • (b) non-release would not unduly prejudice the creditor or creditors in question.

• Marginal note:Trustee protected

  (9) If the trustee acts in good faith and takes reasonable care in reviewing the cash-flow statement, he is not liable for loss or damage to any person resulting from that person’s reliance on the cash-flow statement.

• Marginal note:Trustee to monitor and report

  (10) Subject to any direction of the court under paragraph 47.1(2)(a), the trustee under a proposal in respect of an insolvent person shall, for the purpose of monitoring the insolvent person’s business and financial affairs, have access to and examine the insolvent person’s property, including his premises, books, records and other financial documents, to the extent necessary to adequately assess the insolvent person’s business and financial affairs, from the filing of the proposal until the proposal is approved by the court or the insolvent person becomes bankrupt, and shall

  • (a) file a report on the state of the insolvent person’s business and financial affairs, containing any prescribed information,

    • (i) with the official receiver forthwith after ascertaining any material adverse change in the insolvent person’s projected cash-flow or financial circumstances, and

    • (ii) with the court at such other times as the court may order; and

  • (b) send a report on the state of the insolvent person’s business and financial affairs, containing any prescribed information, to the creditors and the official receiver, in the prescribed manner, at least ten days before the meeting of creditors referred to in subsection 51(1).

• Marginal note:Report to creditors

  (11) An interim receiver who has been directed under subsection 47.1(2) to carry out the duties set out in subsection (10) in substitution for the trustee shall deliver a report on the state of the insolvent person’s business and financial affairs, containing any prescribed information, to the trustee at least fifteen days before the meeting of creditors referred to in subsection 51(1), and the trustee shall send the report to the creditors and the official receiver, in the prescribed manner, at least ten days before the meeting of creditors referred to in that subsection.

• Marginal note:Court may declare proposal as deemed refused by creditors

  (12) The court may, on application by the trustee, the interim receiver, if any, appointed under section 47.1 or a creditor, at any time before the meeting of creditors, declare that the proposal is deemed to have been refused by the creditors if the court is satisfied that

  • (a) the debtor has not acted, or is not acting, in good faith and with due diligence;

  • (b) the proposal will not likely be accepted by the creditors; or

  • (c) the creditors as a whole would be materially prejudiced if the application under this subsection is rejected.

• Marginal note:Claims against directors — compromise

  (13) A proposal made in respect of a corporation may include in its terms provision for the compromise of claims against directors of the corporation that arose before the commencement of proceedings under this Act and that relate to the obligations of the corporation where the directors are by law liable in their capacity as directors for the payment of such obligations.

• Marginal note:Exception

  (14) A provision for the compromise of claims against directors may not include claims that

  • (a) relate to contractual rights of one or more creditors arising from contracts with one or more directors; or

  • (b) are based on allegations of misrepresentation made by directors to creditors or of wrongful or oppressive conduct by directors.

• Marginal note:Powers of court

  (15) The court may declare that a claim against directors shall not be compromised if it is satisfied that the compromise would not be just and equitable in the circumstances.

• Marginal note:Application of other provisions

  (16) Subsection 62(2) and section 122 apply, with such modifications as the circumstances require, in respect of claims against directors compromised under a proposal of a debtor corporation.

• Marginal note:Determination of classes of claims

  (17) The court, on application made at any time after a proposal is filed, may determine the classes of claims of claimants against directors and the class into which any particular claimant’s claim falls.

• Marginal note:Resignation or removal of directors

  (18) Where all of the directors have resigned or have been removed by the shareholders without replacement, any person who manages or supervises the management of the business and affairs of the corporation shall be deemed to be a director for the purposes of this section.

Marginal note:Secured creditor may file proof of secured claim

• 50.1 (1) Subject to subsections (2) to (4), a secured creditor to whom a proposal has been made in respect of a particular secured claim may respond to the proposal by filing with the trustee a proof of secured claim in the prescribed form, and may vote, on all questions relating to the proposal, in respect of that entire claim, and sections 124 to 126 apply, in so far as they are applicable, with such modifications as the circumstances require, to proofs of secured claim.

• Marginal note:Proposed assessed value

  (2) Where a proposal made to a secured creditor in respect of a claim includes a proposed assessed value of the security in respect of the claim, the secured creditor may file with the trustee a proof of secured claim in the prescribed form, and may vote as a secured creditor on all questions relating to the proposal in respect of an amount equal to the lesser of

  • (a) the amount of the claim, and

  • (b) the proposed assessed value of the security.

• Marginal note:Idem

  (3) Where the proposed assessed value is less than the amount of the secured creditor’s claim, the secured creditor may file with the trustee a proof of claim in the prescribed form, and may vote as an unsecured creditor on all questions relating to the proposal in respect of an amount equal to the difference between the amount of the claim and the proposed assessed value.

• Marginal note:Idem

  (4) Where a secured creditor is dissatisfied with the proposed assessed value of his security, the secured creditor may apply to the court, within fifteen days after the proposal is sent to the creditors, to have the proposed assessed value revised, and the court may revise the proposed assessed value, in which case the revised value henceforth applies for the purposes of this Part.

• Marginal note:Where no secured creditor in a class takes action

  (5) Where no secured creditor having a secured claim of a particular class files a proof of secured claim at or before the meeting of creditors, the secured creditors having claims of that class shall be deemed to have voted for the refusal of the proposal.

Marginal note:Excluded secured creditor

50.2 A secured creditor to whom a proposal has not been made in respect of a particular secured claim may not file a proof of secured claim in respect of that claim.

Marginal note:Rights in bankruptcy

50.3 On the bankruptcy of an insolvent person who made a proposal to one or more secured creditors in respect of secured claims, any proof of secured claim filed pursuant to section 50.1 ceases to be valid or effective, and sections 112 and 127 to 134 apply in respect of a proof of claim filed by any secured creditor in the bankruptcy.

Marginal note:Notice of intention

• 50.4 (1) Before lodging a copy of a proposal with a licensed trustee, an insolvent person may file a notice of intention, in the prescribed form, with the official receiver in the insolvent person’s locality, stating

  • (a) the insolvent person’s intention to make a proposal,

  • (b) the name and address of the licensed trustee who has consented, in writing, to act as the trustee under the proposal, and

  • (c) the names of the creditors with claims amounting to two hundred and fifty dollars or more and the amounts of their claims as known or shown by the debtor’s books,

  and attaching thereto a copy of the consent referred to in paragraph (b).

• Marginal note:Certain things to be filed

  (2) Within ten days after filing a notice of intention under subsection (1), the insolvent person shall file with the official receiver

  • (a) a statement indicating the projected cash-flow of the insolvent person (in this section referred to as the "cash-flow statement"), prepared by the insolvent person, reviewed for its reasonableness by the trustee under the notice of intention, and signed by the trustee and the insolvent person;

  • (b) a report on the reasonableness of the cash-flow statement, in the prescribed form, prepared and signed by the trustee; and

  • (c) a report containing prescribed representations by the insolvent person regarding the preparation of the cash-flow statement, in the prescribed form, prepared and signed by the insolvent person.

• Marginal note:Creditors may obtain statement

  (3) Subject to subsection (4), any creditor may obtain a copy of the cash-flow statement on request made to the trustee.

• Marginal note:Exception

  (4) The court may order that a cash-flow statement or any part thereof not be released to some or all of the creditors pursuant to subsection (3) where it is satisfied that

  • (a) such release would unduly prejudice the insolvent person; and

  • (b) non-release would not unduly prejudice the creditor or creditors in question.

• Marginal note:Trustee protected

  (5) If the trustee acts in good faith and takes reasonable care in reviewing the cash-flow statement, the trustee is not liable for loss or damage to any person resulting from that person’s reliance on the cash-flow statement.

• Marginal note:Trustee to notify creditors

  (6) Within five days after the filing of a notice of intention under subsection (1), the trustee named therein shall send to every known creditor, in the prescribed manner, a copy thereof.

• Marginal note:Trustee to monitor and report

  (7) Subject to any direction of the court under paragraph 47.1(2)(a), the trustee under a notice of intention in respect of an insolvent person

  • (a) shall, for the purpose of monitoring the insolvent person’s business and financial affairs, have access to and examine the insolvent person’s property, including his premises, books, records and other financial documents, to the extent necessary to adequately assess the insolvent person’s business and financial affairs, from the filing of the notice of intention until a proposal is filed or the insolvent person becomes bankrupt; and

  • (b) shall file a report on the state of the insolvent person’s business and financial affairs, containing any prescribed information,

    • (i) with the official receiver forthwith after ascertaining any 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 such other times as the court may order.

• Marginal note:Where assignment deemed to have been made

  (8) Where an insolvent person fails to comply with subsection (2), or where the trustee fails to file a proposal with the official receiver under subsection 62(1) within a period of thirty days after the day the notice of intention was filed under subsection (1), or within any extension of that period granted under subsection (9),

  • (a) the insolvent person is, on the expiration of that period or that extension, as the case may be, deemed to have thereupon made an assignment;

  • (b) the trustee shall forthwith file a report thereof in the prescribed form with the official receiver, who shall thereupon issue a certificate of assignment in the prescribed form, which has the same effect for the purposes of this Act as an assignment filed pursuant to section 49; and

  • (c) the trustee shall, within five days after the day the certificate mentioned in paragraph (b) is issued, send notice of the meeting of creditors under section 102, at which meeting the creditors may by ordinary resolution, notwithstanding section 14, affirm the appointment of the trustee or appoint another licensed trustee in lieu of that trustee.

• Marginal note:Extension of time for filing proposal

  (9) The insolvent person may, before the expiration of the thirty day period mentioned in subsection (8) or any extension thereof granted under this subsection, apply to the court for an extension, or further extension, as the case may be, of that period, and the court may grant such extensions, not exceeding forty-five days for any individual extension and not exceeding in the aggregate five months after the expiration of the thirty day period mentioned in subsection (8), if satisfied on each application that

  • (a) the insolvent person has acted, and is acting, in good faith and with due diligence;

  • (b) the insolvent person would likely be able to make a viable proposal if the extension being applied for were granted; and

  • (c) no creditor would be materially prejudiced if the extension being applied for were granted.

• Marginal note:Court may not extend time

  (10) Subsection 187(11) does not apply in respect of time limitations imposed by subsection (9).

• Marginal note:Court may terminate period for making proposal

  (11) The court may, on application by the trustee, the interim receiver, if any, appointed under section 47.1, or a creditor, declare terminated, before its actual expiration, the thirty day period mentioned in subsection (8) or any extension thereof granted under subsection (9) if the court is satisfied that

  • (a) the insolvent person has not acted, or is not acting, in good faith and with due diligence,

  • (b) the insolvent person will not likely be able to make a viable proposal before the expiration of the period in question,

  • (c) the insolvent person will not likely be able to make a proposal, before the expiration of the period in question, that will be accepted by the creditors, or

  • (d) the creditors as a whole would be materially prejudiced were the application under this subsection rejected,

  and where the court declares the period in question terminated, paragraphs (8)(a) to (c) thereupon apply as if that period had expired.

Marginal note:Trustee to help prepare proposal

50.5 The trustee under a notice of intention shall, between the filing of the notice of intention and the filing of a proposal, advise on and participate in the preparation of the proposal, including negotiations thereon.

Marginal note:Calling of meeting of creditors

• 51 (1) The trustee shall call a meeting of the creditors, to be held within twenty-one days after the filing of the proposal with the official receiver under subsection 62(1), by sending in the prescribed manner to every known creditor and to the official receiver, at least ten days before the meeting,

  • (a) a notice of the date, time and place of the meeting;

  • (b) a condensed statement of the assets and liabilities;

  • (c) a list of the creditors with claims amounting to two hundred and fifty dollars or more and the amounts of their claims as known or shown by the debtor’s books;

  • (d) a copy of the proposal;

  • (e) the prescribed forms, in blank, of

    • (i) proof of claim,

    • (ii) in the case of a secured creditor to whom the proposal was made, proof of secured claim, and

    • (iii) proxy,

    if not already sent; and

  • (f) a voting letter as prescribed.

• Marginal note:In case of a prior meeting

  (2) Where a meeting of his creditors at which a statement or list of the debtor’s assets, liabilities and creditors was presented was held before the trustee is required by this section to convene a meeting to consider the proposal and at the time when the debtor requires the convening of the meeting the condition of the debtor’s estate remains substantially the same as at the time of the former meeting, the trustee may omit observance of the provisions of paragraphs (1)(b) and (c).

• Marginal note:Chairman of first meeting

  (3) The official receiver, or the nominee thereof, shall be the chairman of the meeting referred to in subsection (1) and shall decide any questions or disputes arising at the meeting, and any creditor may appeal any such decision to the court.

Marginal note:Adjournment of meeting for further investigation and examination

52 Where the creditors by ordinary resolution at the meeting at which a proposal is being considered so require, the meeting shall be adjourned to such time and place as may be fixed by the chairman

• (a) to enable a further appraisal and investigation of the affairs and property of the debtor to be made; or

• (b) for the examination under oath of the debtor or of such other person as may be believed to have knowledge of the affairs or property of the debtor, and the testimony of the debtor or such other person, if transcribed, shall be placed before the adjourned meeting or may be read in court on the application for the approval of the proposal.

Marginal note:Creditor may assent or dissent

53 Any creditor who has proved a claim, whether secured or unsecured, may indicate assent to or dissent from the proposal in the prescribed manner to the trustee prior to the meeting, and any assent or dissent, if received by the trustee at or prior to the meeting, has effect as if the creditor had been present and had voted at the meeting.

Marginal note:Vote on proposal by creditors

• 54 (1) The creditors may, in accordance with this section, resolve to accept or may refuse the proposal as made or as altered at the meeting or any adjournment thereof.

• Marginal note:Voting system

  (2) For the purpose of subsection (1),

  • (a) the following creditors with proven claims are entitled to vote:

    • (i) all unsecured creditors, and

    • (ii) those secured creditors in respect of whose secured claims the proposal was made;

  • (b) the creditors shall vote by class, according to the class of their respective claims, and for that purpose

    • (i) all unsecured claims constitute one class, unless the proposal provides for more than one class of unsecured claim, and

    • (ii) the classes of secured claims shall be determined as provided by subsection 50(1.4);

  • (c) the votes of the secured creditors do not count for the purpose of this section, but are relevant only for the purpose of subsection 62(2); and

  • (d) the proposal shall be deemed to be accepted by the creditors if, and only if, all classes of unsecured creditors 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:Certain Crown claims

  (2.1) For greater certainty, subsection 224(1.2) of the Income Tax Act shall not be construed as classifying as secured claims, for the purpose of subsection (2), claims of Her Majesty in right of Canada or a province for amounts that could be subject to a demand under

  • (a) subsection 224(1.2) of the Income Tax Act;

  • (b) any provision of the Canada Pension Plan or of the Employment Insurance Act that refers to subsection 224(1.2) of the Income Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, or an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, and of any related interest, penalties or other amounts; or

  • (c) any provision of provincial legislation that has a similar purpose to subsection 224(1.2) of the Income Tax Act, or that refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, where the sum

    • (i) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or

    • (ii) is of the same nature as a contribution under the Canada Pension Plan if the province is a "province providing a comprehensive pension plan" as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a "provincial pension plan" as defined in that subsection.

• Marginal note:Where no quorum in a class

  (2.2) Where there is no quorum of secured creditors in respect of a particular class of secured claims, the secured creditors having claims of that class shall be deemed to have voted for the refusal of the proposal.

• Marginal note:Related creditor

  (3) A creditor who is related to the debtor may vote against but not for the acceptance of the proposal.

• Marginal note:Voting by trustee

  (4) The trustee, as a creditor, may not vote on the proposal.

Marginal note:Creditors may provide for supervision of debtor’s affairs

55 At a meeting to consider a proposal, the creditors, with the consent of the debtor, may include such provisions or terms in the proposal with respect to the supervision of the affairs of the debtor as they may deem advisable.

Marginal note:Appointment of inspectors

56 The creditors may appoint one or more, but not exceeding five, inspectors of the estate of the debtor, who shall have the powers of an inspector under this Act, subject to any extension or restriction of those powers by the terms of the proposal.

Marginal note:Result of refusal of proposal

57 Where the creditors refuse a proposal in respect of an insolvent person,

• (a) the insolvent person is deemed to have thereupon made an assignment;

• (b) the trustee shall forthwith file a report thereof in the prescribed form with the official receiver, who shall thereupon issue a certificate of assignment in the prescribed form, which has the same effect for the purposes of this Act as an assignment filed pursuant to section 49; and

• (c) the trustee shall either

  • (i) forthwith call a meeting of creditors present at that time, which meeting shall be deemed to be a meeting called under section 102, or

  • (ii) if no quorum exists for the purpose of subparagraph (i), send notice, within five days after the day the certificate mentioned in paragraph (b) is issued, of the meeting of creditors under section 102,

  and at either meeting the creditors may by ordinary resolution, notwithstanding section 14, affirm the appointment of the trustee or appoint another licensed trustee in lieu of that trustee.

Marginal note:Appointment of new trustee

57.1 Where a declaration has been made under subsection 50(12) or 50.4(11), the court may, if it is satisfied that it would be in the best interests of the creditors to do so, appoint a trustee in lieu of the trustee appointed under the notice of intention or proposal that was filed.

Marginal note:Application for court approval

58 On acceptance of a proposal by the creditors, the trustee shall

• (a) within five days after the acceptance, apply to the court for an appointment for a hearing of the application for the court’s approval of the proposal;

• (b) send a notice of the hearing of the application, in the prescribed manner and at least fifteen days before the date of the hearing, to the debtor, to every creditor who has proved a claim, whether secured or unsecured, to the person making the proposal and to the official receiver;

• (c) forward a copy of the report referred to in paragraph (d) to the official receiver at least ten days before the date of the hearing; and

• (d) at least two days before the date of the hearing, file with the court, in the prescribed form, a report on the proposal.

Marginal note:Court to hear report of trustee, etc.

• 59 (1) The court shall, before approving the proposal, hear a report of the trustee in the prescribed form respecting the terms thereof and the conduct of the debtor, and, in addition, shall hear the trustee, the debtor, the person making the proposal, any opposing, objecting or dissenting creditor and such further evidence as the court may require.

• Marginal note:Court may refuse to approve the proposal

  (2) Where the court is of the opinion that the terms of the proposal are not reasonable or are not calculated to benefit the general body of creditors, the court shall refuse to approve the proposal, and the court may refuse to approve the proposal whenever it is established that the debtor has committed any one of the offences mentioned in sections 198 to 200.

• Marginal note:Reasonable security

  (3) Where any of the facts mentioned in section 173 are proved against the debtor, the court shall refuse to approve the proposal unless it provides reasonable security for the payment of not less than fifty cents on the dollar on all the unsecured claims provable against the debtor’s estate or such percentage thereof as the court may direct.

Marginal note:Priority of claims

• 60 (1) No proposal shall be approved by the court that does not provide for the payment in priority to other claims of all claims directed to be so paid in the distribution of the property of a debtor and for the payment of all proper fees and expenses of the trustee on and incidental to the proceedings arising out of the proposal or in the bankruptcy.

• Marginal note:Certain Crown claims

  (1.1) Unless Her Majesty consents, no proposal shall be approved by the court that does not provide for the payment in full to Her Majesty in right of Canada or a province, within six months after court approval of the proposal, of all amounts that were outstanding at the time of the filing of the notice of intention or of the proposal, if no notice of intention was filed, and are of a kind that could be subject to a demand under

  • (a) subsection 224(1.2) of the Income Tax Act;

  • (b) any provision of the Canada Pension Plan or of the Employment Insurance Act that refers to subsection 224(1.2) of the Income Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, or an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, and of any related interest, penalties or other amounts; or

  • (c) any provision of provincial legislation that has a similar purpose to subsection 224(1.2) of the Income Tax Act, or that refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, where the sum

    • (i) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or

    • (ii) is of the same nature as a contribution under the Canada Pension Plan if the province is a "province providing a comprehensive pension plan" as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a "provincial pension plan" as defined in that subsection.

• Marginal note:Idem

  (1.2) No proposal shall be approved by the court if, at the time the court hears the application for approval, Her Majesty in right of Canada or a province satisfies the court that the debtor is in default on any remittance of an amount referred to in subsection (1.1) that became due after the filing

  • (a) of the notice of intention; or

  • (b) of the proposal, if no notice of intention was filed.

• Marginal note:Proposals by employers

  (1.3) No proposal in respect of an employer shall be approved by the court unless

  • (a) it provides for payment to the employees and former employees, immediately after court approval of the proposal, of amounts equal to the amounts that they would be qualified to receive under paragraph 136(1)(d) if the employer became bankrupt on the date of the filing of the notice of intention, or proposal if no notice of intention was filed, as well as wages, salaries, commissions or compensation for services rendered after that date and before the court approval of the proposal, together with, in the case of travelling salesmen, disbursements properly incurred by those salesmen in and about the bankrupt’s business during the same period; and

  • (b) the court is satisfied that the employer can and will make the payments as required under paragraph (a).

• Marginal note:Voting on proposal

  (1.4) For the purpose of voting on any question relating to a proposal in respect of an employer, no person has a claim for an amount referred to in paragraph (1.3)(a).

• (1.5) [Repealed, 1997, c. 12, s. 37]

• Marginal note:Payment to trustee

  (2) All moneys payable under the proposal shall be paid to the trustee and, after payment of all proper fees and expenses mentioned in subsection (1), shall be distributed by him to the creditors.

• Marginal note:Distribution of promissory notes, stock, etc., of debtor

  (3) Where the proposal provides for the distribution of property in the nature of promissory notes or other evidence of obligations by or on behalf of the debtor or, when the debtor is a corporation, shares in the capital stock of the corporation, the property shall be dealt with in the manner prescribed in subsection (2) as nearly as may be.

• Marginal note:Section 147 applies

  (4) Section 147 applies to all distributions made to the creditors by the trustee pursuant to subsection (2) or (3).

• Marginal note:Power of court

  (5) Subject to subsections (1) to (1.5), the court may either approve or refuse to approve the proposal.

Marginal note:Annulment of bankruptcy

• 61 (1) The approval by the court of a proposal made after bankruptcy operates to annul the bankruptcy and to revest in the debtor, or in such other person as the court may approve, all the right, title and interest of the trustee in the property of the debtor, unless the terms of the proposal otherwise provide.

• Marginal note:Non-approval of proposal by court

  (2) Where the court refuses to approve a proposal in respect of an insolvent person a copy of which has been filed under section 62,

  • (a) the insolvent person is deemed to have thereupon made an assignment;

  • (b) the trustee shall forthwith file a report thereof in the prescribed form with the official receiver, who shall thereupon issue a certificate of assignment in the prescribed form, which has the same effect for the purposes of this Act as an assignment filed pursuant to section 49; and

  • (c) the trustee shall, within five days after the day the certificate mentioned in paragraph (b) is issued, send notice of the meeting of creditors under section 102, at which meeting the creditors may by ordinary resolution, notwithstanding section 14, affirm the appointment of the trustee or appoint another licensed trustee in lieu of that trustee.

• (3) [Repealed, 1992, c. 27, s. 25]

• Marginal note:Costs when proposal refused

  (4) No costs incurred by a debtor on or incidental to an application to approve a proposal, other than the costs incurred by the trustee, shall be allowed out of the estate of the debtor if the court refuses to approve the proposal.

Marginal note:Filing of proposal

• 62 (1) Where a proposal is made in respect of an insolvent person, the trustee shall file a copy thereof with the official receiver.

• Marginal note:Determination of claims

  (1.1) Except in respect of claims referred to in subsection 14.06(8), where a proposal is made in respect of an insolvent person, the time with respect to which the claims of creditors shall be determined is the time of the filing of

  • (a) the notice of intention; or

  • (b) the proposal, if no notice of intention was filed.

• Marginal note:Determination of claims re bankrupt

  (1.2) Except in respect of claims referred to in subsection 14.06(8), where a proposal is made in respect of a bankrupt, the time with respect to which the claims of creditors shall be determined is the date on which the bankrupt became bankrupt.

• Marginal note:On whom approval binding

  (2) A proposal accepted by the creditors and approved by the court is binding on creditors in respect of

  • (a) all unsecured claims, and

  • (b) the secured claims in respect of which the proposal was made and that were in classes in which the secured creditors voted for the acceptance of the proposal by a majority in number and two thirds in value of the secured creditors present, personally or by proxy, at the meeting and voting on the resolution to accept the proposal,

  but does not release the insolvent person from the debts and liabilities referred to in section 178, unless the creditor assents thereto.

• Marginal note:Certain persons not released

  (3) The acceptance of a proposal by a creditor does not release any person who would not be released under this Act by the discharge of the debtor.

Marginal note:Default in performance of proposal

62.1 Where

• (a) default is made in the performance of any provision in a proposal,

• (b) the default is not waived

  • (i) by the inspectors, or

  • (ii) if there are no inspectors, by the creditors, and

• (c) the default is not remedied by the insolvent person within the prescribed time,

the trustee shall, within such time and in such form and manner as are prescribed, so inform all the creditors and the official receiver.

Marginal note:Receiving order on default, etc.

• 63 (1) Where default is made in the performance of any provision in a proposal, or where it appears to the court that the proposal cannot continue without injustice or undue delay or that the approval of the court was obtained by fraud, the court may, on application thereto, with such notice as the court may direct to the debtor, and, if applicable to the trustee and to the creditors, annul the proposal.

• Marginal note:Validity of things done

  (2) An order made under subsection (1) shall be made without prejudice to the validity of any sale, disposition of property or payment duly made, or anything duly done under or in pursuance of the proposal, and notwithstanding the annulment of the proposal, a guarantee given pursuant to the proposal remains in full force and effect in accordance with its terms.

• Marginal note:Annulment for offence

  (3) A proposal, although accepted or approved, may be annulled by order of the court at the request of the trustee or of any creditor whenever the debtor is afterwards convicted of any offence under this Act.

• Marginal note:Effect of annulling order

  (4) On the annulment of a proposal, the debtor shall be deemed to have thereupon made an assignment and the order annulling the proposal shall so state.

• Marginal note:Meeting of creditors to be called

  (5) Where an order annulling a proposal has been made, the trustee shall, within five days after the order is made, send notice of the meeting of creditors under section 102, at which meeting the creditors may by ordinary resolution, notwithstanding section 14, affirm the appointment of the trustee or appoint another licensed trustee in lieu of that trustee.

• Marginal note:Consequences of annulment

  (6) Where an order annulling the proposal described in subsection (5) has been made, the trustee shall forthwith file a report thereof in the prescribed form with the official receiver, who shall thereupon issue a certificate of assignment in the prescribed form, which has the same effect for the purposes of this Act as an assignment filed pursuant to section 49.

64 [Repealed, 1999, c. 31, s. 20]

Marginal note:Where proposal is conditional on purchase of new securities

65 A proposal made conditional on the purchase of shares or securities or on any other payment or contribution by the creditors shall provide that the claim of any creditor who elects not to participate in the proposal shall be valued by the court and shall be paid in cash on approval of the proposal.

Marginal note:Certain rights limited

• 65.1 (1) If a notice of intention or a proposal has been filed in respect of an insolvent person, no person may terminate or amend any agreement with the insolvent person, or claim an accelerated payment, or a forfeiture of the term, under any agreement with the insolvent person, by reason only that

  • (a) the insolvent person is insolvent; or

  • (b) a notice of intention or a proposal has been filed in respect of the insolvent person.

• Marginal note:Idem

  (2) Where the agreement referred to in subsection (1) is a lease or a licensing agreement, subsection (1) shall be read as including the following paragraph:

  • "(c) the insolvent person has not paid rent or royalties, as the case may be, or other payments of a similar nature, in respect of a period preceding the filing of

    • (i) the notice of intention, if one was filed, or

    • (ii) the proposal, if no notice of intention was filed."

• Marginal note:Idem

  (3) Where a notice of intention or a proposal has been filed in respect of an insolvent person, no public utility may discontinue service to that insolvent person by reason only that

  • (a) the insolvent person is insolvent;

  • (b) a notice of intention or a proposal has been filed in respect of the insolvent person; or

  • (c) the insolvent person has not paid for services rendered, or material provided, before the filing of

    • (i) the notice of intention, if one was filed, or

    • (ii) the proposal, if no notice of intention was filed.

• Marginal note:Certain acts not prevented

  (4) Nothing in subsections (1) to (3) shall be construed

  • (a) as prohibiting a person from requiring immediate payment for goods, services, use of leased or licensed property or other valuable consideration provided after the filing of

    • (i) the notice of intention, if one was filed, or

    • (ii) the proposal, if no notice of intention was filed; or

  • (b) as 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 subsections (1) to (3) is of no force or effect.

• Marginal note:Powers of court

  (6) The court may, on application by a party to an agreement or by a public utility, declare that subsections (1) to (3) do not apply, or apply only to the extent declared by the court, where the applicant satisfies the court that the operation of those subsections would likely cause it significant financial hardship.

• Marginal note:Eligible financial contracts

  (7) Subsection (1) does not apply

  • (a) in respect of an eligible financial contract; or

  • (b) to prevent a member of the Canadian Payments Association established by the Canadian Payments Act from ceasing to act as a clearing agent or group clearer for an insolvent person in accordance with that Act and the by-laws and rules of that Association.

• (8) [Repealed, 2007, c. 29, s. 92]

• Marginal note:Permitted actions

  (9) Despite subsections 69(1) and 69.1(1), the following actions are permitted in respect of an eligible financial contract that is entered into before the filing, in respect of an insolvent person of a notice of intention or, where no notice of intention is filed, a proposal, and that is terminated on or after that filing, but only in accordance with the provisions of that contract:

  • (a) the netting or setting off or compensation of obligations between the insolvent person and the other parties to the eligible financial contract; and

  • (b) any dealing with financial collateral including

    • (i) the sale or foreclosure or, in the Province of Quebec, the surrender of financial collateral, and

    • (ii) the setting off or compensation of financial collateral or the application of the proceeds or value of financial collateral.

• Marginal note:Net termination values

  (10) If net termination values determined in accordance with an eligible financial contract referred to in subsection (9) are owed by the insolvent person to another party to the eligible financial contract, that other party is deemed, for the purposes of paragraphs 69(1)(a) and 69.1(1)(a), to be a creditor of the insolvent person with a claim provable in bankruptcy in respect of those net termination values.

Marginal note:Insolvent person may disclaim or resiliate commercial lease

• 65.2 (1) At any time between the filing of a notice of intention and the filing of a proposal, or on the filing of a proposal, in respect of an insolvent person who is a commercial lessee under a lease of real property or an immovable, the insolvent person may disclaim or resiliate the lease on giving thirty days notice to the lessor in the prescribed manner, subject to subsection (2).

• Marginal note:Lessor may challenge

  (2) Within fifteen days after being given notice of the disclaimer or resiliation of a lease under subsection (1), the lessor may apply to the court for a declaration that subsection (1) does not apply in respect of that lease, and the court, on notice to any parties that it may direct, shall, subject to subsection (3), make that declaration.

• Marginal note:Circumstances for not making declaration

  (3) No declaration under subsection (2) shall be made if the court is satisfied that the insolvent person would not be able to make a viable proposal without the disclaimer or resiliation of the lease and all other leases that the lessee has disclaimed or resiliated under subsection (1).

• Marginal note:Effects of disclaimer or resiliation

  (4) If a lease is disclaimed or resiliated under subsection (1),

  • (a) the lessor has no claim for accelerated rent;

  • (b) the proposal must indicate whether the lessor may file a proof of claim for the actual losses resulting from the disclaimer or resiliation, or for an amount equal to the lesser of

    • (i) the aggregate of

      • (A) the rent provided for in the lease for the first year of the lease following the date on which the disclaimer or resiliation becomes effective, and

      • (B) fifteen per cent of the rent for the remainder of the term of the lease after that year, and

    • (ii) three years’ rent; and

  • (c) the lessor may file a proof of claim as indicated in the proposal.

• Marginal note:Classification of claim

  (5) The lessor’s claim shall be included in either

  • (a) a separate class of similar claims of lessors; or

  • (b) a class of unsecured claims that includes claims of creditors who are not lessors.

• Marginal note:Lessor’s vote on proposal

  (6) The lessor is entitled to vote on the proposal in whichever class referred to in subsection (5) the lessor’s claim is included, and for the amount of the claim as proven.

• Marginal note:Determination of classes

  (7) The court may, on application made at any time after the proposal is filed, determine the classes of claims of lessors and the class into which the claim of any of those particular lessors falls.

• Marginal note:Section 146 not affected

  (8) Nothing in subsections (1) to (7) affects the operation of section 146 in the event of bankruptcy.

Marginal note:Lease disclaimer or resiliation if lessee is a bankrupt

65.21 If, in respect of a proposal concerning a bankrupt person who is a commercial lessee under a lease of real property or an immovable, the lessee’s lease has been surrendered, disclaimed or resiliated in the bankruptcy proceedings, subsections 65.2(3) to (7) apply in the same manner and to the same extent as if the person was not a bankrupt but was an insolvent person in respect of which a disclaimer or resiliation referred to in those subsections applies.

Marginal note:Bankruptcy after court approval

65.22 If an insolvent person who has disclaimed or resiliated a lease under subsection 65.2(1) becomes bankrupt after the court approval of the proposal and before the proposal is fully performed, any claim of the lessor in respect of losses resulting from the disclaimer or resiliation, including any claim for accelerated rent, shall be reduced by the amount of compensation paid under the proposal for losses resulting from the disclaimer or resiliation.

Marginal note:Certificate where proposal performed

65.3 Where a proposal is fully performed, the trustee shall give a certificate to that effect, in the prescribed form, to the debtor and to the official receiver.

Marginal note:Act to apply

• 66 (1) All the provisions of this Act, except Division II of this Part, in so far as they are applicable, apply, with such modifications as the circumstances require, to proposals made under this Division.

• Marginal note:Effect of Companies' Creditors Arrangement Act

  (2) Notwithstanding the Companies' Creditors Arrangement Act,

  • (a) proceedings commenced under that Act shall not be dealt with or continued under this Act; and

  • (b) proceedings shall not be commenced under Part III of this Act in respect of a company if a compromise or arrangement has been proposed in respect of the company under the Companies' Creditors Arrangement Act and the compromise or arrangement has not been agreed to by the creditors or sanctioned by the court under that Act.

DIVISION IIConsumer Proposals

Marginal note:Definitions

66.11 In this Division,

administrator

administrateur

administrator means

• (a) a trustee, or

• (b) a person appointed or designated by the Superintendent to administer consumer proposals; (administrateur)

consumer debtor

débiteur consommateur

consumer debtor means a natural person who is bankrupt or insolvent and whose aggregate debts, excluding any debts secured by the person’s principal residence, do not exceed seventy-five thousand dollars or such other maximum as is prescribed; (débiteur consommateur)

consumer proposal

proposition de consommateur

consumer proposal means a proposal made under this Division. (proposition de consommateur)

Marginal note:Consumer proposal

• 66.12 (1) A consumer proposal may be made by a consumer debtor, subject to subsections (2) and 66.32(1).

• Marginal note:Dealing with certain consumer proposals together

  (1.1) Two or more consumer proposals may, in such circumstances as are specified in directives of the Superintendent, be dealt with as one consumer proposal where they could reasonably be dealt with together because of the financial relationship of the consumer debtors involved.

• Marginal note:Restriction

  (2) A consumer debtor who has filed a notice of intention or lodged a proposal under Division I may not make a consumer proposal until the trustee appointed in respect of the notice of intention or proposal under Division I has been discharged.

• Marginal note:To whom consumer proposal is made

  (3) A consumer proposal shall be made to the creditors generally.

• Marginal note:Creditors' response

  (4) Any creditor may respond to a consumer proposal by filing with the administrator a proof of claim in the manner provided for in

  • (a) sections 124 to 126, in the case of unsecured creditors; or

  • (b) sections 124 to 134, in the case of secured creditors.

• Marginal note:Term of consumer proposal

  (5) A consumer proposal must provide that its performance is to be completed within five years.

• Marginal note:Priority of claims, fees

  (6) A consumer proposal must provide

  • (a) for the payment in priority to other claims of all claims directed to be so paid in the distribution of the property of the consumer debtor;

  • (b) for the payment of all prescribed fees and expenses

    • (i) of the administrator on and incidental to proceedings arising out of the consumer proposal, and

    • (ii) of any person in respect of counselling provided pursuant to paragraph 66.13(2)(b); and

  • (c) for the manner of distributing dividends.

Marginal note:Commencement of proceedings

• 66.13 (1) A consumer debtor who wishes to make a consumer proposal shall commence proceedings by

  • (a) obtaining the assistance of an administrator in preparing the consumer proposal; and

  • (b) providing the administrator with the prescribed information on the consumer debtor’s current financial situation.

• Marginal note:Duties of administrator

  (2) An administrator who agrees to assist a consumer debtor shall

  • (a) investigate, or cause to be investigated, the consumer debtor’s property and financial affairs so as to be able to assess with reasonable accuracy the consumer debtor’s financial situation and the cause of his insolvency;

  • (b) provide, or provide for, counselling in accordance with directives issued by the Superintendent pursuant to paragraph 5(4)(b);

  • (c) prepare a consumer proposal in the prescribed form; and

  • (d) subject to subsection (3), file a copy of the consumer proposal, signed by the consumer debtor, with the official receiver.

• Marginal note:Where consumer proposal not to be filed

  (3) The administrator shall not file a consumer proposal under paragraph (2)(d) if he has reason to believe that

  • (a) the debtor is not eligible to make a consumer proposal; or

  • (b) there has been non-compliance with anything required by this section or section 66.12.

• Marginal note:Where consumer proposal wrongly filed

  (4) Where the administrator determines, after filing a consumer proposal under paragraph (2)(d), that it should not have been filed because the debtor was not eligible to make a consumer proposal, the administrator shall forthwith so inform the creditors and the official receiver, but the consumer proposal is not invalid by reason only that the debtor was not eligible to make the consumer proposal.

Marginal note:Duties of administrator

66.14 The administrator shall, within ten days after filing a consumer proposal with the official receiver,

• (a) prepare and file with the official receiver a report in the prescribed form setting out

  • (i) the results of the investigation made under paragraph 66.13(2)(a),

  • (ii) the administrator’s opinion as to whether the consumer proposal is reasonable and fair to the consumer debtor and the creditors, and whether the consumer debtor will be able to perform it,

  • (iii) a condensed statement of the consumer debtor’s assets, liabilities, income and expenses, and

  • (iv) a list of the creditors whose claims exceed two hundred and fifty dollars; and

• (b) send to every known creditor, in the prescribed form and manner,

  • (i) a copy of the consumer proposal,

  • (ii) a copy of the report referred to in paragraph (a),

  • (iii) a form of proof of claim as prescribed, and

  • (iv) a statement explaining that a meeting of creditors will be called only if required under section 66.15 and that a review of the consumer proposal by a court will be made only if it is requested in accordance with subsection 66.22(1).

Marginal note:Meeting of creditors

• 66.15 (1) The official receiver may, at any time within the forty-five day period following the filing of the consumer proposal, direct the administrator to call a meeting of creditors.

• Marginal note:Idem

  (2) The administrator shall call a meeting of creditors

  • (a) forthwith after being so directed by the official receiver under subsection (1), or

  • (b) at the expiration of the forty-five day period following the filing of the consumer proposal, if at that time creditors having in the aggregate at least twenty-five per cent in value of the proven claims have so requested,

  and any meeting of creditors must be held within twenty-one days after being called.

• Marginal note:Notice to be sent to creditors

  (3) The administrator shall, at least ten days before a meeting called pursuant to this section, send to the consumer debtor, every known creditor and the official receiver, in the prescribed form and manner, a notice setting out

  • (a) the time and place of the meeting;

  • (b) a form of proxy as prescribed; and

  • (c) such other information and documentation as is prescribed.

Marginal note:Chairman of meeting

• 66.16 (1) The official receiver, or the nominee thereof, shall be the chairman of a meeting called pursuant to section 66.15 and subsection 66.37(1) and shall decide any questions or disputes arising at the meeting, and any creditor may appeal any such decision to the court.

• Marginal note:Adjournment of meeting for further investigation and examination

  (2) Where the creditors by ordinary resolution at the meeting so require, the meeting shall be adjourned to such time and place as may be fixed by the chairman

  • (a) to enable a further appraisal and investigation of the affairs and property of the consumer debtor to be made; or

  • (b) for the examination under oath of the consumer debtor or of such other person as may be believed to have knowledge of the affairs or property of the consumer debtor, and the testimony of the consumer debtor or such other person, if transcribed, shall be placed before the adjourned meeting or may be read in court on the application, if any, for the approval of the consumer proposal.

Marginal note:Creditor may indicate assent or dissent

• 66.17 (1) Any creditor who has proved a claim may indicate assent to or dissent from the consumer proposal in the prescribed manner to the administrator at or prior to a meeting of creditors, or prior to the expiration of the forty-five day period following the filing of the consumer proposal.

• Marginal note:Effect

  (2) Any dissent received by the administrator prior to the expiration of the forty-five day period mentioned in subsection (1) is deemed to be a request for a meeting of creditors for the purpose of paragraph 66.15(2)(b), and any assent or dissent received by the administrator at or prior to a meeting of creditors has effect as if the creditor had been present and had voted at the meeting.

Marginal note:Where consumer proposal deemed accepted

• 66.18 (1) Where, at the expiration of the forty-five day period following the filing of the consumer proposal, no obligation has arisen under subsection 66.15(2) to call a meeting of creditors, the consumer proposal is deemed to be accepted by the creditors.

• Marginal note:Idem

  (2) Where there is no quorum at a meeting of creditors, the consumer proposal shall be deemed to be accepted by the creditors.

Marginal note:Voting on consumer proposal

• 66.19 (1) At a meeting of creditors, the creditors may by ordinary resolution, voting all as one class, accept or refuse the consumer proposal as filed or as altered at the meeting or any adjournment thereof, subject to the rights of secured creditors.

• Marginal note:Related creditor

  (2) A creditor who is related to the consumer debtor may vote against but not for the acceptance of the consumer proposal.

• Marginal note:Voting by administrator

  (3) The administrator, as a creditor, may not vote on the consumer proposal.

Marginal note:Creditors may provide for supervision of consumer debtor’s affairs

66.2 The creditors, with the consent of the consumer debtor, may include such provisions or terms in the consumer proposal with respect to the supervision of the affairs of the consumer debtor as they may deem advisable.

Marginal note:Appointment of inspectors

66.21 The creditors may appoint up to three inspectors of the estate of the consumer debtor, who shall have the powers of an inspector under this Act, subject to any extension or restriction of those powers by the terms of the consumer proposal.

Marginal note:Application to court

• 66.22 (1) Where a consumer proposal is accepted or deemed accepted by the creditors, the administrator shall, if requested by the official receiver or any other interested party within fifteen days after the day of acceptance or deemed acceptance, forthwith apply to the court to have the consumer proposal reviewed.

• Marginal note:Where consumer proposal deemed approved by court

  (2) Where, at the expiration of the fifteenth day after the day of acceptance or deemed acceptance of the consumer proposal by the creditors, no obligation has arisen under subsection (1) to apply to the court, the consumer proposal is deemed to be approved by the court.

Marginal note:Procedure for application to court

66.23 Where the administrator applies to the court pursuant to subsection 66.22(1), the administrator shall

• (a) send a notice of the hearing of the application, in the prescribed manner and at least fifteen days before the date of the hearing, to the consumer debtor, to every creditor who has proved a claim and to the official receiver;

• (b) forward a copy of the report referred to in paragraph (c) to the official receiver at least ten days before the date of the hearing; and

• (c) at least two days before the date of the hearing, file with the court a report in the prescribed form on the consumer proposal and the conduct of the consumer debtor.

Marginal note:Court to hear report of administrator, etc.

• 66.24 (1) The court shall, before approving the consumer proposal, hear the report mentioned in paragraph 66.23(c) and, in addition, shall hear the official receiver, the administrator, the consumer debtor, any opposing, objecting or dissenting creditor or other interested party, and such further evidence as the court may require.

• Marginal note:Refusal to approve the consumer proposal

  (2) Where the court is of the opinion that the terms of the consumer proposal are not reasonable or are not fair to the consumer debtor and the creditors, the court shall refuse to approve the consumer proposal, and the court may refuse to approve the consumer proposal whenever it is established that the consumer debtor

  • (a) has committed any one of the offences mentioned in sections 198 to 200; or

  • (b) was not eligible to make a consumer proposal when the consumer proposal was filed with the official receiver.

• Marginal note:Proposal must comply with Act

  (3) The court shall refuse to approve a consumer proposal if it does not comply with subsections 66.12(5) and (6).

• Marginal note:Power of court

  (4) Subject to subsections (1) to (3), the court may either approve or refuse to approve the consumer proposal.

Marginal note:Withdrawal of consumer proposal

66.25 A consumer debtor may withdraw a consumer proposal

• (a) at any time before its deemed approval by the court by virtue of subsection 66.22(2), where no court review is requested; or

• (b) where a court review is requested, at any time before its actual approval or refusal by the court pursuant to section 66.24.

Marginal note:Where periodic payments not provided for

66.251 Where a proposal is approved or deemed approved by the court and the terms of the proposal do not provide for the distribution of available moneys at least once every three months, the administrator shall forthwith, upon ascertaining any change in the consumer debtor’s circumstances that leads the administrator to conclude, after consultation with the debtor where practicable, that such change could jeopardize the consumer debtor’s ability to meet the terms of the proposal, in writing, notify the official receiver and every known creditor of the change.

Marginal note:Payments to administrator

• 66.26 (1) All moneys payable under the consumer proposal shall be paid to the administrator and, after payment of all fees and expenses mentioned in paragraph 66.12(6)(b), the administrator shall distribute available moneys to the creditors in accordance with the terms of the consumer proposal.

• Marginal note:Deposit of moneys

  (2) In such circumstances as are specified in directives of the Superintendent and with the approval of the Superintendent, the administrator may deposit all moneys relating to the administration of consumer proposals in a single trust account.

• Marginal note:Section 147 applies

  (3) Section 147 applies, with such modifications as the circumstances require, to all distributions made to the creditors by the administrator pursuant to subsection (1).

Marginal note:Notifications

66.27 The administrator shall, within five days after

• (a) the refusal of a consumer proposal by the creditors,

• (b) the refusal of a consumer proposal by the court, and

• (c) the withdrawal of a consumer proposal by the consumer debtor,

so notify in the prescribed form and manner the consumer debtor, every known creditor and the official receiver.

Marginal note:Time for determining claims

• 66.28 (1) The time with respect to which the claims of creditors shall be determined is the time of the filing of the consumer proposal.

• Marginal note:On whom approval binding

  (2) A consumer proposal accepted, or deemed accepted, by the creditors and approved, or deemed approved, by the court is binding on creditors in respect of

  • (a) all unsecured claims, and

  • (b) secured claims for which proofs of claim have been filed in the manner provided for in sections 124 to 134,

  but does not release the consumer debtor from the debts and liabilities referred to in section 178, unless the creditor assents thereto.

• Marginal note:Certain persons not released

  (3) The acceptance of a consumer proposal by a creditor does not release any person who would not be released under this Act by the discharge of the consumer debtor.

Marginal note:Administrator may issue certificate

• 66.29 (1) If a consumer proposal is approved or deemed approved by the court, the administrator may, if the administrator believes on reasonable grounds that the debtor owns land or other valuable property, issue a certificate in respect of the proposal, and may cause the certificate to be filed in any place where a certificate of judgment, writ of seizure and sale or other like document may be filed or where a legal hypothec of judgment creditors may be registered.

• Marginal note:Effect of filing certificate

  (2) A certificate filed under subsection (1) operates as a certificate of judgment, writ of execution or legal hypothec of judgment creditors until the proposal is fully performed.

Marginal note:Annulment of consumer proposal

• 66.3 (1) Where default is made in the performance of any provision in a consumer proposal, or where it appears to the court

  • (a) that the debtor was not eligible to make a consumer proposal when the consumer proposal was filed,

  • (b) that the consumer proposal cannot continue without injustice or undue delay, or

  • (c) that the approval of the court was obtained by fraud,

  the court may, on application, with such notice as the court may direct to the consumer debtor and, if applicable, to the administrator and to the creditors, annul the consumer proposal.

• Marginal note:Validity of things done

  (2) An order made under subsection (1) shall be made without prejudice to the validity of any sale, disposition of property or payment duly made, or anything duly done under or in pursuance of the consumer proposal, and notwithstanding the annulment of the consumer proposal, a guarantee given pursuant to the consumer proposal remains in full force and effect in accordance with its terms.

• Marginal note:Annulment for offence

  (3) A consumer proposal, although accepted or approved, may be annulled by order of the court at the request of the administrator or of any creditor whenever the consumer debtor is afterwards convicted of any offence under this Act.

• Marginal note:Notification of annulment

  (4) Where an order annulling the consumer proposal of a consumer debtor who is not a bankrupt has been made pursuant to this section, the administrator shall forthwith so inform the creditors and file a report thereof in the prescribed form with the official receiver.

• Marginal note:Annulment effect

  (5) Where a consumer proposal made by a bankrupt is annulled,

  • (a) the consumer debtor is deemed on the annulment to have made an assignment and the order annulling the proposal shall so state;

  • (b) the trustee who is the administrator of the proposal shall, within five days after the order is made, send notice of the meeting of creditors under section 102, at which meeting the creditors may by ordinary resolution, notwithstanding section 14, affirm the appointment of the trustee or appoint another trustee in lieu of that trustee; and

  • (c) the trustee shall forthwith file a report thereof in the prescribed form with the official receiver, who shall thereupon issue a certificate of assignment in the prescribed form, which has the same effect for the purposes of this Act as an assignment filed pursuant to section 49.

Marginal note:Where consumer proposal deemed annulled

• 66.31 (1) Independently of section 66.3,

  • (a) where payments under a consumer proposal are to be made monthly or more frequently and the consumer debtor is in default to the extent of three months payments, or

  • (b) where payments under a consumer proposal are to be made less frequently than monthly and the consumer debtor is in default for more than three months on any payment,

  the consumer proposal shall thereupon be deemed to be annulled unless the court has previously ordered otherwise or unless an amendment to the consumer proposal has previously been filed, and the administrator shall forthwith so inform the creditors and file a report thereof in the prescribed form with the official receiver.

• Marginal note:Idem

  (2) Where an amendment to a consumer proposal filed before the deemed annulment of the consumer proposal by virtue of subsection (1) is withdrawn or refused by the creditors or the court, the consumer proposal shall thereupon be deemed to be annulled.

• Marginal note:Validity of things done

  (3) A deemed annulment of a consumer proposal by virtue of subsection (1) or (2) does not prejudice the validity of any sale, disposition of property or payment duly made, or anything duly done under or in pursuance of the consumer proposal, and notwithstanding the deemed annulment of the consumer proposal, a guarantee given pursuant to the consumer proposal remains in full force and effect in accordance with its terms.

Marginal note:Effects of annulment

• 66.32 (1) Unless the court otherwise orders, where a consumer proposal is annulled or deemed annulled, the consumer debtor

  • (a) may not make another consumer proposal, and

  • (b) is not entitled to any relief provided by sections 69 to 69.2

  until all claims for which proofs of claim were filed and accepted are either paid in full or are extinguished by the operation of subsection 178(2).

• Marginal note:Idem

  (2) Where a consumer proposal is annulled or deemed annulled, the rights of the creditors are revived for the amount of their claims less any dividends received.

Marginal note:Assignment pending approval of consumer proposal

66.33 Where a consumer debtor in respect of whom a consumer proposal has been filed makes an assignment at any time before the court has approved or deemed to have approved the consumer proposal, the date of the assignment shall be deemed to be the earlier of

• (a) the day on which the consumer proposal was filed, and

• (b) the day on which the first application, if any, for a bankruptcy order in respect of that consumer debtor was filed.

Marginal note:Certain rights limited

• 66.34 (1) If a consumer proposal has been filed in respect of a consumer debtor, no person may terminate or amend any agreement with the consumer debtor, or claim an accelerated payment, or a forfeiture of the term, under any agreement with the consumer debtor, by reason only that

  • (a) the consumer debtor is insolvent, or

  • (b) a consumer proposal has been filed in respect of the consumer debtor

  until the consumer proposal has been withdrawn, refused by the creditors or the court, annulled or deemed annulled.

• Marginal note:Idem

  (2) Where the agreement referred to in subsection (1) is a lease, subsection (1) shall be read as including the following paragraph:

  • "(c) the consumer debtor has not paid rent in respect of a period preceding the filing of the consumer proposal."

• Marginal note:Idem

  (3) Where a consumer proposal has been filed in respect of a consumer debtor, no public utility may discontinue service to that consumer debtor by reason only that

  • (a) the consumer debtor is insolvent,

  • (b) a consumer proposal has been filed in respect of the consumer debtor, or

  • (c) the consumer debtor has not paid for services rendered, or material provided, before the filing of the consumer proposal

  until the consumer proposal has been withdrawn, refused by the creditors or the court, annulled or deemed annulled.

• Marginal note:Certain acts not prevented

  (4) Nothing in subsections (1) to (3) shall be construed

  • (a) as 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 filing of the consumer proposal; or

  • (b) as 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 subsections (1) to (3) is of no force or effect.

• Marginal note:Powers of court

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

• Marginal note:Eligible financial contracts

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

• Marginal note:Permitted actions

  (8) Despite section 69.2, the following actions are permitted in respect of an eligible financial contract that is entered into before the filing of a consumer proposal and is terminated on or after that filing, but only in accordance with the provisions of that contract:

  • (a) the netting or setting off or compensation of obligations between the consumer debtor and the other parties to the eligible financial contract; and

  • (b) any dealing with financial collateral including

    • (i) the sale or foreclosure or, in the Province of Quebec, the surrender of financial collateral, and

    • (ii) the setting off or compensation of financial collateral or the application of the proceeds or value of financial collateral.

• Marginal note:Net termination values

  (9) If net termination values determined in accordance with an eligible financial contract referred to in subsection (8) are owed by the consumer debtor to another party to the eligible financial contract, that 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 those net termination values.

Marginal note:Assignment of wages

• 66.35 (1) An assignment of existing or future wages made by a consumer debtor before the filing of a consumer proposal is of no effect in respect of wages earned after the filing of the consumer proposal.

• Marginal note:Assignment of debts at request of administrator

  (2) In order to ensure compliance with the terms of a consumer proposal, the administrator may, at any time after the consumer proposal is filed, require of, and take from, the consumer debtor an assignment of any amount payable to the consumer debtor, including wages, that may become payable in the future, but no such assignment can, unless the consumer debtor agrees, be for an amount greater than is due and payable pursuant to the terms of the consumer proposal.

• Marginal note:Third parties protected

  (3) An assignment made pursuant to subsection (2) is of no effect against a person owing the amount payable until a notice of the assignment is served on that person.

• Marginal note:When section ceases to apply

  (4) This section ceases to apply where the consumer proposal is refused by the creditors or by the court, or is withdrawn, annulled or deemed annulled.

Marginal note:No dismissal, etc., of employee

66.36 No employer shall dismiss, suspend, lay off or otherwise discipline a consumer debtor on the sole ground that a consumer proposal has been filed in respect of that consumer debtor.

Marginal note:Amendment to consumer proposal

• 66.37 (1) Where an administrator files an amendment to a consumer proposal

  • (a) before the withdrawal, refusal, approval or deemed approval by the court of the consumer proposal, or

  • (b) after the approval or deemed approval by the court of the consumer proposal and before it has been fully performed or annulled or deemed annulled,

  the administrator shall call a meeting of creditors to be held within twenty-one days after the amendment is filed, to consider the consumer proposal as amended.

• Marginal note:Application of Division

  (2) With respect to an amendment to a consumer proposal and the amended consumer proposal,

  • (a) the provisions of this Division, except subsections 66.15(1) and (2), apply, with such modifications as the circumstances require; and

  • (b) the definition "consumer debtor" in section 66.11 shall be read as follows:

    ""consumer debtor" means an insolvent natural person;".

Marginal note:Certificate where consumer proposal performed

66.38 Where a consumer proposal is fully performed, the administrator shall give a certificate to that effect, in the prescribed form, to the consumer debtor and to the official receiver.

Marginal note:Administrator’s accounts, discharge

66.39 The form and content of the administrator’s accounts, the procedure for the preparation and taxation of those accounts and the procedure for the discharge of the administrator shall be as prescribed.

Marginal note:Act to apply

• 66.4 (1) All the provisions of this Act, except Division I of this Part, in so far as they are applicable, apply, with such modifications as the circumstances require, to consumer proposals.

• Marginal note:Where consumer debtor is bankrupt

  (2) Where a consumer proposal is made by a consumer debtor who is a bankrupt,

  • (a) the consumer proposal must be approved by the inspectors, if any, before any further action is taken thereon;

  • (b) the consumer debtor must have obtained the assistance of a trustee who shall act as administrator of the proposal in the preparation and execution thereof;

  • (c) the time with respect to which the claims of creditors shall be determined is the time at which the consumer debtor became bankrupt; and

  • (d) the approval or deemed approval by the court of the consumer proposal operates to annul the bankruptcy and to revest in the consumer debtor, or in such other person as the court may approve, all the right, title and interest of the trustee in the property of the consumer debtor, unless the terms of the consumer proposal otherwise provide.

PART IVProperty of the Bankrupt

Marginal note:Property of bankrupt

• 67 (1) The property of a bankrupt divisible among his creditors shall not comprise

  • (a) property held by the bankrupt in trust for any other person,

  • (b) any property that as against the bankrupt is exempt from execution or seizure under any laws applicable in the province within which the property is situated and within which the bankrupt resides, or

  • (b.1) such goods and services tax credit payments and prescribed payments relating to the essential needs of an individual as are made in prescribed circumstances and are not property referred to in paragraph (a) or (b),

  but it shall comprise

  • (c) all property wherever situated of the bankrupt at the date of his bankruptcy or that may be acquired by or devolve on him before his discharge, and

  • (d) such powers in or over or in respect of the property as might have been exercised by the bankrupt for his own benefit.

• Marginal note:Deemed trusts

  (2) Subject to subsection (3), notwithstanding any provision in federal or provincial legislation that has the effect of deeming property to be held in trust for Her Majesty, property of a bankrupt shall not be regarded as held in trust for Her Majesty for the purpose of paragraph (1)(a) unless it would be so regarded in the absence of that statutory provision.

• Marginal note:Exceptions

  (3) Subsection (2) does not apply in respect of amounts deemed to be held in trust under subsection 227(4) or (4.1) of the Income Tax Act, subsection 23(3) or (4) of the Canada Pension Plan or subsection 86(2) or (2.1) of the Employment Insurance Act (each of which is in this subsection referred to as a "federal provision") nor in respect of amounts deemed to be held in trust under any law of a province that creates a deemed trust the sole purpose of which is to ensure remittance to Her Majesty in right of the province of amounts deducted or withheld under a law of the province where

  • (a) that law of the province imposes a tax similar in nature to the tax imposed under the Income Tax Act and the amounts deducted or withheld under that law of the province are of the same nature as the amounts referred to in subsection 227(4) or (4.1) of the Income Tax Act, or

  • (b) the province is a province providing a comprehensive pension plan as defined in subsection 3(1) of the Canada Pension Plan, that law of the province establishes a "provincial pension plan" as defined in that subsection and the amounts deducted or withheld under that law of the province are of the same nature as amounts referred to in subsection 23(3) or (4) of the Canada Pension Plan,

  and for the purpose of this subsection, any provision of a law of a province that creates a deemed trust is, notwithstanding any Act of Canada or of a province or any other law, deemed to have the same effect and scope against any creditor, however secured, as the corresponding federal provision.

Marginal note:Directives re standard of living factors

• 68 (1) The Superintendent shall, by directive, establish in respect of the provinces or one or more bankruptcy districts or parts of bankruptcy districts, the standards for determining the portion of the total income of an individual bankrupt that exceeds that which is necessary to enable the bankrupt to maintain a reasonable standard of living.

• Marginal note:Interpretation

  (2) For the purposes of this section,

  • (a) "total income" referred to in subsection (1) includes, notwithstanding paragraphs 67(1)(b) and (b.1), all revenues of a bankrupt of whatever nature or source; and

  • (b) a requirement that a bankrupt pay an amount to the estate of the bankrupt is enforceable against all property of the bankrupt, other than property referred to in paragraphs 67(1)(b) and (b.1).

• Marginal note:Trustee to fix amount to be paid

  (3) The trustee shall

  • (a) having regard to the applicable standards established under subsection (1), and to the personal and family situation of the bankrupt, fix the amount that the bankrupt is required to pay to the estate of the bankrupt;

  • (b) inform the official receiver in writing of the amount fixed under paragraph (a); and

  • (c) take reasonable measures to ensure that the bankrupt complies with the requirement to pay.

• Marginal note:Modification by trustee

  (4) The trustee may, at any time, amend an amount fixed under subsection (3) to take into account

  • (a) material changes that have occurred in the personal or family situation of the bankrupt; or

  • (b) a recommendation made by the official receiver under subsection (5).

• Marginal note:Official receiver recommendation

  (5) Where the official receiver determines that the amount required to be paid by the bankrupt under subsection (3) or (4) is substantially not in accordance with the applicable standards established under subsection (1), the official receiver shall recommend to the trustee and to the bankrupt an amount required to be paid that the official receiver determines is in accordance with the applicable standards.

• Marginal note:Trustee may request mediation

  (6) Where the trustee and the bankrupt are not in agreement with the amount that the bankrupt is required to pay under subsection (3) or (4), the trustee shall, forthwith, in the prescribed form, send to the official receiver a request that the matter be determined by mediation and send a copy of the request to the bankrupt.

• Marginal note:Creditor may request mediation

  (7) On the request in writing of a creditor made within thirty days after the date of bankruptcy or an amendment referred to in subsection (4), the trustee shall, within the five days following the thirty day period, send to the official receiver a request in the prescribed form that the matter of the amount the bankrupt is required to pay under subsection (3) or (4) be determined by mediation and send a copy of the request to the bankrupt and the creditor.

• Marginal note:Mediation procedure

  (8) A mediation shall be in accordance with prescribed procedures.

• Marginal note:File

  (9) Documents contained in a file on the mediation of a matter under this section form part of the records referred to in subsection 11.1(2).

• Marginal note:Court determination

  (10) Where

  • (a) the trustee has not implemented a recommendation made by the official receiver under subsection (5),

  • (b) the issue submitted to mediation requested under subsection (6) or (7) is not thereby resolved, or

  • (c) the bankrupt fails to comply with the requirement to pay as determined under this section,

  the trustee may, or on the request of the inspectors, any of the creditors or the official receiver shall, apply to the court for the hearing of the matter, and the court may, on the hearing, in accordance with the standards established under subsection (1) and having regard to the personal and family situation of the bankrupt, by order, fix the amount that the bankrupt is required to pay to the estate of the bankrupt.

• Marginal note:Fixing fair and reasonable remuneration in the case of related persons

  (11) The court may fix an amount that is fair and reasonable

  • (a) as salary, wages or other remuneration for the services being performed by a bankrupt for a person employing the bankrupt, or

  • (b) as payment for or commission in respect of any services being performed by a bankrupt for a person,

  where the person is related to the bankrupt, and the court may, by order, determine the part of the salary, wages or other remuneration, or the part of the payment or commission, that shall be paid to the trustee on the basis of the amount so fixed by the court, unless it appears to the court that the services have been performed for the benefit of the bankrupt and are not of any substantial benefit to the person for whom they were performed.

• Marginal note:Modification of order

  (12) On the application of any interested person, the court may, at any time, amend an order made under this section to take into account material changes that have occurred in the personal or family situation of the bankrupt.

• Marginal note:Default by other person

  (13) An order of the court made under this section may be served on a person from whom the bankrupt is entitled to receive money and, in such case,

  • (a) the order binds the person to pay to the estate of the bankrupt the amount fixed by the order; and

  • (b) if the person fails to comply with the terms of the order, the court may, on the application of the trustee, order the person to pay the trustee the amount of money that the estate of the bankrupt would have received had the person complied with the terms of the order.

• Marginal note:Application is a proceeding

  (14) For the purposes of section 38, an application referred to in subsection (10) is deemed to be a proceeding for the benefit of the estate.

Marginal note:Assignment of wages

• 68.1 (1) An assignment of existing or future wages made by a debtor before the debtor became bankrupt is of no effect in respect of wages earned after the bankruptcy.

• Marginal note:Assignment of book debts

  (2) An assignment of existing or future amounts receivable as payment for or commission or professional fees in respect of services rendered made by a debtor who is a natural person before the debtor became bankrupt is of no effect in respect of such amounts earned or generated after the bankruptcy.

Stay of Proceedings

Marginal note:Stay of proceedings — notice of intention

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

  • (a) no creditor has any remedy against the insolvent person or the insolvent person’s property, or shall commence or continue any action, execution or other proceedings, for the recovery of a claim provable in bankruptcy,

  • (b) no provision of a security agreement between the insolvent person and a secured creditor that provides, in substance, that on

    • (i) the insolvent person’s insolvency,

    • (ii) the default by the insolvent person of an obligation under the security agreement, or

    • (iii) the filing by the insolvent person of a notice of intention under section 50.4,

    the insolvent person ceases to have such rights to use or deal with assets secured under the agreement as he would otherwise have, has any force or effect,

  • (c) Her Majesty in right of Canada may not exercise Her rights under

    • (i) subsection 224(1.2) of the Income Tax Act, or

    • (ii) any provision of the Canada Pension Plan or of the Employment Insurance Act that

      • (A) refers to subsection 224(1.2) of the Income Tax Act, and

      • (B) provides for the collection of a contribution, as defined in the Canada Pension Plan, or an employee’s premium or employer’s premium, as defined in the Employment Insurance Act, and of any related interest, penalties or other amounts,

    in respect of the insolvent person where the insolvent person is a tax debtor under that subsection or provision, and

  • (d) Her Majesty in right of a province may not exercise her rights under any provision of provincial legislation in respect of the insolvent person where the insolvent person is a debtor under the provincial legislation and the provision has a similar purpose to subsection 224(1.2) of the Income Tax Act, or refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, where the sum

    • (i) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or

    • (ii) is of the same nature as a contribution under the Canada Pension Plan if the province is a "province providing a comprehensive pension plan" as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a "provincial pension plan" as defined in that subsection,

  until the filing of a proposal under subsection 62(1) in respect of the insolvent person or the bankruptcy of the insolvent person.

• Marginal note:Limitation

  (2) The stays provided by subsection (1) do not apply

  • (a) to prevent a secured creditor who took possession of secured assets of the insolvent person for the purpose of realization before the notice of intention under section 50.4 was filed from dealing with those assets;

  • (b) to prevent a secured creditor who gave notice of intention under subsection 244(1) to enforce that creditor’s security against the insolvent person more than ten days before the notice of intention under section 50.4 was filed, from enforcing that security, unless the secured creditor consents to the stay;

  • (c) to prevent a secured creditor who gave notice of intention under subsection 244(1) to enforce that creditor’s security from enforcing the security if the insolvent person has, under subsection 244(2), consented to the enforcement action; or

  • (d) to prevent a creditor who holds security on aircraft objects — or who is a lessor of aircraft objects or a conditional seller of aircraft objects  —  under an agreement with the insolvent person from taking possession of the equipment

    • (i) if, after the commencement of proceedings under this Act, the insolvent person defaults in protecting or maintaining the equipment in accordance with the agreement,

    • (ii) sixty days after the commencement of proceedings under this Act unless, during that period, the insolvent person

      • (A) remedied the default of every other obligation under the agreement, other than a default constituted by the commencement of proceedings under this Act or the breach of a provision in the agreement relating to the insolvent person’s financial condition,

      • (B) agreed to perform the obligations under the agreement, other than an obligation not to become insolvent or an obligation relating to the insolvent person’s financial condition, until the day on which proceedings under this Act end, and

      • (C) agreed to perform all the obligations arising under the agreement after the proceedings under this Act end, or

    • (iii) if, during the period that begins on the expiry of the sixty-day period and ends on the day on which proceedings under this Act end, the insolvent person defaults in performing an obligation under the agreement, other than an obligation not to become insolvent or an obligation relating to the insolvent person’s financial condition.

• Marginal note:Limitation

  (3) A stay provided by paragraph (1)(c) or (d) does not apply, or terminates, in respect of Her Majesty in right of Canada and every province if

  • (a) the insolvent person defaults on payment of any amount that becomes due to Her Majesty after the filing of the notice of intention and could be subject to a demand under

    • (i) subsection 224(1.2) of the Income Tax Act,

    • (ii) any provision of the Canada Pension Plan or of the Employment Insurance Act that refers to subsection 224(1.2) of the Income Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, or an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, and of any related interest, penalties or other amounts, or

    • (iii) any provision of provincial legislation that has a similar purpose to subsection 224(1.2) of the Income Tax Act, or that refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, where the sum

      • (A) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or

      • (B) is of the same nature as a contribution under the Canada Pension Plan if the province is a "province providing a comprehensive pension plan" as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a "provincial pension plan" as defined in that subsection; or

  • (b) any other creditor is or becomes entitled to realize a security on any property that could be claimed by Her Majesty in exercising Her rights under

    • (i) subsection 224(1.2) of the Income Tax Act,

    • (ii) any provision of the Canada Pension Plan or of the Employment Insurance Act that refers to subsection 224(1.2) of the Income Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, or an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, and of any related interest, penalties or other amounts, or

    • (iii) any provision of provincial legislation that has a similar purpose to subsection 224(1.2) of the Income Tax Act, or that refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, where the sum

      • (A) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or

      • (B) is of the same nature as a contribution under the Canada Pension Plan if the province is a "province providing a comprehensive pension plan" as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a "provincial pension plan" as defined in that subsection.

Marginal note:Stay of proceedings — Division I proposals

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

  • (a) no creditor has any remedy against the insolvent person or the insolvent person’s property, or shall commence or continue any action, execution or other proceedings, for the recovery of a claim provable in bankruptcy, until the trustee has been discharged or the insolvent person becomes bankrupt;

  • (b) no provision of a security agreement between the insolvent person and a secured creditor that provides, in substance, that on

    • (i) the insolvent person’s insolvency,

    • (ii) the default by the insolvent person of an obligation under the security agreement, or

    • (iii) the filing of a notice of intention under section 50.4 or of a proposal under subsection 62(1) in respect of the insolvent person,

    the insolvent person ceases to have such rights to use or deal with assets secured under the agreement as the insolvent person would otherwise have, has any force or effect until the trustee has been discharged or the insolvent person becomes bankrupt;

  • (c) Her Majesty in right of Canada may not exercise Her rights under subsection 224(1.2) of the Income Tax Act or any provision of the Canada Pension Plan or of the Employment Insurance Act that refers to subsection 224(1.2) of the Income Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, or an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, and of any related interest, penalties or other amounts, in respect of the insolvent person where the insolvent person is a tax debtor under that subsection or provision, until

    • (i) the trustee has been discharged,

    • (ii) six months have elapsed following court approval of the proposal, or

    • (iii) the insolvent person becomes bankrupt; and

  • (d) Her Majesty in right of a province may not exercise Her rights under any provision of provincial legislation that has a similar purpose to subsection 224(1.2) of the Income Tax Act, or that refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, where the sum

    • (i) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or

    • (ii) is of the same nature as a contribution under the Canada Pension Plan if the province is a "province providing a comprehensive pension plan" as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a "provincial pension plan" as defined in that subsection,

    in respect of the insolvent person where the insolvent person is a debtor under the provincial legislation, until

    • (iii) the trustee has been discharged,

    • (iv) six months have elapsed following court approval of the proposal, or

    • (v) the insolvent person becomes bankrupt.

• Marginal note:Limitation

  (2) The stays provided by subsection (1) do not apply

  • (a) to prevent a secured creditor who took possession of secured assets of the insolvent person for the purpose of realization before the proposal was filed from dealing with those assets;

  • (b) unless the secured creditor otherwise agrees, to prevent a secured creditor who gave notice of intention under subsection 244(1) to enforce that creditor’s security against the insolvent person more than ten days before

    • (i) a notice of intention was filed in respect of the insolvent person under section 50.4, or

    • (ii) the proposal was filed, if no notice of intention under section 50.4 was filed

    from enforcing that security;

  • (c) to prevent a secured creditor who gave notice of intention under subsection 244(1) to enforce that creditor’s security from enforcing the security if the insolvent person has, under subsection 244(2), consented to the enforcement action; or

  • (d) to prevent a creditor who holds security on aircraft objects — or who is a lessor of aircraft objects or a conditional seller of aircraft objects — under an agreement with the insolvent person from taking possession of the equipment

    • (i) if, after the commencement of proceedings under this Act, the insolvent person defaults in protecting or maintaining the equipment in accordance with the agreement,

    • (ii) sixty days after the commencement of proceedings under this Act unless, during that period, the insolvent person

      • (A) remedied the default of every other obligation under the agreement, other than a default constituted by the commencement of proceedings under this Act or the breach of a provision in the agreement relating to the insolvent person’s financial condition,

      • (B) agreed to perform the obligations under the agreement, other than an obligation not to become insolvent or an obligation relating to the insolvent person’s financial condition, until the day on which proceedings under this Act end, and

      • (C) agreed to perform all the obligations arising under the agreement after the proceedings under this Act end, or

    • (iii) if, during the period that begins on the expiry of the sixty-day period and ends on the day on which proceedings under this Act end, the insolvent person defaults in performing an obligation under the agreement, other than an obligation not to become insolvent or an obligation relating to the insolvent person’s financial condition.

• Marginal note:Limitation

  (3) A stay provided by paragraph (1)(c) or (d) does not apply, or terminates, in respect of Her Majesty in right of Canada and every province if

  • (a) the insolvent person defaults on payment of any amount that becomes due to Her Majesty after the filing of the proposal and could be subject to a demand under

    • (i) subsection 224(1.2) of the Income Tax Act,

    • (ii) any provision of the Canada Pension Plan or of the Employment Insurance Act that refers to subsection 224(1.2) of the Income Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, or an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, and of any related interest, penalties or other amounts, or

    • (iii) any provision of provincial legislation that has a similar purpose to subsection 224(1.2) of the Income Tax Act, or that refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, where the sum

      • (A) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or

      • (B) is of the same nature as a contribution under the Canada Pension Plan if the province is a "province providing a comprehensive pension plan" as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a "provincial pension plan" as defined in that subsection; or

  • (b) any other creditor is or becomes entitled to realize a security on any property that could be claimed by Her Majesty in exercising Her rights under

    • (i) subsection 224(1.2) of the Income Tax Act,

    • (ii) any provision of the Canada Pension Plan or of the Employment Insurance Act that refers to subsection 224(1.2) of the Income Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, or an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, and of any related interest, penalties or other amounts, or

    • (iii) any provision of provincial legislation that has a similar purpose to subsection 224(1.2) of the Income Tax Act, or that refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, where the sum

      • (A) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or

      • (B) is of the same nature as a contribution under the Canada Pension Plan if the province is a "province providing a comprehensive pension plan" as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a "provincial pension plan" as defined in that subsection.

• Marginal note:Limitation

  (4) If, by virtue of subsection 69(3), the stay provided by paragraph 69(1)(c) or (d) does not apply or terminates, the stay provided by paragraph (1)(c) or (d) of this section does not apply.

• Marginal note:Secured creditors to whom proposal not made

  (5) Subject to sections 79 and 127 to 135 and subsection 248(1), the filing of a proposal under subsection 62(1) does not prevent a secured creditor to whom the proposal has not been made in respect of a particular security from realizing or otherwise dealing with that security in the same manner as he would have been entitled to realize or deal with it if this section had not been passed.

• Marginal note:Where secured creditors vote against proposal

  (6) Subject to sections 79 and 127 to 135 and subsection 248(1), where secured creditors holding a particular class of secured claim vote for the refusal of a proposal, a secured creditor holding a secured claim of that class may henceforth realize or otherwise deal with his security in the same manner as he would have been entitled to realize or deal with it if this section had not been passed.

Marginal note:Stay of proceedings — consumer proposals

• 69.2 (1) Subject to subsections (2) to (4) and sections 69.4 and 69.5, on the filing of a consumer proposal under subsection 66.13(2) or of an amendment to a consumer proposal under subsection 66.37(1) in respect of a consumer debtor, no creditor has any remedy against the debtor or the debtor’s property, or shall commence or continue any action, execution or other proceedings, for the recovery of a claim provable in bankruptcy until

  • (a) the consumer proposal or the amended consumer proposal, as the case may be, has been withdrawn, refused, annulled or deemed annulled; or

  • (b) the administrator has been discharged.

• Marginal note:Exception

  (2) Subsection (1) does not apply where the consumer proposal, other than an amendment to a consumer proposal referred to in section 66.37, is filed within six months after the filing of a previous consumer proposal in respect of the same debtor.

• Marginal note:Idem

  (3) Subsection (1) does not apply where an amendment to a consumer proposal is filed within six months after the filing of a previous amendment to the same consumer proposal.

• Marginal note:Secured creditors

  (4) Subject to sections 79 and 127 to 135 and subsection 248(1), the filing of a consumer proposal under subsection 66.13(2) does not prevent a secured creditor from realizing or otherwise dealing with his security in the same manner as he would have been entitled to realize or deal with it if this section had not been passed, unless the court otherwise orders, but in so ordering the court shall not postpone the right of the secured creditor to realize or otherwise deal with his security, except as follows:

  • (a) in the case of a security for a debt that is due at the date of the approval or deemed approval of the consumer proposal or that becomes due not later than six months thereafter, that right shall not be postponed for more than six months from that date; and

  • (b) in the case of a security for a debt that does not become due until more than six months after the date of the approval or deemed approval of the consumer proposal, that right shall not be postponed for more than six months from that date, unless all instalments of interest that are more than six months in arrears are paid and all other defaults of more than six months standing are cured, and then only so long as no instalment of interest remains in arrears or defaults remain uncured for more than six months, but, in any event, not beyond the date at which the debt secured by the security becomes payable under the instrument or act, or law, creating the security.

• Marginal note:Exception

  (5) No order may be made under subsection (4) if the order would have the effect of preventing a secured creditor from realizing or otherwise dealing with financial collateral.

Marginal note:Stay of proceedings — bankruptcy

• 69.3 (1) Subject to subsections (2) and (3) and sections 69.4 and 69.5, on the bankruptcy of any debtor, no creditor has any remedy against the debtor or the debtor’s property, or may commence or continue any action, execution or other proceedings, for the recovery of a claim provable in bankruptcy, until the trustee has been discharged.

• Marginal note:Secured creditors

  (2) Subject to sections 79 and 127 to 135 and subsection 248(1), the bankruptcy of a debtor does not prevent a secured creditor from realizing or otherwise dealing with his security in the same manner as he would have been entitled to realize or deal with it if this section had not been passed, unless the court otherwise orders, but in so ordering the court shall not postpone the right of the secured creditor to realize or otherwise deal with his security, except as follows:

  • (a) in the case of a security for a debt that is due at the date the bankrupt became bankrupt or that becomes due not later than six months thereafter, that right shall not be postponed for more than six months from that date; and

  • (b) in the case of a security for a debt that does not become due until more than six months after the date the bankrupt became bankrupt, that right shall not be postponed for more than six months from that date, unless all instalments of interest that are more than six months in arrears are paid and all other defaults of more than six months standing are cured, and then only so long as no instalment of interest remains in arrears or defaults remain uncured for more than six months, but, in any event, not beyond the date at which the debt secured by the security becomes payable under the instrument or law creating the security.

• Marginal note:Exception

  (2.1) No order may be made under subsection (2) if the order would have the effect of preventing a secured creditor from realizing or otherwise dealing with financial collateral.

• Marginal note:Secureed creditors — aircraft objects

  (3) The bankruptcy of a debtor does not prevent a creditor who holds security on aircraft objects — or who is a lessor of aircraft objects or a conditional seller of aircraft objects — under an agreement with the bankrupt from taking possession of the equipment

  • (a) if, after the commencement of proceedings under this Act, the trustee defaults in protecting or maintaining the equipment in accordance with the agreement;

  • (b) sixty days after the commencement of proceedings under this Act unless, during that period, the trustee

    • (i) 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 bankrupt’s financial condition,

    • (ii) agreed to perform the obligations under the agreement, other than an obligation not to become insolvent or an obligation relating to the bankrupt’s financial condition, until the day on which proceedings under this Act end, and

    • (iii) agreed to perform all the obligations arising under the agreement after the proceedings under this Act end; or

  • (c) if, during the period that begins on the expiry of the sixty-day period and ends on the day on which proceedings under this Act end, the trustee defaults in performing an obligation under the agreement, other than an obligation not to become insolvent or an obligation relating to the bankrupt’s financial condition.

Marginal note:Stay of proceedings — directors

• 69.31 (1) Where a notice of intention under subsection 50.4(1) has been filed or a proposal has been made by an insolvent corporation, no person may commence or continue any action against a director of the corporation on any claim against directors that arose before the commencement of proceedings under this Act and that relates to obligations of the corporation where directors are under any law liable in their capacity as directors for the payment of such obligations, until the proposal, if one has been filed, is approved by the court or the corporation becomes bankrupt.

• Marginal note:Exception

  (2) Subsection (1) does not apply in respect of an action against a director on a guarantee given by the director relating to the corporation’s obligations or an action seeking injunctive relief against a director in relation to the corporation.

• Marginal note:Resignation or removal of directors

  (3) Where all of the directors have resigned or have been removed by the shareholders without replacement, any person who manages or supervises the management of the business and affairs of the corporation shall be deemed to be a director for the purposes of this section.

Marginal note:Court may declare that stays, etc., cease

69.4 A creditor who is affected by the operation of sections 69 to 69.31 or any other person affected by the operation of section 69.31 may apply to the court for a declaration that those sections no longer operate in respect of that creditor or person, and the court may make such a declaration, subject to any qualifications that the court considers proper, if it is satisfied

• (a) that the creditor or person is likely to be materially prejudiced by the continued operation of those sections; or

• (b) that it is equitable on other grounds to make such a declaration.

Marginal note:Non-application of certain provisions

• 69.41 (1) Sections 69 to 69.31 do not apply in respect of a claim referred to in subsection 121(4).

• Marginal note:No remedy, etc.

  (2) Notwithstanding subsection (1), no creditor with a claim referred to in subsection 121(4) has any remedy, or shall commence or continue any action, execution or other proceeding, against

  • (a) property of a bankrupt that has vested in the trustee; or

  • (b) amounts that are payable to the estate of the bankrupt under section 68.

Marginal note:No stay, etc., in certain cases

69.42 Despite anything in this Act, no provision of this Act shall have the effect of staying or restraining, and no order may be made under this Act staying or restraining,

• (a) the exercise by the Minister of Finance or the Superintendent of Financial Institutions of any power, duty or function assigned to them by the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act or the Trust and Loan Companies Act;

• (b) the exercise by the Governor in Council, the Minister of Finance or the Canada Deposit Insurance Corporation of any power, duty or function assigned to them by the Canada Deposit Insurance Corporation Act; or

• (c) the exercise by the Attorney General of Canada of any power, assigned to him or her by the Winding-up and Restructuring Act.

Marginal note:Provincial legislation

69.5 Except for paragraphs 69(1)(c) and (d) and 69.1(1)(c) and (d), sections 69 to 69.3 do not affect the operation of any provision of provincial legislation that has a similar purpose to subsection 224(1.2) of the Income Tax Act, or that refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, where the sum

• (a) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or

• (b) is of the same nature as a contribution under the Canada Pension Plan if the province is a province providing a comprehensive pension plan as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a provincial pension plan as defined in that subsection,

and for the purpose of this section, the provision is, despite any Act of Canada or of a province or any other law, deemed to have the same effect and scope against any creditor, however secured, as subsection 224(1.2) of the Income Tax Act in respect of a sum referred to in paragraph (a), or as subsection 23(2) of the Canada Pension Plan in respect of a sum referred to in paragraph (b), and in respect of any related interest, penalties or other amounts.

General Provisions

Marginal note:Precedence of bankruptcy orders and assignments

• 70 (1) Every bankruptcy order and every assignment made under this Act takes precedence over all judicial or other attachments, garnishments, certificates having the effect of judgments, judgments, certificates of judgment, legal hypothecs of judgment creditors, executions or other process against the property of a bankrupt, except those that have been completely executed by payment to the creditor or the creditor’s representative, and except the rights of a secured creditor.

• Marginal note:Costs

  (2) Despite subsection (1), one bill of costs of a barrister or solicitor or, in the Province of Quebec, an advocate, including the executing officer’s fees and land registration fees, shall be payable to the creditor who has first attached by way of garnishment or lodged with the executing officer an attachment, execution or other process against the property of the bankrupt.

Marginal note:Vesting of property in trustee

71 On a bankruptcy order being made or an assignment being filed with an official receiver, a bankrupt ceases to have any capacity to dispose of or otherwise deal with their property, which shall, subject to this Act and to the rights of secured creditors, immediately pass to and vest in the trustee named in the bankruptcy order or assignment, and in any case of change of trustee the property shall pass from trustee to trustee without any assignment or transfer.

Marginal note:Application of other substantive law

• 72 (1) The provisions of this Act shall not be deemed to abrogate or supersede the substantive provisions of any other law or statute relating to property and civil rights that are not in conflict with this Act, and the trustee is entitled to avail himself of all rights and remedies provided by that law or statute as supplementary to and in addition to the rights and remedies provided by this Act.

• Marginal note:Operation of provincial law re documents executed under Act

  (2) No bankruptcy order, assignment or other document made or executed under the authority of this Act shall, except as otherwise provided in this Act, be within the operation of any legislative enactment in force at any time in any province relating to deeds, mortgages, hypothecs, judgments, bills of sale, chattel mortgages, property or registration of documents affecting title to or liens or charges on real or personal property or immovables or movables.

Marginal note:Purchaser in good faith at sale protected

• 73 (1) An execution levied by seizure and sale of the property of a bankrupt is not invalid by reason only of its being an act of bankruptcy, and a person who purchases the property in good faith under a sale by the executing officer acquires a good title to the property against the trustee.

• Marginal note:Executing officer to deliver property of bankrupt to trustee

  (2) If an assignment or a bankruptcy order has been made, the executing officer or other officer of any court or any other person having seized property of the bankrupt under execution or attachment or any other process shall, on receiving a copy of the assignment or the bankruptcy order certified by the trustee as a true copy, immediately deliver to the trustee all the property of the bankrupt in their hands.

• Marginal note:In case of executing officer’s sale

  (3) If the executing officer has sold the property or any part of the property of a bankrupt, the executing officer shall deliver to the trustee the money so realized less the executing officer’s fees and the costs referred to in subsection 70(2).

• Marginal note:Effect of bankruptcy on seizure of property for rent or taxes

  (4) Any property of a bankrupt under seizure for rent or taxes shall on production of a copy of the bankruptcy order or the assignment certified by the trustee as a true copy be delivered without delay to the trustee, but the costs of distress or, in the Province of Quebec, the costs of seizure are a security on the property ranking ahead of any other security on it, and, if the property or any part of it has been sold, the money realized from the sale less the costs of distress, or seizure, and sale shall be paid to the trustee.

Marginal note:Registration of bankruptcy order or assignment

• 74 (1) Every bankruptcy order, or a true copy certified by the registrar or other officer of the court that made it, and every assignment, or a true copy certified by the official receiver, may be registered by or on behalf of the trustee in respect of the whole or any part of any real property in which the bankrupt has any interest or estate, or in respect of the whole or any part of any immovable in which the bankrupt has any right, in the registry office in which, according to the law of the province in which the real property or immovable is situated, deeds or transfers of title and other documents relating to real property, an immovable or any interest or estate in real property or any right in an immovable may be registered.

• Marginal note:Effect of registration

  (2) If a bankrupt is the registered owner of any real property or immovable or the registered holder of any charge, the trustee, on registration of the documents referred to in subsection (1), is entitled to be registered as owner of the real property or immovable or holder of the charge free of all encumbrances or charges mentioned in subsection 70(1).

• Marginal note:Caveat may be filed

  (3) If a bankrupt owns any real property or immovable or holds any charge registered in a land registry office or has or is believed to have any interest, estate or right in any of them, and for any reason a copy of the bankruptcy order or assignment has not been registered as provided in subsection (1), a caveat or caution may be lodged with the official in charge of the land registry by the trustee, and any registration made after the lodging of the caveat or caution in respect of the real property, immovable or charge is subject to the caveat or caution unless it has been removed or cancelled under the provisions of the Act under which the real property, immovable, charge, interest, estate or right is registered.

• Marginal note:Duty of official

  (4) Every official to whom a trustee tenders or causes to be tendered for registration any bankruptcy order, assignment or other document shall register it according to the ordinary procedure for registering within the official’s office documents relating to real property or immovables.

Marginal note:Law of province to apply in favour of purchaser for value

75 Despite anything in this Act, a deed, transfer, agreement for sale, mortgage, charge or hypothec made to or in favour of a bona fide purchaser, mortgagee or hypothecary creditor for adequate valuable consideration and covering any real property or immovable affected by a bankruptcy order or an assignment under this Act is valid and effectual according to the tenor of the deed, transfer, agreement for sale, mortgage, charge or hypothec and according to the laws of the province in which the property is situated as fully and effectually and to all intents and purposes as if no bankruptcy order or assignment had been made under this Act, unless the bankruptcy order or assignment, or notice of the order or assignment, or caution, has been registered against the property in the proper office prior to the registration of the deed, transfer, agreement for sale, mortgage, charge or hypothec in accordance with the laws of the province in which the property is situated.

Marginal note:Property not to be removed from province

76 No property of a bankrupt shall be removed out of the province in which the property was at the date when the bankruptcy order or assignment was made, without the permission of the inspectors or an order of the court in which proceedings under this Act are being carried on or within the jurisdiction in which the property is situated.

Marginal note:Contributory shareholders

• 77 (1) Every shareholder or member of a bankrupt corporation is liable to contribute the amount unpaid on his shares of the capital or on his liability to the corporation, its members or creditors, as the case may be, under the Act, charter or instrument of incorporation of the company or otherwise.

• Marginal note:Liability of contributory an asset

  (2) The amount that the contributory is liable to contribute under subsection (1) shall be deemed an asset of the corporation and a debt payable to the trustee forthwith on the bankruptcy of the corporation.

Marginal note:Bank must notify trustee

78 Where a banker has ascertained that a person having an account with the banker is an undischarged bankrupt, it is his duty forthwith to inform the trustee of the existence of the account, and thereafter the banker shall not make any payments out of the account, except under an order of the court or in accordance with instructions from the trustee, unless on the expiration of one month from the date of giving the information no instructions have been received from the trustee.

Marginal note:Inspection of property held in pledge

79 Where property of a bankrupt is held as a pledge, hypothec, pawn or other security, the trustee may give notice in writing of the trustee’s intention to inspect the property, and the person so notified is not thereafter entitled to realize the security until the person has given the trustee a reasonable opportunity of inspecting the property and of exercising the trustee’s right of redemption.

Marginal note:Protection of trustee

80 If the trustee has seized or disposed of property in the possession or on the premises of a bankrupt without notice of any claim in respect of the property and after the seizure or disposal it is made to appear that the property, at the date of the bankruptcy, was not the property of the bankrupt or was subject to an unregistered security or charge, the trustee is not personally liable for any loss or damage arising from the seizure or disposal sustained by any person claiming the property, interest in property or, in the Province of Quebec, a right in property, or for the costs of proceedings taken to establish a claim to that property, interest or right, unless the court is of opinion that the trustee has been negligent with respect to the trustee’s duties in relation to the property.

Marginal note:Persons claiming property in possession of bankrupt

• 81 (1) Where a person claims any property, or interest therein, in the possession of a bankrupt at the time of the bankruptcy, he shall file with the trustee a proof of claim verified by affidavit giving the grounds on which the claim is based and sufficient particulars to enable the property to be identified.

• Marginal note:How claim disposed of

  (2) The trustee with whom a proof of claim is filed under subsection (1) shall within fifteen days thereafter or within fifteen days after the first meeting of creditors, whichever is the later, either admit the claim and deliver possession of the property to the claimant or give notice in writing to the claimant that the claim is disputed with his reasons therefor, and, unless the claimant appeals therefrom to the court within fifteen days after the mailing of the notice of dispute, he shall be deemed to have abandoned or relinquished all his right to or interest in the property to the trustee who thereupon may sell or dispose of the property free of any lien, right, title or interest of the claimant.

• Marginal note:Onus on claimant

  (3) The onus of establishing a claim to or in property under this section is on the claimant.

• Marginal note:Require proof of claim

  (4) The trustee may give notice in writing to any person to prove his claim to or in property under this section, and, unless that person files with the trustee a proof of claim in the prescribed form within fifteen days after the mailing of the notice, the trustee may thereupon with the leave of the court sell or dispose of the property free of any lien, right, title or interest of that person.

• Marginal note:No other proceeding to be instituted

  (5) No proceedings shall be instituted to establish a claim to, or to recover any right or interest in, any property in the possession of a bankrupt at the time of the bankruptcy, except as provided in this section.

• Marginal note:Rights of others not extended

  (6) Nothing in this section shall be construed as extending the rights of any person other than the trustee.

Marginal note:Right of unpaid supplier to repossess goods

• 81.1 (1) Subject to this section, where a person (in this section referred to as the "supplier") has sold and delivered goods to another person (in this section referred to as the "purchaser") for use in relation to the purchaser’s business, and the purchaser has not fully paid for the goods, the supplier may have access to and repossess the goods at the supplier’s own expense, and the purchaser, trustee or receiver shall release the goods, if

  • (a) the supplier presents a written demand for repossession to the purchaser, trustee or receiver, in prescribed form and containing the details of the transaction, within a period of thirty days after the delivery of the goods to the purchaser;

  • (b) at the time when the demand referred to in paragraph (a) is presented,

    • (i) the purchaser is bankrupt, or

    • (ii) there is a receiver, within the meaning of subsection 243(2), in relation to the purchaser;

  • (c) at the time when the demand referred to in paragraph (a) is presented, the goods

    • (i) are in the possession of the purchaser, trustee or receiver,

    • (ii) are identifiable as the goods delivered by the supplier and not fully paid for,

    • (iii) are in the same state as they were on delivery,

    • (iv) have not been resold at arms' length, and

    • (v) are not subject to any agreement for sale at arms' length; and

  • (d) the purchaser, trustee or receiver does not, forthwith after the demand referred to in paragraph (a) is presented, pay to the supplier the entire balance owing.

• Marginal note:Where goods have been partly paid for

  (2) Where, at the time when the demand referred to in paragraph (1)(a) is presented, the goods have been partly paid for, the supplier’s right to repossess under subsection (1) shall be read as a right

  • (a) to repossess a portion of the goods proportional to the unpaid amount; or

  • (b) to repossess all of the goods on paying to the purchaser, trustee or receiver an amount equal to the partial payment previously made to the supplier.

• (3) [Repealed, 1999, c. 31, s. 23]

• Marginal note:Where notice of intention or proposal is filed

  (4) Where a notice of intention under section 50.4 or a proposal was filed in respect of the purchaser after the delivery of the goods to the purchaser and before there was a receiver, within the meaning of subsection 243(2), in relation to the purchaser or the purchaser became bankrupt, the period between

  • (a) the earlier of the filing of the notice of intention or proposal, and

  • (b) the earlier of the first day there was a receiver, within the meaning of subsection 243(2), in relation to the purchaser or the day the purchaser became bankrupt

  shall not be counted in determining the end of the thirty day period referred to in paragraph (1)(a).

• Marginal note:Expiration of supplier’s right

  (5) A supplier’s right to repossess goods pursuant to this section expires if not exercised within ten days after the purchaser, trustee or receiver presents the supplier with a written notice admitting that right, unless the ten day period is extended by mutual agreement.

• Marginal note:Ranks above other claims

  (6) Notwithstanding any other federal or provincial Act or law, a supplier’s right to repossess goods pursuant to this section ranks above every other claim or right against the purchaser in respect of those goods, other than the right of a bona fide subsequent purchaser of the goods for value without notice that the supplier had demanded repossession of the goods.

• Marginal note:Application to court for directions

  (7) The purchaser, trustee or receiver may apply to the court for directions in relation to any matter relating to this section, and the court shall give, in writing, such directions, if any, as it considers proper in the circumstances.

• Marginal note:Supplier may appeal to court

  (8) Where a supplier is aggrieved by any act, omission or decision of the purchaser, trustee or receiver, the supplier may apply to the court and the court may make such order as it considers proper in the circumstances.

• Marginal note:Other rights saved

  (9) Nothing in subsection (7) or (8) precludes a person from exercising any right that the person may have under subsection 34(1) or section 37.

• Marginal note:No payment

  (10) A supplier who repossesses goods pursuant to this section is not entitled to be paid for those goods.

• Marginal note:Provincial rights saved

  (11) Nothing in this section precludes a supplier from exercising any right that the supplier may have under the law of a province.

Marginal note:Special right for farmers, fishermen and aquaculturists

• 81.2 (1) Where

  • (a) a farmer has sold and delivered products of agriculture, a fisherman has sold and delivered products of the sea, lakes and rivers, or an aquaculturist has sold and delivered products of aquaculture, to another person (in this section referred to as the “purchaser”) for use in relation to the purchaser’s business,

  • (b) the products were delivered to the purchaser within the fifteen day period preceding

    • (i) the day on which the purchaser became bankrupt, or

    • (ii) the first day on which there was a receiver, within the meaning of subsection 243(2), in relation to the purchaser,

  • (c) as of the day referred to in subparagraph (b)(i) or (ii), the farmer, fisherman or aquaculturist has not been fully paid for the products, and

  • (d) the farmer, fisherman or aquaculturist files a proof of claim in the prescribed form in respect of the unpaid amount with the trustee or receiver, as the case may be, within thirty days after the day referred to in subparagraph (b)(i) or (ii),

  the claim of the farmer, fisherman or aquaculturist for the unpaid amount in respect of the products is secured by security on all the inventory of or held by the purchaser as of the day referred to in subparagraph (b)(i) or (ii), and the security ranks above every other claim, right, charge or security against that inventory, regardless of when that other claim, right, charge or security arose, except a supplier’s right, under section 81.1, to repossess goods, despite any other federal or provincial Act or law; and if the trustee or receiver, as the case may be, takes possession or in any way disposes of inventory covered by the security, the trustee or receiver is liable for the claim of the farmer, fisherman or aquaculturist to the extent of the net amount realized on the disposition of that inventory, after deducting the cost of realization, and is subrogated in and to all rights of the farmer, fisherman or aquaculturist to the extent of the amounts paid to them by the trustee or receiver.

• Marginal note:Definitions

  (2) In this section,

  aquaculture

  aquaculture means the cultivation of aquatic plants and animals; (aquiculture)

  aquaculture operation

  aquaculture operation means any premises or site where aquaculture is carried out; (exploitation aquicole)

  aquaculturist

  aquaculturist includes the owner, occupier, lessor and lessee of an aquaculture operation; (aquiculteur)

  aquatic plants and animals

  aquatic plants and animals means plants and animals that, at most stages of their development or life cycles, live in an aquatic environment; (organismes animaux et végétaux aquatiques)

  farm

  farm means land in Canada used for the purpose of farming, which term includes livestock raising, dairying, bee-keeping, fruit growing, the growing of trees and all tillage of the soil; (ferme)

  farmer

  farmer includes the owner, occupier, lessor and lessee of a farm; (agriculteur)

  fish

  fish includes shellfish, crustaceans and marine animals; (poisson)

  fisherman

  fisherman means a person whose business consists in whole or in part of fishing; (pêcheur)

  fishing

  fishing means fishing for or catching fish by any method; (pêche)

  products of agriculture

  products of agriculture includes

  • (a) grain, hay, roots, vegetables, fruits, other crops and all other direct products of the soil, and

  • (b) honey, livestock (whether alive or dead), dairy products, eggs and all other indirect products of the soil; (produits agricoles)

  products of aquaculture

  products of aquaculture includes all cultivated aquatic plants and animals; (produits aquicoles)

  products of the sea, lakes and rivers

  products of the sea, lakes and rivers includes fish of all kinds, marine and freshwater organic and inorganic life and any substances extracted or derived from any water, but does not include products of aquaculture. (produits aquatiques)

• Marginal note:Interpretation — products and by-products

  (3) For the purposes of this section, each thing included in the following terms as defined in subsection (2), namely,

  • (a) “products of agriculture”,

  • (b) “products of aquaculture”, and

  • (c) “products of the sea, lakes and rivers”,

  comprises that thing in any form or state and any part thereof and any product or by-product thereof or derived therefrom.

• Marginal note:Section 81.1 applies

  (4) For greater certainty, “goods” in section 81.1 includes products of agriculture, products of the sea, lakes and rivers, and products of aquaculture.

• Marginal note:Other rights saved

  (5) Nothing in this section precludes a farmer, fisherman or aquaculturist from exercising

  • (a) the right that that person may have under section 81.1 to repossess products of agriculture, products of the sea, lakes and rivers, or products of aquaculture; or

  • (b) any right that that person may have under the law of a province.

Marginal note:Trustee to have right to sell patented articles

• 82 (1) Where any property of a bankrupt vesting in a trustee consists of patented articles that were sold to the bankrupt subject to any restrictions or limitations, the trustee is not bound by the restrictions or limitations but may sell and dispose of the patented articles free and clear of the restrictions or limitations.

• Marginal note:Right of manufacturer

  (2) Where the manufacturer or vendor of the patented articles referred to in subsection (1) objects to the disposition of them by the trustee as provided by this section and gives to the trustee notice in writing of the objection before the sale or disposition thereof, that manufacturer or vendor has the right to purchase the patented articles at the invoice prices thereof, subject to any reasonable deduction for depreciation or deterioration.

Marginal note:Copyright and manuscript to revert to author

• 83 (1) Notwithstanding anything in this Act or in any other statute, the author’s manuscripts and any copyright or any interest in a copyright in whole or in part assigned to a publisher, printer, firm or person becoming bankrupt shall,

  • (a) if the work covered by the copyright has not been published and put on the market at the time of the bankruptcy and no expense has been incurred in connection with that work, revert and be delivered to the author or their heirs, and any contract or agreement between the author or their heirs and the bankrupt shall then terminate and be void or, in the Province of Quebec, null;

  • (b) if the work covered by the copyright has in whole or in part been put into type and expenses have been incurred by the bankrupt, revert and be delivered to the author on payment of the expenses so incurred and the product of those expenses shall also be delivered to the author or their heirs and any contract or agreement between the author or their heirs and the bankrupt shall then terminate and be void or, in the Province of Quebec, null, but if the author does not exercise their rights under this paragraph within six months after the date of the bankruptcy, the trustee may carry out the original contract; or

  • (c) if the trustee at the end of the six-month period from the date of the bankruptcy decides not to carry out the contract, revert without expense to the author and any contract or agreement between the author or their heirs and the bankrupt shall then terminate and be void or, in the Province of Quebec, null.

• Marginal note:If copies of the work are on the market

  (2) Where, at the time of the bankruptcy referred to in subsection (1), the work was published and put on the market, the trustee is entitled to sell, or authorize the sale or reproduction of, any copies of the published work, or to perform or authorize the performance of the work, but

  • (a) there shall be paid to the author or his heirs such sums by way of royalties or share of the profits as would have been payable by the bankrupt;

  • (b) the trustee is not, without the written consent of the author or his heirs, entitled to assign the copyright or transfer the interest or to grant any interest therein by licence or otherwise, except on terms that will guarantee to the author or his heirs payment by way of royalties or share of the profits at a rate not less than the rate the bankrupt was liable to pay; and

  • (c) any contract or agreement between the author or their heirs and the bankrupt shall then terminate and be void or, in the Province of Quebec, null, except with respect to the disposal, under this subsection, of copies of the work published and put on the market before the bankruptcy.

• Marginal note:Marketable copies to be first offered for sale to the author

  (3) The trustee shall offer in writing to the author or his heirs the right to purchase the manufactured or marketable copies of the copyright work comprised in the estate of the bankrupt at such price and on such terms and conditions as the trustee may deem fair and proper before disposing of the manufactured and marketable copies in the manner prescribed in this section.

Marginal note:Effect of sales by trustee

84 All sales of property made by a trustee vest in the purchaser all the legal and equitable estate of the bankrupt therein.

Partnership Property

Marginal note:Application to limited partnerships

• 85 (1) This Act applies to limited partnerships in like manner as if limited partnerships were ordinary partnerships, and, on all the general partners of a limited partnership becoming bankrupt, the property of the limited partnership vests in the trustee.

• Marginal note:Actions by trustee and bankrupt’s partner

  (2) If a member of a partnership becomes bankrupt, the court may authorize the trustee to commence and prosecute any action in the names of the trustee and of the bankrupt’s partner, and any release by the partner of the debt or demand to which the action relates is void or, in the Province of Quebec, null.

• Marginal note:Notice to partner

  (3) Notice of the application for authority to commence an action under subsection (2) shall be given to the bankrupt’s partner, who may show cause against it, and on his application the court may, if it thinks fit, direct that he shall receive his proper share of the proceeds of the action, and, if he does not claim any benefit therefrom, he shall be indemnified against costs in respect thereof as the court directs.

Crown Interests

Marginal note:Status of Crown claims

• 86 (1) In relation to a bankruptcy or proposal, all provable claims, including secured claims, of Her Majesty in right of Canada or a province or of any body under an Act respecting workers' compensation, in this section and in section 87 called a "workers' compensation body", rank as unsecured claims.

• Marginal note:Exceptions

  (2) Subsection (1) does not apply

  • (a) to claims that are secured by a security or privilege of a kind that can be obtained by persons other than Her Majesty or a workers' compensation body

    • (i) pursuant to any law, or

    • (ii) pursuant to provisions of federal or provincial legislation, where those provisions do not have as their sole or principal purpose the establishment of a means of securing claims of Her Majesty or of a workers' compensation body; and

  • (b) to the extent provided in subsection 87(2), to claims that are secured by a security referred to in subsection 87(1), if the security is registered in accordance with that subsection.

• Marginal note:Exceptions

  (3) Subsection (1) does not affect the operation of

  • (a) subsections 224(1.2) and (1.3) of the Income Tax Act;

  • (b) any provision of the Canada Pension Plan or of the Employment Insurance Act that refers to subsection 224(1.2) of the Income Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, or an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, and of any related interest, penalties or other amounts; or

  • (c) any provision of provincial legislation that has a similar purpose to subsection 224(1.2) of the Income Tax Act, or that refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, where the sum

    • (i) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or

    • (ii) is of the same nature as a contribution under the Canada Pension Plan if the province is a "province providing a comprehensive pension plan" as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a "provincial pension plan" as defined in that subsection,

  and for the purpose of paragraph (c), the provision of provincial legislation is, despite any Act of Canada or of a province or any other law, deemed to have the same effect and scope against any creditor, however secured, as subsection 224(1.2) of the Income Tax Act in respect of a sum referred to in subparagraph (c)(i), or as subsection 23(2) of the Canada Pension Plan in respect of a sum referred to in subparagraph (c)(ii), and in respect of any related interest, penalties or other amounts.

Marginal note:Statutory Crown securities

• 87 (1) 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 of a workers' compensation body is valid in relation to a bankruptcy or proposal only if the security is registered, before the earliest of

  • (a) the date an application is filed against the debtor,

  • (b) the date the debtor makes an assignment,

  • (c) the date the debtor files a notice of intention under section 50.4, and

  • (d) the date on which a proposal is filed,

  pursuant to a prescribed system of registration.

• Marginal note:Idem

  (2) In relation to a bankruptcy or proposal, a security referred to in subsection (1) that is registered in accordance with that subsection

  • (a) is subordinate to securities in respect of which all steps necessary to make them effective against other creditors were taken before that registration; and

  • (b) is valid only in respect of amounts owing to Her Majesty or a workers' compensation body at the time of that registration, plus any interest subsequently accruing on those amounts.

Priority of Financial Collateral

Marginal note:Priority

88 In relation to a bankruptcy or proposal, no order may be made under this Act if the order would have the effect of subordinating financial collateral.

89 and 90 [Repealed, 1992, c. 27, s. 39]

Settlements and Preferences

Marginal note:Certain settlements ineffective

• 91 (1) Any settlement of property made within the period beginning on the day that is one year before the date of the initial bankruptcy event in respect of the settlor and ending on the date that the settlor became bankrupt, both dates included, is void as against, or in the Province of Quebec, may not be set up against, the trustee.

• Marginal note:If bankrupt within five years

  (2) Any settlement of property made within the period beginning on the day that is five years before the date of the initial bankruptcy event in respect of the settlor and ending on the date that the settlor became bankrupt, both dates included, is void as against, or in the Province of Quebec, may not be set up against, the trustee if the trustee can prove that the settlor was, at the time of making the settlement, unable to pay all the settlor’s debts without the aid of the property that was the subject of the settlement or that the interest of the settlor in the property did not pass on the execution of the settlement.

• Marginal note:Non-application of section

  (3) This section does not extend to any settlement made in favour of a purchaser, incumbrancer or holder of a charge in good faith and for valuable consideration.

92 and 93 [Repealed, 2000, c. 12, s. 12]

Marginal note:General assignments of book debts ineffective

• 94 (1) If a person engaged in any trade or business makes an assignment of their existing or future book debts or any class or part of those debts and subsequently becomes bankrupt, the assignment of book debts is void as against, or in the Province of Quebec, may not be set up against, the trustee with respect to any book debts that have not been paid at the date of the bankruptcy.

• Marginal note:Foregoing provisions not to apply in some cases

  (2) This section does not apply to an assignment of book debts that is registered pursuant to any statute of any province providing for the registration thereof if the assignment is valid in accordance with the laws of the province.

• Marginal note:Other cases

  (3) Nothing in this section renders void or, in the Province of Quebec, null any assignment of book debts due at the date of the assignment from specified debtors, or of debts growing due under specified contracts, or any assignment of book debts included in a transfer of a business made in good faith and for adequate valuable consideration.

• Marginal note:Definition of "assignment"

  (4) For the purposes of this section, assignment includes assignment by way of security, hypothec and other charges on book debts.

Marginal note:Preferences

• 95 (1) Every transfer of property, every charge made on property, every payment made, every obligation incurred and every judicial proceeding taken or suffered by any insolvent person in favour of any creditor or of any person in trust for any creditor with a view to giving that creditor a preference over the other creditors is, when it is made, given, incurred, taken or suffered within the period beginning on the day that is three months before the date of the initial bankruptcy event and ending on the date the insolvent person became bankrupt, both dates included, deemed fraudulent and void as against, or in the Province of Quebec, may not be set up against, the trustee in the bankruptcy.

• Marginal note:When view to prefer presumed

  (2) If any transfer, charge, payment, obligation or judicial proceeding mentioned in subsection (1) has the effect of giving any creditor a preference over other creditors, or over any one or more of them, it shall be presumed, in the absence of evidence to the contrary, to have been made, incurred, taken, paid or suffered with a view to giving the creditor a preference over other creditors, whether or not it was made voluntarily or under pressure and evidence of pressure shall not be admissible to support the transaction.

• Marginal note:Exception

  (2.1) Subsection (2) does not apply in respect of the following:

  • (a) a margin deposit made by a clearing member with a clearing house; or

  • (b) a transfer, charge or payment made in connection with financial collateral and in accordance with the provisions of an eligible financial contract.

• Marginal note:Definitions

  (3) In this section,

  clearing house

  chambre de compensation

  clearing house means a body that acts as an intermediary for its clearing members in effecting securities transactions; (chambre de compensation)

  clearing member

  membre

  clearing member means a person engaged in the business of effecting securities transactions who uses a clearing house as intermediary; (membre)

  creditor

  créancier

  creditor includes a surety or guarantor for the debt due to the creditor; (créancier)

  margin deposit

  dépôt de couverture

  margin deposit means a payment, deposit or transfer to a clearing house under the rules of the clearing house to assure the performance of the obligations of a clearing member in connection with security transactions, including, without limiting the generality of the foregoing, transactions respecting futures, options or other derivatives or to fulfil any of those obligations. (dépôt de couverture)

Marginal note:Extended period

96 If the transfer, charge, payment, obligation or judicial proceeding mentioned in section 95 is in favour of a person related to the insolvent person, the period referred to in subsection 95(1) shall be one year instead of three months.

Marginal note:Protected transactions

• 97 (1) No payment, contract, dealing or transaction to, by or with a bankrupt made between the date of the initial bankruptcy event and the date of the bankruptcy is valid, except the following, which are valid if made in good faith, subject to the foregoing provisions of this Act with respect to the effect of bankruptcy on an execution, attachment or other process against property, and subject to the provisions of this Act respecting settlements, preferences and reviewable transactions:

  • (a) a payment by the bankrupt to any of the bankrupt’s creditors;

  • (b) a payment or delivery to the bankrupt;

  • (c) a transfer by the bankrupt for adequate valuable consideration; and

  • (d) a contract, dealing or transaction, including any giving of security, by or with the bankrupt for adequate valuable consideration.

• Definition of adequate valuable consideration

  (2) The expression adequate valuable consideration in paragraph (1)(c) means a consideration of fair and reasonable money value with relation to that of the property assigned or transferred, and in paragraph (1)(d) means a consideration of fair and reasonable money value with relation to the known or reasonably to be anticipated benefits of the contract, dealing or transaction.

• Marginal note:Law of set-off or compensation

  (3) The law of set-off or compensation applies to all claims made against the estate of the bankrupt and also to all actions instituted by the trustee for the recovery of debts due to the bankrupt in the same manner and to the same extent as if the bankrupt were plaintiff or defendant, as the case may be, except in so far as any claim for set-off or compensation is affected by the provisions of this Act respecting frauds or fraudulent preferences.

Marginal note:Recovering proceeds if transferred

• 98 (1) If a person has acquired property of a bankrupt under a transaction that is void or voidable and set aside or, in the Province of Quebec, null or annullable and set aside, and has sold, disposed of, realized or collected the property or any part of it, the money or other proceeds, whether further disposed of or not, shall be deemed the property of the trustee.

• Marginal note:Trustee may recover

  (2) The trustee may recover the property or the value thereof or the money or proceeds therefrom from the person who acquired it from the bankrupt or from any other person to whom he may have resold, transferred or paid over the proceeds of the property as fully and effectually as the trustee could have recovered the property if it had not been so sold, disposed of, realized or collected.

• Marginal note:Operation of section

  (3) Notwithstanding subsection (1), where any person to whom the property has been sold or disposed of has paid or given therefor in good faith adequate valuable consideration, he is not subject to the operation of this section but the trustee’s recourse shall be solely against the person entering into the transaction with the bankrupt for recovery of the consideration so paid or given or the value thereof.

• Marginal note:Trustee subrogated

  (4) Where the consideration payable for or on any sale or resale of the property or any part thereof remains unsatisfied, the trustee is subrogated to the rights of the vendor to compel payment or satisfaction.

Marginal note:Dealings with undischarged bankrupt

• 99 (1) All transactions by a bankrupt with any person dealing with the bankrupt in good faith and for value in respect of property acquired by the bankrupt after the bankruptcy, if completed before any intervention by the trustee, are valid against the trustee, and any estate, or interest or right, in the property that by virtue of this Act is vested in the trustee shall determine and pass in any manner and to any extent that may be required for giving effect to any such transaction.

• Marginal note:Receipt of money by banker

  (2) For the purposes of this section, the receipt of any money, security or negotiable instrument from or by the order or direction of a bankrupt by his banker and any payment and any delivery of any security or negotiable instrument made to or by the order or direction of a bankrupt by his banker shall be deemed to be a transaction by the bankrupt with his banker dealing with him for value.

Marginal note:Examination of consideration in a reviewable transaction

• 100 (1) Where a bankrupt sold, purchased, leased, hired, supplied or received property or services in a reviewable transaction within the period beginning on the day that is one year before the date of the initial bankruptcy event and ending on the date of the bankruptcy, both dates included, the court may, on the application of the trustee, inquire into whether the bankrupt gave or received, as the case may be, fair market value in consideration for the property or services concerned in the transaction.

• Marginal note:Judgment for difference

  (2) Where the court in proceedings under this section finds that the consideration given or received by the bankrupt in the reviewable transaction was conspicuously greater or less than the fair market value of the property or services concerned in the transaction, the court may give judgment to the trustee against the other party to the transaction, against any other person being privy to the transaction with the bankrupt or against all those persons for the difference between the actual consideration given or received by the bankrupt and the fair market value, as determined by the court, of the property or services concerned in the transaction.

• Marginal note:Establishing values

  (3) In making an application under this section, the trustee shall state what in his opinion was the fair market value of the property or services concerned in the transaction and what in his opinion was the value of the actual consideration given or received by the bankrupt in the transaction, and the values on which the court makes any finding pursuant to this section shall be the values so stated by the trustee unless other values are proven.

Marginal note:Inquiry into dividends and redemptions of shares

• 101 (1) Where a corporation that is bankrupt has paid a dividend, other than a stock dividend, or redeemed or purchased for cancellation any of the shares of the capital stock of the corporation within the period beginning on the day that is one year before the date of the initial bankruptcy event and ending on the date of the bankruptcy, both dates included, the court may, on the application of the trustee, inquire into the transaction to ascertain whether it occurred at a time when the corporation was insolvent or whether it rendered the corporation insolvent.

• Marginal note:Judgment against directors

  (2) If a transaction referred to in subsection (1) has occurred, the court may give judgment to the trustee against the directors of the corporation, jointly and severally, or solidarily, in the amount of the dividend or redemption or purchase price, with interest on the amount, that has not been paid to the corporation if the court finds that

  • (a) the transaction occurred at a time when the corporation was insolvent or the transaction rendered the corporation insolvent; and

  • (b) the directors did not have reasonable grounds to believe that the transaction was occurring at a time when the corporation was not insolvent or the transaction would not render the corporation insolvent.

• Marginal note:Criteria

  (2.1) In making a determination under paragraph (2)(b), the court shall consider whether the directors acted as prudent and diligent persons would have acted in the same circumstances and whether the directors in good faith relied on

  • (a) financial or other statements of the corporation represented to them by officers of the corporation or the auditor of the corporation, as the case may be, or by written reports of the auditor to fairly reflect the financial condition of the corporation; or

  • (b) a report relating to the corporation’s affairs prepared pursuant to a contract with the corporation by a lawyer, notary, accountant, engineer, appraiser or other person whose profession gave credibility to the statements made in the report.

• Marginal note:Judgment against shareholders

  (2.2) Where a transaction referred to in subsection (1) has occurred and the court makes a finding referred to in paragraph (2)(a), the court may give judgment to the trustee against a shareholder who is related to one or more directors or to the corporation or who is a director not liable by reason of paragraph (2)(b) or subsection (3), in the amount of the dividend or redemption or purchase price referred to in subsection (1) and the interest thereon, that was received by the shareholder and not repaid to the corporation.

• Marginal note:Directors exonerated by law

  (3) A judgment pursuant to subsection (2) shall not be entered against or be binding on a director who had, in accordance with any applicable law governing the operation of the corporation, protested against the payment of the dividend or the redemption or purchase for cancellation of the shares of the capital stock of the corporation and had thereby exonerated himself or herself under that law from any liability therefor.

• Marginal note:Directors’ right to recover

  (4) Nothing in this section shall be construed to affect any right, under any applicable law governing the operation of the corporation, of the directors to recover from a shareholder the whole or any part of any dividend, or any redemption or purchase price, made or paid to the shareholder when the corporation was insolvent or that rendered the corporation insolvent.

• Marginal note:Onus of proof — directors

  (5) For the purposes of subsection (2), the onus of proving

  • (a) that the corporation was not insolvent at the time the transaction occurred and that the transaction did not render the corporation insolvent, or

  • (b) that the directors had reasonable grounds to believe that the transaction was occurring at a time when the corporation was not insolvent or that the transaction would not render the corporation insolvent

  lies on the directors.

• Marginal note:Onus of proof — shareholder

  (6) For the purposes of subsection (2.2), the onus of proving that the corporation was not insolvent at the time the transaction occurred and that the transaction did not render the corporation insolvent lies on the shareholder.

Marginal note:Application of sections

• 101.1 (1) Where a proposal is made under Division I of Part III, sections 91 to 101 apply to the proposal, with such modifications as the circumstances require, except where the proposal otherwise provides.

• Marginal note:Interpretation

  (2) For the purposes of subsection (1), any reference in sections 91 to 101 to "becomes bankrupt" shall be construed as a reference to "files a notice of intention" or "files a proposal", whichever filing was done first, and any reference in those sections to a bankrupt shall be construed as a reference to the debtor in respect of whom the proposal is filed.

Marginal note:Provisions to apply

101.2 Sections 91 to 101 apply as though the debtor became bankrupt on the date of the initial bankruptcy event if the proposal is annulled either by the court under subsection 63(1) or as a result of a bankruptcy order or assignment.

PART VAdministration of Estates

Meetings of Creditors

Marginal note:First meeting of creditors

• 102 (1) Subject to subsection (1.1), it is the duty of the trustee to inquire as to the names and addresses of the creditors of a bankrupt and, within five days after the date of the trustee’s appointment, to send in the prescribed manner to the bankrupt, to every known creditor and to the Superintendent a notice in the prescribed form of the bankruptcy and of the first meeting of creditors, to be held within the twenty-one day period following the day of the trustee’s appointment, at the office of the official receiver in the locality of the bankrupt, but the official receiver may, when the official receiver deems it expedient, authorize the meeting to be held at the office of any other official receiver or at such other place as the official receiver may fix.

• Marginal note:Extension of days

  (1.1) The official receiver in the locality of the bankrupt may extend the period during which the first meeting of creditors must be held

  • (a) by ten days, or

  • (b) where the official receiver is satisfied that special circumstances exist, by up to thirty days,

  where the official receiver is satisfied that the extension will not be detrimental to the creditors and is in the general interests of the administration of the estate.

• Marginal note:Documents to accompany notice

  (2) The trustee shall include with the notice referred to in subsection (1) a list of the creditors with claims amounting to twenty-five dollars or more and the amounts of their claims together with a proof of claim and proxy in the prescribed form but no name shall be inserted in the proxy before it is so sent.

• Marginal note:Information and notice

  (3) In the case of the bankruptcy of an individual, the trustee shall

  • (a) set out in the notice, in the prescribed form, information concerning the financial situation of the bankrupt and the obligation of the bankrupt to make payments required under section 68 to the estate of the bankrupt; and

  • (b) forthwith advise the official receiver, and any creditors who have requested such information, of

    • (i) any material change relating to the financial situation of the bankrupt, and

    • (ii) any amendment made under subsection 68(4) to the amount that the bankrupt is required to pay to the estate of the bankrupt.

• Marginal note:Publication in local paper by trustee

  (4) A notice in the prescribed form shall, as soon as possible after the bankruptcy and not later than five days before the first meeting of creditors, be published in a local newspaper by the trustee.

• Marginal note:Purpose of meeting

  (5) The purpose of the first meeting of creditors shall be to consider the affairs of the bankrupt, to affirm the appointment of the trustee or substitute another in place thereof, to appoint inspectors and to give such directions to the trustee as the creditors may see fit with reference to the administration of the estate.

Marginal note:Meetings during administration

• 103 (1) The trustee may at any time call a meeting of creditors and he shall do so when directed by the court and whenever requested in writing by a majority of the inspectors or by twenty-five per cent in number of the creditors holding twenty-five per cent in value of the proved claims.

• Marginal note:Meetings convened by inspectors

  (2) A meeting of the creditors may be convened by a majority of the inspectors at any time when a trustee is not available to call a meeting or has neglected or failed to do so when so directed by the inspectors.

Marginal note:Notice of subsequent meetings

• 104 (1) Meetings of creditors other than the first shall be called by sending a notice of the time and place thereof not less than five days before the time of each meeting to each creditor at the address given in the creditor’s proof of claim.

• Marginal note:Notice to creditors with proved claims

  (2) After the first meeting of creditors, notice of any meeting or of any proceeding need not be given to any creditors other than those who have proved their claims.

Procedure at Meetings

Marginal note:Chairman of first meeting

• 105 (1) The official receiver or his nominee shall be the chairman at the first meeting of creditors and shall decide any questions or disputes arising at the meeting and from any such decision any creditor may appeal to the court.

• Marginal note:Chairman of subsequent meetings

  (2) At all meetings of creditors other than the first, the trustee shall be the chairman unless by resolution at the meeting some other person is appointed.

• Marginal note:Casting vote

  (3) The chairman of any meeting of creditors shall, in the case of a tie, have a second or casting vote.

• Marginal note:Minutes of meeting

  (4) The chairman of any meeting of creditors shall cause minutes of the proceedings at the meeting to be drawn up and entered in a book kept for that purpose, and the minutes shall be signed by him or by the chairman of the next ensuing meeting.

• Marginal note:Non-receipt of notice by creditor

  (5) Where a meeting of creditors is called, the proceedings had and resolutions passed at the meeting, unless the court otherwise orders, are valid, notwithstanding that some creditors had not received notice.

Marginal note:Quorum

• 106 (1) One creditor entitled to vote, or the representative of such a creditor, constitutes a quorum for a meeting of creditors.

• Marginal note:Where no quorum

  (2) Where there is no quorum at the first meeting of creditors,

  • (a) the appointment of the trustee shall be deemed to be confirmed; and

  • (b) the chairman shall adjourn the meeting

    • (i) to such time and place as the chairman fixes, or

    • (ii) without fixing a time or place for a future meeting.

• Marginal note:Idem

  (2.1) Where there is no quorum at any meeting of creditors other than the first meeting, the chairman shall adjourn the meeting to such time and place as the chairman fixes.

• Marginal note:Adjournment with consent of meeting

  (3) The chairman of any meeting of creditors may with the consent of the meeting adjourn the meeting from time to time.

Marginal note:How creditors shall vote

107 Every class of creditors may express its views and wishes separately from every other class and the effect to be given to those views and wishes shall, in case of any dispute and subject to this Act, be in the discretion of the court.

Marginal note:Chairman may admit or reject proof

• 108 (1) The chairman of any meeting of creditors has power to admit or reject a proof of claim for the purpose of voting but his decision is subject to appeal to the court.

• Marginal note:Accept as proof

  (2) Notwithstanding anything in this Act, the chairman may, for the purpose of voting, accept any letter or printed matter transmitted by any form or mode of telecommunication as proof of the claim of a creditor.

• Marginal note:In case of doubt

  (3) Where the chairman is in doubt as to whether a proof of claim should be admitted or rejected, he shall mark the proof as objected to and allow the creditor to vote subject to the vote being declared invalid in the event of the objection being sustained.

Marginal note:Right of creditor to vote

• 109 (1) A person is not entitled to vote as a creditor at any meeting of creditors unless he has duly proved a claim provable in bankruptcy and the proof of claim has been duly lodged with the trustee before the time appointed for the meeting.

• Marginal note:Voting by proxy

  (2) A creditor may vote either in person or by proxy.

• Marginal note:Form of proxy

  (3) A proxy is not invalid merely because it is in the form of a letter or printed matter transmitted by any form or mode of telecommunication.

• Marginal note:Debtor may not be proxyholder

  (4) A debtor may not be appointed a proxyholder to vote at any meeting of the debtor’s creditors.

• Marginal note:Corporation

  (5) A corporation may vote by an authorized proxyholder at meetings of creditors.

• Marginal note:Creditor not dealing at arm’s length

  (6) Except as otherwise provided by this Act, a creditor is not entitled to vote at any meeting of creditors if the creditor did not, at all times within the period beginning on the day that is one year before the date of the initial bankruptcy event in respect of the debtor and ending on the date of the bankruptcy, both dates included, deal with the debtor at arm’s length.

• Marginal note:Exception

  (7) A creditor who is not entitled to vote at a meeting of creditors by virtue of subsection (6) may with leave of the court vote at the meeting of creditors when all the creditors who have dealt with the debtor at arm’s length do not together represent at least twenty per cent in value of the claims against the debtor.

Marginal note:Claims acquired after bankruptcy

• 110 (1) No person is entitled to vote on a claim acquired after the bankruptcy of a debtor unless the entire claim is acquired.

• Marginal note:Exception

  (2) Subsection (1) does not apply to persons acquiring notes, bills or other securities on which they are liable.

Marginal note:Creditor secured by bill or note

111 A creditor shall not vote in respect of any claim on or secured by a current bill of exchange or promissory note held by him, unless he is willing to treat the liability to him thereon of every person who is liable thereon antecedently to the debtor, and who is not a bankrupt, as a security in his hands and to estimate the value thereof and for the purposes of voting, but not for the purposes of dividend, to deduct it from his claim.

Marginal note:Voting by secured creditor

112 For the purpose of voting, a secured creditor shall, unless he surrenders his security, state in his proof the particulars of his security, the date when it was given and the value at which he assesses it, and he is entitled to vote only in respect of the balance, if any, due to him, after deducting the value of his security.

Marginal note:Trustee may vote

• 113 (1) Where the trustee is a creditor or a proxy for a creditor, he may vote as a creditor at any meeting of creditors.

• Marginal note:Trustee may not vote on remuneration

  (2) The vote of the trustee or of their partner, clerk, legal counsel or legal counsel’s clerk, either as creditor or as proxy for a creditor, shall not be reckoned in the majority required for passing any resolution affecting the remuneration or conduct of the trustee.

• Marginal note:Persons not entitled to vote

  (3) The following persons are not entitled to vote on the appointment of a trustee or inspectors:

  • (a) the father, mother, child, sister, brother, uncle or aunt, by blood, adoption, marriage or common-law partnership, or the spouse or common-law partner, of the bankrupt;

  • (b) where the bankrupt is a corporation, any officer, director or employee thereof; and

  • (c) where the bankrupt is a corporation, any wholly owned subsidiary corporation or any officer, director or employee thereof.

Marginal note:Evidence of proceedings at meetings of creditors

• 114 (1) A minute of proceedings at a meeting of creditors under this Act signed at the same or the next ensuing meeting by a person describing himself as or appearing to be chairman of the meeting at which the minute is signed shall be admitted in evidence without further proof.

• Marginal note:Evidence of regularity

  (2) Until the contrary is proved, every meeting of creditors in respect of the proceedings whereof a minute has been signed by the chairman shall be deemed to have been duly convened and held and all resolutions passed or proceedings thereat to have been duly convened and held and to have been duly passed or had.

Marginal note:Votes

115 Subject to this Act, all questions at meetings of creditors shall be decided by resolution carried by the majority of votes, and for that purpose the votes of a creditor shall be calculated by counting one vote for each dollar of every claim of the creditor that is not disallowed.

Inspectors

Marginal note:Appointment

• 116 (1) At the first or a subsequent meeting of creditors, the creditors shall appoint one or more, but not exceeding five, inspectors of the estate of the bankrupt.

• Marginal note:Persons not eligible

  (2) No person is eligible to be appointed or to act as an inspector who is a party to any contested action or proceedings by or against the estate of the bankrupt.

• Marginal note:Powers

  (3) The powers of the inspectors may be exercised by a majority of them.

• Marginal note:Filling vacancy

  (4) The creditors or inspectors at any meeting may fill any vacancy on the board of inspectors.

• Marginal note:Revocation and replacement

  (5) The creditors may at any meeting and the court may on the application of the trustee or any creditor revoke the appointment of any inspector and appoint another in his stead.

Marginal note:Meetings

• 117 (1) The trustee may call a meeting of inspectors when he deems it advisable and he shall do so when requested in writing by a majority of the inspectors.

• Marginal note:Participation by telephone, etc.

  (1.1) An inspector may, if all the other inspectors consent, participate in a meeting of inspectors by means of such telephone or other communication facilities as permit all persons participating in the meeting to communicate with each other, and an inspector participating in such a meeting by such means is deemed for the purpose of this Act to be present at that meeting.

• Marginal note:Trustee votes in case of tie

  (2) In the event of an equal division of opinion at a meeting of inspectors, the opinion of any absent inspector shall be sought in order to resolve the difference, and in the case of a difference that cannot be so resolved, it shall be resolved by the trustee, unless it concerns his personal conduct or interest in which case it shall be resolved by the creditors or the court.

Marginal note:If no inspectors appointed

118 Where there are no inspectors of the estate of the bankrupt or where the inspectors fail to exercise the powers conferred on them, the trustee shall call a meeting of the creditors for the purpose of appointing inspectors or substituting other inspectors, taking such action or giving such directions as may be necessary.

Marginal note:Creditors may override directions of inspectors

• 119 (1) Subject to this Act, the trustee shall in the administration of the property of the bankrupt and in the distribution thereof among his creditors have regard to any directions that may be given by resolution of the creditors at any general meeting or by the inspectors, and any directions so given by the creditors shall in case of conflict be deemed to override any directions given by the inspectors.

• Marginal note:Decisions of inspectors subject to review by court

  (2) The decisions and actions of the inspectors are subject to review by the court at the instance of the trustee or any interested person and the court may revoke or vary any act or decision of the inspectors and it may give such directions, permission or authority as it deems proper in substitution thereof or may refer any matter back to the inspectors for reconsideration.

Marginal note:Inspector may not acquire property

• 120 (1) No inspector is, directly or indirectly, capable of purchasing or acquiring for himself or for another any of the property of the estate for which he is an inspector, except with the prior approval of the court.

• Marginal note:Formal defects

  (2) No defect or irregularity in the appointment of an inspector vitiates any act done by him in good faith.

• Marginal note:Duty of inspectors

  (3) The inspectors shall from time to time verify the bank balance of the estate, examine the trustee’s accounts and inquire into the adequacy of the security filed by the trustee and, subject to subsection (4), shall approve the trustee’s final statement of receipts and disbursements, dividend sheet and disposition of unrealized property.

• Marginal note:Approval of trustee’s final statement by inspectors

  (4) Before approving the final statement of receipts and disbursements of the trustee, the inspectors shall satisfy themselves that all the property has been accounted for and that the administration of the estate has been completed as far as can reasonably be done and shall determine whether or not the disbursements and expenses incurred are proper and have been duly authorized, and the fees and remuneration just and reasonable in the circumstances.

• Marginal note:Inspectors' expenses and fees

  (5) Each inspector

  • (a) may be repaid actual and necessary travel expenses incurred in relation to the performance of the inspector’s duties; and

  • (b) may be paid such fees per meeting as are prescribed.

• Marginal note:Special services

  (6) An inspector duly authorized by the creditors or by the other inspectors to perform special services for the estate may be allowed a special fee for those services, subject to approval of the court, which may vary that fee as it deems proper having regard to the nature of the services rendered in relation to the obligations of the inspector to the estate to act in good faith for the general interests of the administration of the estate.

Claims Provable

Marginal note:Claims provable

• 121 (1) All debts and liabilities, present or future, to which the bankrupt is subject on the day on which the bankrupt becomes bankrupt or to which the bankrupt may become subject before the bankrupt’s discharge by reason of any obligation incurred before the day on which the bankrupt becomes bankrupt shall be deemed to be claims provable in proceedings under this Act.

• Marginal note:Contingent and unliquidated claims

  (2) The determination whether a contingent or unliquidated claim is a provable claim and the valuation of such a claim shall be made in accordance with section 135.

• Marginal note:Debts payable at a future time

  (3) A creditor may prove a debt not payable at the date of the bankruptcy and may receive dividends equally with the other creditors, deducting only thereout a rebate of interest at the rate of five per cent per annum computed from the declaration of a dividend to the time when the debt would have become payable according to the terms on which it was contracted.

• Marginal note:Family support claims

  (4) A claim in respect of a debt or liability referred to in paragraph 178(1)(b) or (c) payable under an order or agreement made before the date of the initial bankruptcy event in respect of the bankrupt and at a time when the spouse, former spouse, former common-law partner or child was living apart from the bankrupt, whether the order or agreement provides for periodic amounts or lump sum amounts, is a claim provable under this Act.

Marginal note:Claims provable in bankruptcy following proposal

• 122 (1) The claims of creditors under a proposal are, in the event of the debtor subsequently becoming bankrupt, provable in the bankruptcy for the full amount of the claims less any dividends paid thereon pursuant to the proposal.

• Marginal note:Interest

  (2) If interest on any debt or sum certain is provable under this Act but the rate of interest has not been agreed on, the creditor may prove interest at a rate not exceeding five per cent per annum to the date of the bankruptcy from the time the debt or sum was payable, if evidenced by a written document, or, if not so evidenced, from the time notice has been given the debtor of the interest claimed.

Marginal note:Proof in respect of distinct contracts

123 Where a bankrupt was, at the date of the bankruptcy, liable in respect of distinct contracts as a member of two or more distinct firms, or as a sole contractor and also as member of a firm, the circumstance that the firms are in whole or in part composed of the same individuals, or that the sole contractor is also one of the joint contractors, shall not prevent proof, in respect of the contracts, against the properties respectively liable on the contracts.

Proof of Claims

Marginal note:Creditors shall prove claims

• 124 (1) Every creditor shall prove his claim, and a creditor who does not prove his claim is not entitled to share in any distribution that may be made.

• Marginal note:Proof by delivery

  (2) A claim shall be proved by delivering to the trustee a proof of claim in the prescribed form.

• Marginal note:Who may make proof of claims

  (3) The proof of claim may be made by the creditor himself or by a person authorized by him on behalf of the creditor, and, if made by a person so authorized, it shall state his authority and means of knowledge.

• Marginal note:Shall refer to account

  (4) The proof of claim shall contain or refer to a statement of account showing the particulars of the claim and any counter-claim that the bankrupt may have to the knowledge of the creditor and shall specify the vouchers or other evidence, if any, by which it can be substantiated.

• Marginal note:Whether secured or preferred

  (5) The proof of claim shall state whether the creditor is or is not a secured or preferred creditor.

Marginal note:Penalty for filing false claim

125 Where a creditor or other person in any proceedings under this Act files with the trustee a proof of claim containing any wilfully false statement or wilful misrepresentation, the court may, in addition to any other penalty provided in this Act, disallow the claim in whole or in part as the court in its discretion may see fit.

Marginal note:Who may examine proofs

• 126 (1) Every creditor who has lodged a proof of claim is entitled to see and examine the proofs of other creditors.

• Marginal note:Worker’s wage claims

  (2) Proofs of claims for wages of workers and others employed by the bankrupt may be made in one proof by the bankrupt or someone on behalf of the bankrupt or by a representative of a federal or provincial ministry responsible for labour matters or a representative of a union representing workers and others employed by the bankrupt, by attaching thereto a schedule setting out the names and addresses of the workers and others and the amounts severally due to them, but that proof does not disentitle any worker or other wage-earner to file a separate proof on their own behalf.

Proof by Secured Creditors

Marginal note:Proof by secured creditor

• 127 (1) Where a secured creditor realizes his security, he may prove the balance due to him after deducting the net amount realized.

• Marginal note:May prove whole claim on surrender

  (2) Where a secured creditor surrenders his security to the trustee for the general benefit of the creditors, he may prove his whole claim.

Marginal note:Proof may be requested

• 128 (1) Where the trustee has knowledge of property that may be subject to a security, the trustee may, by serving notice in the prescribed form and manner, require any person to file, in the prescribed form and manner, a proof of the security that gives full particulars of the security, including the date on which the security was given and the value at which that person assesses it.

• Marginal note:Where reply not received

  (1.1) Where the trustee serves a notice pursuant to subsection (1), and the person on whom the notice is served does not file a proof of security within thirty days after the day of service of the notice, the trustee may thereupon, with leave of the court, sell or dispose of any property that was subject to the security, free of that security.

• Marginal note:Dividend on balance

  (2) A creditor is entitled to receive a dividend in respect only of the balance due to him after deducting the assessed value of his security.

• Marginal note:Trustee may redeem security

  (3) The trustee may redeem a security on payment to the secured creditor of the debt or the value of the security as assessed, in the proof of security, by the secured creditor.

Marginal note:May order security to be sold

• 129 (1) Where the trustee is dissatisfied with the value at which a security is assessed, the trustee may require that the property the security comprises be offered for sale at such time and on such terms and conditions as may be agreed on between the creditor and the trustee or, in default of such an agreement, as the court may direct.

• Marginal note:Sale by public auction

  (2) Where a sale under subsection (1) is by public auction the creditor or the trustee on behalf of the estate may bid or purchase.

• (3) [Repealed, 1992, c. 27, s. 52]

• Marginal note:Costs of sale

  (4) The costs and expenses of a sale made under this section are in the discretion of the court.

Marginal note:Creditor may require trustee to elect to exercise power

130 Notwithstanding subsection 128(3) and section 129, the creditor may, by notice in writing, require the trustee to elect whether he will exercise the power of redeeming the security or requiring it to be realized, and if the trustee does not, within one month after receiving the notice or such further time or times as the court may allow, signify in writing to the creditor his election to exercise the power, he is not entitled to exercise it, and the equity of redemption or any other interest in the property comprised in the security that is vested in the trustee shall vest in the creditor, and the amount of his claim shall be reduced by the amount at which the security has been valued.

Marginal note:Amended valuation by creditor

131 Where a creditor after having valued his security subsequently realizes it, or it is realized under section 129, the net amount realized shall be substituted for the amount of any valuation previously made by the creditor and shall be treated in all respects as an amended valuation made by the creditor.

Marginal note:Secured creditor may amend

• 132 (1) Where the trustee has not elected to acquire the security as provided in this Act, a creditor may at any time amend the valuation and proof on showing to the satisfaction of the trustee or the court that the valuation and proof were made in good faith on a mistaken estimate or that the security has diminished or increased in value since its previous valuation.

• Marginal note:Amendment at cost of creditor

  (2) An amendment pursuant to subsection (1) shall be made at the cost of the creditor and on such terms as the court orders, unless the trustee allows the amendment without application to the court.

• Marginal note:Rights and liabilities of creditor where valuation amended

  (3) Where a valuation has been amended pursuant to this section, the creditor

  • (a) shall forthwith repay any surplus dividend that he may have received in excess of that to which he would have been entitled on the amended valuation; or

  • (b) is entitled to be paid out of any money for the time being available for dividend any dividend or share of dividend that he may have failed to receive by reason of the amount of the original valuation before that money is made applicable to the payment of any future dividend, but he is not entitled to disturb the distribution of any dividend declared before the amendment is filed with the trustee.

Marginal note:Exclusion for non-compliance

133 Where a secured creditor does not comply with sections 127 to 132, he shall be excluded from any dividend.

Marginal note:No creditor to receive more than 100 cents in dollar

134 Subject to section 130, a creditor shall in no case receive more than one hundred cents on the dollar and interest as provided by this Act.

Admission and Disallowance of Proofs of Claim and Proofs of Security

Marginal note:Trustee shall examine proof

• 135 (1) The trustee shall examine every proof of claim or proof of security and the grounds therefor and may require further evidence in support of the claim or security.

• Marginal note:Determination of provable claims

  (1.1) The trustee shall determine whether any contingent claim or unliquidated claim is a provable claim, and, if a provable claim, the trustee shall value it, and the claim is thereafter, subject to this section, deemed a proved claim to the amount of its valuation.

• Marginal note:Disallowance by trustee

  (2) The trustee may disallow, in whole or in part,

  • (a) any claim;

  • (b) any right to a priority under the applicable order of priority set out in this Act; or

  • (c) any security.

• Marginal note:Notice of determination or disallowance

  (3) Where the trustee makes a determination under subsection (1.1) or, pursuant to subsection (2), disallows, in whole or in part, any claim, any right to a priority or any security, the trustee shall forthwith provide, in the prescribed manner, to the person whose claim was subject to a determination under subsection (1.1) or whose claim, right to a priority or security was disallowed under subsection (2), a notice in the prescribed form setting out the reasons for the determination or disallowance.

• Marginal note:Determination or disallowance final and conclusive

  (4) A determination under subsection (1.1) or a disallowance referred to in subsection (2) is final and conclusive unless, within a thirty day period after the service of the notice referred to in subsection (3) or such further time as the court may on application made within that period allow, the person to whom the notice was provided appeals from the trustee’s decision to the court in accordance with the General Rules.

• Marginal note:Expunge or reduce a proof

  (5) The court may expunge or reduce a proof of claim or a proof of security on the application of a creditor or of the debtor if the trustee declines to interfere in the matter.

Scheme of Distribution

Marginal note:Priority of claims

• 136 (1) Subject to the rights of secured creditors, the proceeds realized from the property of a bankrupt shall be applied in priority of payment as follows:

  • (a) in the case of a deceased bankrupt, the reasonable funeral and testamentary expenses incurred by the legal representative or, in the Province of Quebec, the successors or heirs of the deceased bankrupt;

  • (b) the costs of administration, in the following order,

    • (i) the expenses and fees of any person acting under a direction made under paragraph 14.03(1)(a),

    • (ii) the expenses and fees of the trustee, and

    • (iii) legal costs;

  • (c) the levy payable under section 147;

  • (d) wages, salaries, commissions or compensation of any clerk, servant, travelling salesman, labourer or workman for services rendered during the six months immediately preceding the bankruptcy to the extent of two thousand dollars in each case, together with, in the case of a travelling salesman, disbursements properly incurred by that salesman in and about the bankrupt’s business, to the extent of an additional one thousand dollars in each case, during the same period, and for the purposes of this paragraph commissions payable when goods are shipped, delivered or paid for, if shipped, delivered or paid for within the six month period, shall be deemed to have been earned therein;

  • (d.1) claims in respect of debts or liabilities referred to in paragraph 178(1)(b) or (c), if provable by virtue of subsection 121(4), for periodic amounts accrued in the year before the date of the bankruptcy that are payable, plus any lump sum amount that is payable;

  • (e) municipal taxes assessed or levied against the bankrupt, within the two years immediately preceding the bankruptcy, that do not constitute a secured claim against the real property or immovables of the bankrupt, but not exceeding the value of the interest or, in the Province of Quebec, the value of the right of the bankrupt in the property in respect of which the taxes were imposed as declared by the trustee;

  • (f) the lessor for arrears of rent for a period of three months immediately preceding the bankruptcy and accelerated rent for a period not exceeding three months following the bankruptcy if entitled to accelerated rent under the lease, but the total amount so payable shall not exceed the realization from the property on the premises under lease, and any payment made on account of accelerated rent shall be credited against the amount payable by the trustee for occupation rent;

  • (g) the fees and costs referred to in subsection 70(2) but only to the extent of the realization from the property exigible thereunder;

  • (h) in the case of a bankrupt who became bankrupt before the prescribed date, all indebtedness of the bankrupt under any Act respecting workers' compensation, under any Act respecting unemployment insurance or under any provision of the Income Tax Act creating an obligation to pay to Her Majesty amounts that have been deducted or withheld, rateably;

  • (i) claims resulting from injuries to employees of the bankrupt in respect of which the provisions of any Act respecting workers' compensation do not apply, but only to the extent of moneys received from persons guaranteeing the bankrupt against damages resulting from those injuries; and

  • (j) in the case of a bankrupt who became bankrupt before the prescribed date, claims of the Crown not mentioned in paragraphs (a) to (i), in right of Canada or any province, rateably notwithstanding any statutory preference to the contrary.

• Marginal note:Payment as funds available

  (2) Subject to the retention of such sums as may be necessary for the costs of administration or otherwise, payment in accordance with subsection (1) shall be made as soon as funds are available for the purpose.

• Marginal note:Balance of claim

  (3) A creditor whose rights are restricted by this section is entitled to rank as an unsecured creditor for any balance of claim due him.

Marginal note:Postponement of claims from reviewable transactions

• 137 (1) A creditor who entered into a reviewable transaction with a debtor at any time prior to the bankruptcy of the debtor is not entitled to claim a dividend in respect of a claim arising out of that transaction until all claims of the other creditors have been satisfied unless the transaction was in the opinion of the trustee or of the court a proper transaction.

• Marginal note:Claim of present or former spouse or common-law partner

  (2) A spouse or common-law partner, or former spouse or common-law partner, of a bankrupt is not entitled to claim a dividend in respect of wages, salary, commission or compensation for work done or services rendered in connection with the trade or business of the bankrupt until all claims of the other creditors have been satisfied.

Marginal note:Postponement of wage claims of relatives

138 A father, mother, child, brother, sister, uncle or aunt, by blood, adoption, marriage or common-law partnership, of a bankrupt is not entitled to have a claim preferred as provided by section 136, in respect of wages, salary, commission or compensation for work done or services rendered to the bankrupt.

Marginal note:Postponement of claims of silent partners

139 Where a lender advances money to a borrower engaged or about to engage in trade or business under a contract with the borrower that the lender shall receive a rate of interest varying with the profits or shall receive a share of the profits arising from carrying on the trade or business, and the borrower subsequently becomes bankrupt, the lender of the money is not entitled to recover anything in respect of the loan until the claims of all other creditors of the borrower have been satisfied.

Marginal note:Postponement of wage claims of officers and directors

140 Where a corporation becomes bankrupt, no officer or director thereof is entitled to have his claim preferred as provided by section 136 in respect of wages, salary, commission or compensation for work done or services rendered to the corporation in any capacity.

Marginal note:Claims generally payable rateably

141 Subject to this Act, all claims proved in a bankruptcy shall be paid rateably.

Marginal note:Partners and separate properties

• 142 (1) Where partners become bankrupt, their joint property shall be applicable in the first instance in payment of their joint debts, and the separate property of each partner shall be applicable in the first instance in payment of his separate debts.

• Marginal note:Surplus of separate properties

  (2) Where there is a surplus of the separate properties of the partners, it shall be dealt with as part of the joint property.

• Marginal note:Surplus of joint properties

  (3) Where there is a surplus of the joint property of the partners, it shall be dealt with as part of the respective separate properties in proportion to the right and interest of each partner in the joint property.

• Marginal note:Different properties

  (4) Where a bankrupt owes or owed debts both individually and as a member of one or more partnerships, the claims shall rank first on the property of the individual or partnership by which the debts they represent were contracted and shall only rank on the other estate or estates after all the creditors of the other estate or estates have been paid in full.

• Marginal note:Costs out of joint and separate properties

  (5) Where the joint property of any bankrupt partnership is insufficient to defray any costs properly incurred, the trustee may pay such costs as cannot be paid out of the joint property out of the separate property of the bankrupts or one or more of them in such proportion as he may determine, with the consent of the inspectors of the estates out of which the payment is intended to be made, or, if the inspectors withhold or refuse their consent, with the approval of the court.

Marginal note:Interest from date of bankruptcy

143 Where there is a surplus after payment of the claims as provided in sections 136 to 142, it shall be applied in payment of interest from the date of the bankruptcy at the rate of five per cent per annum on all claims proved in the bankruptcy and according to their priority.

Marginal note:Right of bankrupt to surplus

144 The bankrupt, or the legal personal representative or heirs of a deceased bankrupt, is entitled to any surplus remaining after payment in full of the bankrupt’s creditors with interest as provided by this Act and of the costs, charges and expenses of the bankruptcy proceedings.

Marginal note:Proceeds of liability insurance policy on motor vehicles

145 Nothing in this Act affects the right afforded by provincial statute of any person who has a claim against the bankrupt for damages on account of injury to or death of any person, or injury to property, occasioned by a motor vehicle, or on account of injury to property being carried in or on a motor vehicle, to have the proceeds of any liability insurance policy applied in or toward the satisfaction of the claim.

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), the rights of lessors shall be determined according to the laws of the province in which the leased premises are situated.

Marginal note:Levy payable out of dividends for supervision

• 147 (1) For the purpose of defraying the expenses of the supervision by the Superintendent, there shall be payable to the Superintendent for deposit with the Receiver General a levy on all payments, except the costs referred to in subsection 70(2), made by the trustee by way of dividend or otherwise on account of the claims of creditors, whether unsecured, preferred or secured creditors, and including Her Majesty in right of Canada or a province claiming in respect of taxes or otherwise.

• Marginal note:Rate of levy

  (2) The levy referred to in subsection (1) shall be at a rate to be fixed by the Governor in Council and shall be charged proportionately against all payments and deducted therefrom by the trustee before payment is made.

Dividends

Marginal note:Trustee to pay dividends as required

• 148 (1) Subject to the retention of such sums as may be necessary for the costs of administration or otherwise, the trustee shall, from time to time as required by the inspectors, declare and distribute dividends among the unsecured creditors entitled thereto.

• Marginal note:Disputed claims

  (2) Where the validity of any claim has not been determined, the trustee shall retain sufficient funds to provide for payment thereof in the event that the claim is admitted.

• Marginal note:No action for dividend

  (3) No action for a dividend lies against the trustee, but, if the trustee refuses or fails to pay any dividend after having been directed to do so by the inspectors, the court may, on the application of any creditor, order him to pay it, and also to pay personally interest thereon for the time that it is withheld and the costs of the application.

Marginal note:Notice that final dividend will be made

• 149 (1) The trustee may, after the first meeting of the creditors, give notice by registered or certified mail to every person with a claim of which the trustee has notice or knowledge but whose claim has not been proved that if that person does not prove his claim within a period of thirty days after the mailing of the notice the trustee will proceed to declare a dividend or final dividend without regard to that person’s claim.

• Marginal note:Court may extend time

  (2) Where a person notified under subsection (1) does not prove the claim within the time limit or within such further time as the court, on proof of merits and satisfactory explanation of the delay in making proof, may allow, the claim of that person shall, notwithstanding anything in this Act, be excluded from all share in any dividend, but a taxing authority may notify the trustee within the period referred to in subsection (1) that it proposes to file a claim as soon as the amount has been ascertained, and the time for filing the claim shall thereupon be extended to three months or such further time as the court may allow.

• Marginal note:Federal income tax claims

  (3) Notwithstanding subsection (2), a claim may be filed for an amount payable under the Income Tax Act within the time limit referred to in subsection (2) or within three months from the time the return of income or other evidence of the facts on which the claim is based is filed or comes to the attention of the Minister of National Revenue.

• Marginal note:No dividend allowed

  (4) Unless the trustee retains sufficient funds to provide for payment of any claims that may be filed under the Income Tax Act, no dividend shall be declared until the expiration of three months after the trustee has filed all returns that the trustee is required to file.