PART VAdministration of Estates (continued)
Proof by Secured Creditors (continued)
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.
- R.S., 1985, c. B-3, s. 128
- 1992, c. 27, s. 51
- 1999, c. 31, s. 25
- 2004, c. 25, s. 68(F)
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(3) [Repealed, 1992, c. 27, s. 52]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.
- R.S., 1985, c. B-3, s. 129
- 1992, c. 27, s. 52
- 2004, c. 25, s. 69(F)
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.
- R.S., c. B-3, s. 101
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.
- R.S., c. B-3, s. 102
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.
- R.S., c. B-3, s. 103
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.
- R.S., c. B-3, s. 104
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.
- R.S., c. B-3, s. 105
Admission and Disallowance of Proofs of Claim and Proofs of Security
Marginal note:Trustee shall examine proof
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,
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.
- R.S., 1985, c. B-3, s. 135
- 1992, c. 1, s. 20, c. 27, s. 53
- 1997, c. 12, s. 89
Scheme of Distribution
Marginal note:Priority of claims
(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,
(c) the levy payable under section 147;
(d) the amount of any wages, salaries, commissions, compensation or disbursements referred to in sections 81.3 and 81.4 that was not paid;
(d.01) the amount equal to the difference a secured creditor would have received but for the operation of sections 81.3 and 81.4 and the amount actually received by the secured creditor;
(d.02) the amount equal to the difference a secured creditor would have received but for the operation of sections 81.5 and 81.6 and the amount actually received by the secured creditor;
(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.
- R.S., 1985, c. B-3, s. 136
- 1992, c. 1, s. 143(E), c. 27, s. 54
- 1997, c. 12, s. 90
- 2001, c. 4, s. 31
- 2004, c. 25, s. 70
- 2005, c. 47, s. 88
- Date modified: