PART IIIProposals (continued)
DIVISION IGeneral Scheme for Proposals (continued)
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.
- 1992, c. 27, s. 19
Marginal note:Order — interim financing
50.6 (1) On application by a debtor in respect of whom a notice of intention was filed under section 50.4 or a proposal was filed under subsection 62(1) and on notice to the secured creditors who are likely to be affected by the security or charge, a court may make an order declaring that all or part of the debtor’s property is subject to a security or charge — in an amount that the court considers appropriate — in favour of a person specified in the order who agrees to lend to the debtor an amount approved by the court as being required by the debtor, having regard to the debtor’s cash-flow statement referred to in paragraph 50(6)(a) or 50.4(2)(a), as the case may be. The security or charge may not secure an obligation that exists before the order is made.
(2) In the case of an individual,
(a) they may not make an application under subsection (1) unless they are carrying on a business; and
(b) only property acquired for or used in relation to the business may be subject to a security or charge.
(3) The court may order that the security or charge rank in priority over the claim of any secured creditor of the debtor.
Marginal note:Priority — previous orders
(4) The court may order that the security or charge rank in priority over any security or charge arising from a previous order made under subsection (1) only with the consent of the person in whose favour the previous order was made.
Marginal note:Factors to be considered
(5) In deciding whether to make an order, the court is to consider, among other things,
(a) the period during which the debtor is expected to be subject to proceedings under this Act;
(b) how the debtor’s business and financial affairs are to be managed during the proceedings;
(c) whether the debtor’s management has the confidence of its major creditors;
(d) whether the loan would enhance the prospects of a viable proposal being made in respect of the debtor;
(e) the nature and value of the debtor’s property;
(f) whether any creditor would be materially prejudiced as a result of the security or charge; and
(g) the trustee’s report referred to in paragraph 50(6)(b) or 50.4(2)(b), as the case may be.
- 2005, c. 47, s. 36
- 2007, c. 36, s. 18
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
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:Chair of first meeting
(3) The official receiver, or the nominee thereof, shall be the chair 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.
- R.S., 1985, c. B-3, s. 51
- 1992, c. 1, s. 20, c. 27, s. 20
- 1999, c. 31, s. 19(F)
- 2005, c. 47, s. 123(E)
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 chair
(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.
- R.S., 1985, c. B-3, s. 52
- 2005, c. 47, s. 123(E)
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.
- R.S., 1985, c. B-3, s. 53
- 1992, c. 1, s. 20, c. 27, s. 21
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 is deemed to be accepted by the creditors if, and only if, all classes of unsecured creditors — other than, unless the court orders otherwise, a class of creditors having equity claims — vote for the acceptance of the proposal by a majority in number and two thirds in value of the unsecured creditors of each class present, personally or by proxy, at the meeting and voting on the resolution.
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, an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, or a premium under Part VII.1 of that 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.
- R.S., 1985, c. B-3, s. 54
- 1992, c. 27, s. 22
- 2000, c. 30, s. 143
- 2007, c. 36, s. 19
- 2009, c. 33, s. 21
Marginal note:Class — creditors having equity claims
54.1 Despite paragraphs 54(2)(a) and (b), creditors having equity claims are to be in the same class of creditors in relation to those claims unless the court orders otherwise and may not, as members of that class, vote at any meeting unless the court orders otherwise.
- 2007, c. 36, s. 20
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.
- R.S., c. B-3, s. 37
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.
- R.S., c. B-3, s. 38
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, without delay, file with the official receiver, in the prescribed form, a report of the deemed assignment;
(b.1) the official receiver shall issue a certificate of assignment, in the prescribed form, which has the same effect for the purposes of this Act as an assignment filed under 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.1) 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.
- R.S., 1985, c. B-3, s. 57
- 1992, c. 27, s. 23
- 1997, c. 12, s. 33
- 2005, c. 47, s. 38
- 2017, c. 26, s. 7
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.
- 1997, c. 12, s. 34
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.
- R.S., 1985, c. B-3, s. 58
- 1992, c. 1, s. 20, c. 27, s. 23
- 1997, c. 12, s. 35
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:Court may order amendment
(4) If a court approves a proposal, it may order that the debtor’s constating instrument be amended in accordance with the proposal to reflect any change that may lawfully be made under federal or provincial law.
- R.S., 1985, c. B-3, s. 59
- 1997, c. 12, s. 36
- 2000, c. 12, s. 10
- 2007, c. 36, s. 21
- Date modified: