Bankruptcy and Insolvency Act (R.S.C., 1985, c. B-3)

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.

• (3) [Repealed, 2005, c. 47, s. 18]

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:Verifying bankrupt’s statement of affairs

21 The trustee shall verify the bankrupt’s statement of affairs referred to in paragraph 158(d).

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) When acting under the authority of this Act, a trustee shall, without delay, deposit in a bank all funds received for an estate in a separate trust account for each estate.

• Marginal note:Other deposit-taking institutions must be insured

  (1.1) The trustee may deposit the funds 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 funds on deposit with that institution.

• Marginal note:Foreign funds

  (1.2) If the funds are situated in a country other than Canada, the trustee may, if authorized by the Superintendent, deposit them 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 funds 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 (1.3) 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 funds received by the trustee when acting under the authority of this Act in any banking account kept by the trustee for the trustee’s personal use.

Marginal note:Books to be kept by trustee

• 26 (1) A trustee shall keep proper books and records of the administration of each estate to which the trustee is appointed, in which shall be entered a record of all moneys received or disbursed by the trustee, a list of all creditors filing claims, the amount and disposition of those claims, a copy of all notices sent out, a signed copy of all minutes, proceedings had, and resolutions passed at any meeting of creditors or inspectors, court orders and all other matters or proceedings as may be necessary to give a complete account of the trustee’s 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, without delay after their receipt or preparation, send to the Superintendent, in the prescribed manner, 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.

• (2) [Repealed, 2005, c. 47, s. 22]

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:If no inspectors

  (3) If no inspectors are appointed, the trustee may do all or any of the things referred to in subsection (1).

• Marginal note:Sale or disposal to related persons

  (4) The trustee may sell or otherwise dispose of any of the bankrupt’s property to a person who is related to the bankrupt only with the court’s authorization.

• Marginal note:Related persons

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

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

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

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

• Marginal note:Factors to be considered

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

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

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

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

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

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

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

Marginal note:Borrowing powers with permission of court

• 31 (1) With the permission of the court, an interim receiver, a receiver within the meaning of subsection 243(2) or a trustee may make necessary or advisable advances, incur obligations, borrow money and give security on the debtor’s property in any amount, on any terms and on any property that may be authorized by the court and those advances, obligations and money borrowed must be repaid out of the debtor’s property in priority to the creditors’ claims.

• Marginal note:Security under Bank Act

  (2) For the purpose of giving security under section 427 of the Bank Act, the interim receiver, receiver or trustee, when carrying 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.