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Version of document from 2007-06-22 to 2007-11-16:

Companies’ Creditors Arrangement Act

R.S.C., 1985, c. C-36

An Act to facilitate compromises and arrangements between companies and their creditors

Short Title

Marginal note:Short title

 This Act may be cited as the Companies’ Creditors Arrangement Act.

  • R.S., c. C-25, s. 1

Interpretation

Marginal note:Definitions

 In this Act,

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)

bond

obligation

bond includes a debenture, debenture stock or other evidences of indebtedness; (obligation)

company

compagnie

company means any company, corporation or legal person incorporated by or under an Act of Parliament or of the legislature of a province and any incorporated company having assets or doing business in Canada, wherever incorporated, except banks, authorized foreign banks within the meaning of section 2 of the Bank Act, railway or telegraph companies, insurance companies and companies to which the Trust and Loan Companies Act applies; (compagnie)

court

tribunal

court means

  • (a) in Nova Scotia, British Columbia and Newfoundland, the Supreme Court,

  • (a.1) in Ontario, the Superior Court of Justice,

  • (b) in Quebec, the Superior Court,

  • (c) in New Brunswick, Manitoba, Saskatchewan and Alberta, the Court of Queen’s Bench,

  • (c.1) in Prince Edward Island, the Trial Division of the Supreme Court, and

  • (d) in Yukon and the Northwest Territories, the Supreme Court, and in Nunavut, the Nunavut Court of Justice; (tribunal)

debtor company

compagnie débitrice

debtor company means any company that

eligible financial contract

contrat financier admissible

eligible financial contract means

  • (a) a currency or interest rate swap agreement,

  • (b) a basis swap agreement,

  • (c) a spot, future, forward or other foreign exchange agreement,

  • (d) a cap, collar or floor transaction,

  • (e) a commodity swap,

  • (f) a forward rate agreement,

  • (g) a repurchase or reverse repurchase agreement,

  • (h) a spot, future, forward or other commodity contract,

  • (i) an agreement to buy, sell, borrow or lend securities, to clear or settle securities transactions or to act as a depository for securities,

  • (j) any derivative, combination or option in respect of, or agreement similar to, an agreement or contract referred to in paragraphs (a) to (i),

  • (k) any master agreement in respect of any agreement or contract referred to in paragraphs (a) to (j),

  • (l) any master agreement in respect of a master agreement referred to in paragraph (k),

  • (m) a guarantee of the liabilities under an agreement or contract referred to in paragraphs (a) to (l), or

  • (n) any agreement of a kind prescribed; (contrat financier admissible)

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)

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)

secured creditor

créancier garanti

secured creditor means a holder of a mortgage, hypothec, pledge, charge, lien or privilege on or against, or any assignment, cession or transfer of, all or any property of a debtor company as security for indebtedness of the debtor company, or a holder of any bond of a debtor company secured by a mortgage, hypothec, pledge, charge, lien or privilege on or against, or any assignment, cession or transfer of, or a trust in respect of, all or any property of the debtor company, whether the holder or beneficiary is resident or domiciled within or outside Canada, and a trustee under any trust deed or other instrument securing any of those bonds shall be deemed to be a secured creditor for all purposes of this Act except for the purpose of voting at a creditors' meeting in respect of any of those bonds; (créancier garanti)

shareholder

actionnaire

shareholder means a shareholder or member of any company to which this Act applies; (actionnaire)

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 a debtor company has provided title to property for the purpose of securing the payment or performance of an obligation of the debtor company in respect of an eligible financial contract; (accord de transfert de titres pour obtention de crédit)

unsecured creditor

créancier chirographaire

unsecured creditor means any creditor of a company who is not a secured creditor, whether resident or domiciled within or outside Canada, and a trustee for the holders of any unsecured bonds issued under a trust deed or other instrument running in favour of the trustee shall be deemed to be an unsecured creditor for all purposes of this Act except for the purpose of voting at a creditors' meeting in respect of any of those bonds. (créancier chirographaire)

  • R.S., 1985, c. C-36, s. 2
  • R.S., 1985, c. 27 (2nd Supp.), s. 10
  • 1990, c. 17, s. 4
  • 1992, c. 27, s. 90
  • 1993, c. 34, s. 52
  • 1996, c. 6, s. 167
  • 1997, c. 12, s. 120(E)
  • 1998, c. 30, s. 14
  • 1999, c. 3, s. 22, c. 28, s. 154
  • 2001, c. 9, s. 575
  • 2002, c. 7, s. 133
  • 2004, c. 25, s. 193
  • 2005, c. 3, s. 15
  • 2007, c. 29, s. 104

Marginal note:Application

  •  (1) This Act applies in respect of a debtor company or affiliated debtor companies where the total of claims, within the meaning of section 12, against the debtor company or affiliated debtor companies exceeds five million dollars.

  • Marginal note:Affiliated companies

    (2) For the purposes of this Act,

    • (a) companies are affiliated companies if one of them is the subsidiary of the other or both are subsidiaries of the same company or each of them is controlled by the same person; and

    • (b) two companies affiliated with the same company at the same time are deemed to be affiliated with each other.

  • Marginal note:Company controlled

    (3) For the purposes of this Act, a company is controlled by a person or by two or more companies if

    • (a) securities of the company to which are attached more than fifty per cent of the votes that may be cast to elect directors of the company are held, other than by way of security only, by or for the benefit of that person or by or for the benefit of those companies; and

    • (b) the votes attached to those securities are sufficient, if exercised, to elect a majority of the directors of the company.

  • Marginal note:Subsidiary

    (4) For the purposes of this Act, a company is a subsidiary of another company if

    • (a) it is controlled by

      • (i) that other company,

      • (ii) that other company and one or more companies each of which is controlled by that other company, or

      • (iii) two or more companies each of which is controlled by that other company; or

    • (b) it is a subsidiary of a company that is a subsidiary of that other company.

  • R.S., 1985, c. C-36, s. 3
  • 1997, c. 12, s. 121

PART ICompromises and Arrangements

Marginal note:Compromise with unsecured creditors

 Where a compromise or an arrangement is proposed between a debtor company and its unsecured creditors or any class of them, the court may, on the application in a summary way of the company, of any such creditor or of the trustee in bankruptcy or liquidator of the company, order a meeting of the creditors or class of creditors, and, if the court so determines, of the shareholders of the company, to be summoned in such manner as the court directs.

  • R.S., c. C-25, s. 4

Marginal note:Compromise with secured creditors

 Where a compromise or an arrangement is proposed between a debtor company and its secured creditors or any class of them, the court may, on the application in a summary way of the company or of any such creditor or of the trustee in bankruptcy or liquidator of the company, order a meeting of the creditors or class of creditors, and, if the court so determines, of the shareholders of the company, to be summoned in such manner as the court directs.

  • R.S., c. C-25, s. 5

Marginal note:Claims against directors — compromise

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

  • Marginal note:Exception

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

    • (a) relate to contractual rights of one or more creditors; or

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

  • Marginal note:Powers of court

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

  • Marginal note:Resignation or removal of directors

    (4) 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 debtor company shall be deemed to be a director for the purposes of this section.

  • 1997, c. 12, s. 122

Marginal note:Compromises to be sanctioned by court

 Where a majority in number representing two-thirds in value of the creditors, or class of creditors, as the case may be, present and voting either in person or by proxy at the meeting or meetings thereof respectively held pursuant to sections 4 and 5, or either of those sections, agree to any compromise or arrangement either as proposed or as altered or modified at the meeting or meetings, the compromise or arrangement may be sanctioned by the court, and if so sanctioned is binding

  • (a) on all the creditors or the class of creditors, as the case may be, and on any trustee for any such class of creditors, whether secured or unsecured, as the case may be, and on the company; and

  • (b) in the case of a company that has made an authorized assignment or against which a bankruptcy order has been made under the Bankruptcy and Insolvency Act or is in the course of being wound up under the Winding-up and Restructuring Act, on the trustee in bankruptcy or liquidator and contributories of the company.

  • R.S., 1985, c. C-36, s. 6
  • 1992, c. 27, s. 90
  • 1996, c. 6, s. 167
  • 1997, c. 12, s. 123
  • 2004, c. 25, s. 194

Marginal note:Court may give directions

 Where an alteration or a modification of any compromise or arrangement is proposed at any time after the court has directed a meeting or meetings to be summoned, the meeting or meetings may be adjourned on such term as to notice and otherwise as the court may direct, and those directions may be given after as well as before adjournment of any meeting or meetings, and the court may in its discretion direct that it is not necessary to adjourn any meeting or to convene any further meeting of any class of creditors or shareholders that in the opinion of the court is not adversely affected by the alteration or modification proposed, and any compromise or arrangement so altered or modified may be sanctioned by the court and have effect under section 6.

  • R.S., c. C-25, s. 7

Marginal note:Scope of Act

 This Act extends and does not limit the provisions of any instrument now or hereafter existing that governs the rights of creditors or any class of them and has full force and effect notwithstanding anything to the contrary contained in that instrument.

  • R.S., c. C-25, s. 8

PART IIJurisdiction of Courts

Marginal note:Jurisdiction of court to receive applications

  •  (1) Any application under this Act may be made to the court that has jurisdiction in the province within which the head office or chief place of business of the company in Canada is situated, or, if the company has no place of business in Canada, in any province within which any assets of the company are situated.

  • Marginal note:Single judge may exercise powers, subject to appeal

    (2) The powers conferred by this Act on a court may, subject to appeal as provided for in this Act, be exercised by a single judge thereof, and those powers may be exercised in chambers during term or in vacation.

  • R.S., c. C-25, s. 9

Marginal note:Form of applications

 Applications under this Act shall be made by petition or by way of originating summons or notice of motion in accordance with the practice of the court in which the application is made.

  • R.S., c. C-25, s. 10

Marginal note:Powers of court

  •  (1) Notwithstanding anything in the Bankruptcy and Insolvency Act or the Winding-up Act, where an application is made under this Act in respect of a company, the court, on the application of any person interested in the matter, may, subject to this Act, on notice to any other person or without notice as it may see fit, make an order under this section.

  • Marginal note:Initial application

    (2) An application made for the first time under this section in respect of a company, in this section referred to as an "initial application", shall be accompanied by a statement indicating the projected cash flow of the company and copies of all financial statements, audited or unaudited, prepared during the year prior to the application, or where no such statements were prepared in the prior year, a copy of the most recent such statement.

  • Marginal note:Initial application court orders

    (3) A court may, on an initial application in respect of a company, make an order on such terms as it may impose, effective for such period as the court deems necessary not exceeding thirty days,

    • (a) staying, until otherwise ordered by the court, all proceedings taken or that might be taken in respect of the company under an Act referred to in subsection (1);

    • (b) restraining, until otherwise ordered by the court, further proceedings in any action, suit or proceeding against the company; and

    • (c) prohibiting, until otherwise ordered by the court, the commencement of or proceeding with any other action, suit or proceeding against the company.

  • Marginal note:Other than initial application court orders

    (4) A court may, on an application in respect of a company other than an initial application, make an order on such terms as it may impose,

    • (a) staying, until otherwise ordered by the court, for such period as the court deems necessary, all proceedings taken or that might be taken in respect of the company under an Act referred to in subsection (1);

    • (b) restraining, until otherwise ordered by the court, further proceedings in any action, suit or proceeding against the company; and

    • (c) prohibiting, until otherwise ordered by the court, the commencement of or proceeding with any other action, suit or proceeding against the company.

  • Marginal note:Notice of orders

    (5) Except as otherwise ordered by the court, the monitor appointed under section 11.7 shall send a copy of any order made under subsection (3), within ten days after the order is made, to every known creditor who has a claim against the company of more than two hundred and fifty dollars.

  • Marginal note:Burden of proof on application

    (6) The court shall not make an order under subsection (3) or (4) unless

    • (a) the applicant satisfies the court that circumstances exist that make such an order appropriate; and

    • (b) in the case of an order under subsection (4), the applicant also satisfies the court that the applicant has acted, and is acting, in good faith and with due diligence.

  • R.S., 1985, c. C-36, s. 11
  • 1992, c. 27, s. 90
  • 1996, c. 6, s. 167
  • 1997, c. 12, s. 124

Marginal note:Definitions

  •  (1) [Repealed, 2007, c. 29, s. 106]

  • Marginal note:No stay, etc., in certain cases

    (2) No order may be made under this Act staying or restraining the exercise of any right to terminate, amend or claim any accelerated payment under an eligible financial contract or preventing 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 a company in accordance with that Act and the by-laws and rules of that Association.

  • Marginal note:Permitted actions

    (3) The following actions are permitted in respect of an eligible financial contract that is entered into before proceedings under this Act are commenced in respect of the company and is terminated on or after that day, but only in accordance with the provisions of that contract:

    • (a) the netting or setting off or compensation of obligations between the company 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:Restriction

    (4) No order may be made under this Act if the order would have the effect of staying or restraining the actions permitted under subsection (3).

  • Marginal note:Net termination values

    (5) If net termination values determined in accordance with an eligible financial contract referred to in subsection (3) are owed by the company to another party to the eligible financial contract, that other party is deemed to be a creditor of the company with a claim against the company in respect of those net termination values.

  • Marginal note:Priority

    (6) No order may be made under this Act if the order would have the effect of subordinating financial collateral.

  • 1997, c. 12, s. 124
  • 2001, c. 9, s. 576
  • 2007, c. 29, s. 106

Marginal note:No stay, etc., in certain cases

 No order may be made under this Act staying or restraining

  • 2001, c. 9, s. 577

Marginal note:No stay, etc. in certain cases

 No order may be made under section 11 staying or restraining any action, suit or proceeding against a person, other than a debtor company in respect of which an application has been made under this Act, who is obligated under a letter of credit or guarantee in relation to the company.

  • 1997, c. 12, s. 124

Marginal note:Effect of order

 No order made under section 11 shall have the effect of

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

  • (b) requiring the further advance of money or credit.

  • 1997, c. 12, s. 124

Marginal note:Limitation — aircraft objects

 No order made under section 11 prevents a creditor who holds security on aircraft objects — or a lessor of aircraft objects or a conditional seller of aircraft objects — under an agreement with a debtor company in respect of which an application is made under this Act from taking possession of the equipment

  • (a) if, after the commencement of proceedings under this Act, the company 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 company

    • (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 company’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 company’s financial condition, until 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 company defaults in performing an obligation under the agreement, other than an obligation not to become insolvent or an obligation relating to the company’s financial condition.

  • 2005, c. 3, s. 16

Marginal note:Her Majesty affected

  •  (1) An order made under section 11 may provide that

    • (a) Her Majesty in right of Canada may not exercise 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 company if the company is a tax debtor under that subsection or provision, for such period as the court considers appropriate but ending not later than

      • (i) the expiration of the order,

      • (ii) the refusal of a proposed compromise by the creditors or the court,

      • (iii) six months following the court sanction of a compromise or arrangement,

      • (iv) the default by the company on any term of a compromise or arrangement, or

      • (v) the performance of a compromise or arrangement in respect of the company; and

    • (b) Her Majesty in right of a province may not exercise rights under any provision of provincial legislation in respect of the company where the company is a debtor under that 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,

      for such period as the court considers appropriate but ending not later than the occurrence or time referred to in whichever of subparagraphs (a)(i) to (v) may apply.

  • Marginal note:When order ceases to be in effect

    (2) An order referred to in subsection (1) ceases to be in effect if

    • (a) the company defaults on payment of any amount that becomes due to Her Majesty after the order is made 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) 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

        • (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 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:Operation of similar legislation

    (3) An order made under section 11, other than an order referred to in subsection (1) of this section, 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.

  • 1997, c. 12, s. 124
  • 2000, c. 30, s. 156
  • 2001, c. 34, s. 33(E)

Marginal note:Stay of proceedings — directors

  •  (1) An order made under section 11 may provide that no person may commence or continue any action against a director of the debtor company on any claim against directors that arose before the commencement of proceedings under this Act and that relates to obligations of the company where directors are under any law liable in their capacity as directors for the payment of such obligations, until a compromise or arrangement in respect of the company, if one is filed, is sanctioned by the court or is refused by the creditors or the court.

  • 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 company’s obligations or an action seeking injunctive relief against a director in relation to the company.

  • 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 company shall be deemed to be a director for the purposes of this section.

  • 1997, c. 12, s. 124

Marginal note:Bankruptcy and Insolvency Act matters

 Notwithstanding the Bankruptcy and Insolvency Act,

  • 1997, c. 12, s. 124

Marginal note:Court to appoint monitor

  •  (1) When an order is made in respect of a company by the court under section 11, the court shall at the same time appoint a person, in this section and in section 11.8 referred to as "the monitor", to monitor the business and financial affairs of the company while the order remains in effect.

  • Marginal note:Auditor may be monitor

    (2) Except as may be otherwise directed by the court, the auditor of the company may be appointed as the monitor.

  • Marginal note:Functions of monitor

    (3) The monitor shall

    • (a) for the purposes of monitoring the company’s business and financial affairs, have access to and examine the company’s property, including the premises, books, records, data, including data in electronic form, and other financial documents of the company to the extent necessary to adequately assess the company’s business and financial affairs;

    • (b) file a report with the court on the state of the company’s business and financial affairs, containing prescribed information,

      • (i) forthwith after ascertaining any material adverse change in the company’s projected cash-flow or financial circumstances,

      • (ii) at least seven days before any meeting of creditors under section 4 or 5, or

      • (iii) at such other times as the court may order;

    • (c) advise the creditors of the filing of the report referred to in paragraph (b) in any notice of a meeting of creditors referred to in section 4 or 5; and

    • (d) carry out such other functions in relation to the company as the court may direct.

  • Marginal note:Monitor not liable

    (4) Where the monitor acts in good faith and takes reasonable care in preparing the report referred to in paragraph (3)(b), the monitor is not liable for loss or damage to any person resulting from that person’s reliance on the report.

  • Marginal note:Assistance to be provided

    (5) The debtor company shall

    • (a) provide such assistance to the monitor as is necessary to enable the monitor to adequately carry out the monitor’s functions; and

    • (b) perform such duties set out in section 158 of the Bankruptcy and Insolvency Act as are appropriate and applicable in the circumstances.

  • 1997, c. 12, s. 124

Marginal note:Non-liability in respect of certain matters

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

  • Marginal note:Status of claim ranking

    (2) A claim referred to in subsection (1) shall not rank as costs of administration.

  • Marginal note:Liability in respect of environmental matters

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

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

    • (b) after the monitor’s appointment unless it is established that the condition arose or the damage occurred as a result of the monitor’s gross negligence or wilful misconduct.

  • Marginal note:Reports, etc., still required

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

  • Marginal note:Non-liability re certain orders

    (5) Notwithstanding anything in any federal or provincial law but subject to subsection (3), where an order is made which has the effect of requiring a monitor to remedy any environmental condition or environmental damage affecting property involved in a proceeding under this Act, the monitor 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 monitor, if the order is in effect when the monitor is appointed or during the period of the stay referred to in paragraph (b), the monitor

      • (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 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) or within ten days after the order is made or within ten days after the appointment of the monitor, if the order is in effect when the monitor is appointed, by

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

      • (ii) the court having jurisdiction under this Act for the purposes of assessing the economic viability of complying with the order; or

    • (c) if the monitor had, before the order was made, abandoned or renounced any interest in any real property affected by the condition or damage.

  • Marginal note:Stay may be granted

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

  • Marginal note:Costs for remedying not costs of administration

    (7) Where the monitor has abandoned or renounced any interest in real property 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

    (8) Any claim by Her Majesty in right of Canada or a province against a debtor company in respect of which proceedings have been commenced under this Act for costs of remedying any environmental condition or environmental damage affecting real property of the company is secured by a charge on the real property and on any other real property of the company that is contiguous thereto and that is related to the activity that caused the environmental condition or environmental damage, and the charge

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

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

  • Marginal note:Claim for clean-up costs

    (9) A claim against a debtor company for costs of remedying any environmental condition or environmental damage affecting real property of the company shall be a claim under this Act, whether the condition arose or the damage occurred before or after the date on which proceedings under this Act were commenced.

  • 1997, c. 12, s. 124

Marginal note:Definition of "claim"

  •  (1) For the purposes of this Act, claim means any indebtedness, liability or obligation of any kind that, if unsecured, would be a debt provable in bankruptcy within the meaning of the Bankruptcy and Insolvency Act.

  • Marginal note:Determination of amount of claim

    (2) For the purposes of this Act, the amount represented by a claim of any secured or unsecured creditor shall be determined as follows:

    • (a) the amount of an unsecured claim shall be the amount

      • (i) in the case of a company in the course of being wound up under the Winding-up and Restructuring Act, proof of which has been made in accordance with that Act,

      • (ii) in the case of a company that has made an authorized assignment or against which a bankruptcy order has been made under the Bankruptcy and Insolvency Act, proof of which has been made in accordance with that Act, or

      • (iii) in the case of any other company, proof of which might be made under the Bankruptcy and Insolvency Act, but if the amount so provable is not admitted by the company, the amount shall be determined by the court on summary application by the company or by the creditor; and

    • (b) the amount of a secured claim shall be the amount, proof of which might be made in respect thereof under the Bankruptcy and Insolvency Act if the claim were unsecured, but the amount if not admitted by the company shall, in the case of a company subject to pending proceedings under the Winding-up and Restructuring Act or the Bankruptcy and Insolvency Act, be established by proof in the same manner as an unsecured claim under the Winding-up and Restructuring Act or the Bankruptcy and Insolvency Act, as the case may be, and in the case of any other company the amount shall be determined by the court on summary application by the company or the creditor.

  • Marginal note:Admission of claims

    (3) Notwithstanding subsection (2), the company may admit the amount of a claim for voting purposes under reserve of the right to contest liability on the claim for other purposes, and nothing in this Act, the Winding-up and Restructuring Act or the Bankruptcy and Insolvency Act prevents a secured creditor from voting at a meeting of secured creditors or any class of them in respect of the total amount of a claim as admitted.

  • R.S., 1985, c. C-36, s. 12
  • 1992, c. 27, s. 90
  • 1996, c. 6, s. 167
  • 2004, c. 25, s. 195

Marginal note:Leave to appeal

 Except in Yukon, any person dissatisfied with an order or a decision made under this Act may appeal from the order or decision on obtaining leave of the judge appealed from or of the court or a judge of the court to which the appeal lies and on such terms as to security and in other respects as the judge or court directs.

  • R.S., 1985, c. C-36, s. 13
  • 2002, c. 7, s. 134

Marginal note:Court of appeal

  •  (1) An appeal under section 13 lies to the highest court of final resort in or for the province in which the proceeding originated.

  • Marginal note:Practice

    (2) All appeals under section 13 shall be regulated as far as possible according to the practice in other cases of the court appealed to, but no appeal shall be entertained unless, within twenty-one days after the rendering of the order or decision being appealed, or within such further time as the court appealed from, or, in Yukon, a judge of the Supreme Court of Canada, allows, the appellant has taken proceedings therein to perfect his or her appeal, and within that time he or she has made a deposit or given sufficient security according to the practice of the court appealed to that he or she will duly prosecute the appeal and pay such costs as may be awarded to the respondent and comply with any terms as to security or otherwise imposed by the judge giving leave to appeal.

  • R.S., 1985, c. C-36, s. 14
  • 2002, c. 7, s. 135

Marginal note:Appeals

  •  (1) An appeal lies to the Supreme Court of Canada on leave therefor being granted by that Court from the highest court of final resort in or for the province or territory in which the proceeding originated.

  • Marginal note:Jurisdiction of Supreme Court of Canada

    (2) The Supreme Court of Canada shall have jurisdiction to hear and to decide according to its ordinary procedure any appeal under subsection (1) and to award costs.

  • Marginal note:Stay of proceedings

    (3) No appeal to the Supreme Court of Canada shall operate as a stay of proceedings unless and to the extent ordered by that Court.

  • Marginal note:Security for costs

    (4) The appellant in an appeal under subsection (1) shall not be required to provide any security for costs, but, unless he provides security for costs in an amount to be fixed by the Supreme Court of Canada, he shall not be awarded costs in the event of his success on the appeal.

  • Marginal note:Decision final

    (5) The decision of the Supreme Court of Canada on any appeal under subsection (1) is final and conclusive.

  • R.S., c. C-25, s. 15
  • R.S., c. 44(1st Supp.), s. 10

Marginal note:Order of court of one province

 Every order made by the court in any province in the exercise of jurisdiction conferred by this Act in respect of any compromise or arrangement shall have full force and effect in all the other provinces and shall be enforced in the court of each of the other provinces in the same manner in all respects as if the order had been made by the court enforcing it.

  • R.S., c. C-25, s. 16

Marginal note:Courts shall aid each other on request

 All courts that have jurisdiction under this Act and the officers of those courts shall act in aid of and be auxiliary to each other in all matters provided for in this Act, and an order of a court seeking aid with a request to another court shall be deemed sufficient to enable the latter court to exercise in regard to the matters directed by the order such jurisdiction as either the court that made the request or the court to which the request is made could exercise in regard to similar matters within their respective jurisdictions.

  • R.S., c. C-25, s. 17

Marginal note:Governor in Council may make general rules

  •  (1) The Governor in Council may make, alter or revoke, and may delegate to the judges of the courts exercising jurisdiction under this Act the power to make, alter or revoke, general rules for carrying into effect the objects of this Act.

  • Marginal note:Limitation

    (2) The rules referred to in subsection (1) shall not extend the jurisdiction of the court.

  • Marginal note:General rules to be laid before Parliament

    (3) All general rules as are from time to time made by the Governor in Council shall be laid before Parliament within three weeks after they are made, or, if Parliament is not then sitting, within three weeks after the beginning of the next session.

  • Marginal note:Judicial notice

    (4) All rules referred to in subsection (1) shall be judicially noticed and shall have effect as if enacted by this Act.

  • R.S., c. C-25, s. 18

Marginal note:Law of set-off to apply

 The law of set-off applies to all claims made against a debtor company and to all actions instituted by it for the recovery of debts due to the company in the same manner and to the same extent as if the company were plaintiff or defendant, as the case may be.

  • 1997, c. 12, s. 125

Marginal note:Certain Crown claims

  •  (1) If an order contains a provision authorized by subsection 11.4(1), unless Her Majesty consents, no compromise or arrangement shall be sanctioned 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 sanction of the compromise or arrangement, of all amounts that were outstanding at the time of the application for an order under section 11 and that 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:Default of remittance to Crown

    (2) Where an order contains a provision authorized by subsection 11.4(1), no compromise or arrangement shall be sanctioned by the court if, at the time the court hears the application for sanction, Her Majesty in right of Canada or a province satisfies the court that the company is in default on any remittance of an amount referred to in subsection (1) that became due after the time of the application for an order under section 11.

  • 1997, c. 12, s. 125
  • 2000, c. 30, s. 157

Marginal note:Deemed trusts

  •  (1) Subject to subsection (2), 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 debtor company shall not be regarded as held in trust for Her Majesty unless it would be so regarded in the absence of that statutory provision.

  • Marginal note:Exceptions

    (2) Subsection (1) 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.

  • 1997, c. 12, s. 125
  • 1998, c. 19, s. 260

Marginal note:Status of Crown claims

  •  (1) In relation to a proceeding under this Act, all claims, including secured claims, of Her Majesty in right of Canada or a province or any body under an enactment respecting workers' compensation, in this section and in section 18.5 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 a workers' compensation body; and

    • (b) to the extent provided in subsection 18.5(2), to claims that are secured by a security referred to in subsection 18.5(1), if the security is registered in accordance with subsection 18.5(1).

  • Marginal note:Operation of similar legislation

    (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.

  • 1997, c. 12, s. 125
  • 2000, c. 30, s. 158

Marginal note:Statutory Crown securities

  •  (1) In relation to a proceeding under this Act in respect of a debtor company, 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 a workers' compensation body is valid in relation to claims against the company only if the security is registered before the date of the initial application for an order under section 11 pursuant to any system of registration of securities that is available not only to Her Majesty in right of Canada or a province or a workers' compensation body, but also to any other creditor who holds a security, and that is open to the public for information or the making of searches.

  • Marginal note:Effect of security

    (2) 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.

  • 1997, c. 12, s. 125

International Insolvencies

Marginal note:Definitions

  •  (1) In this section,

    foreign proceeding

    procédures intentées à l’étranger

    foreign proceeding means a judicial or administrative proceeding commenced outside Canada in respect of a debtor under a law relating to bankruptcy or insolvency and dealing with the collective interests of creditors generally; (procédures intentées à l’étranger)

    foreign representative

    représentant étranger

    foreign representative means a person, other than a debtor, holding office under the law of a jurisdiction outside Canada who, irrespective of the person’s designation, is assigned, under the laws of the jurisdiction outside Canada, functions in connection with a foreign proceeding that are similar to those performed by a trustee in bankruptcy, liquidator or other administrator appointed by the court. (représentant étranger)

  • Marginal note:Powers of court

    (2) The court may, in respect of a debtor company, make such orders and grant such relief as it considers appropriate to facilitate, approve or implement arrangements that will result in a co-ordination of proceedings under this Act with any foreign proceeding.

  • Marginal note:Terms and conditions of orders

    (3) An order of the court under this section may be made on such terms and conditions as the court considers appropriate in the circumstances.

  • Marginal note:Court not prevented from applying certain rules

    (4) Nothing in this section prevents the court, on the application of a foreign representative or any other interested person, from applying such legal or equitable rules governing the recognition of foreign insolvency orders and assistance to foreign representatives as are not inconsistent with the provisions of this Act.

  • Marginal note:Court not compelled to give effect to certain orders

    (5) Nothing in this section requires the court to make any order that is not in compliance with the laws of Canada or to enforce any order made by a foreign court.

  • Marginal note:Court may seek assistance from foreign tribunal

    (6) The court may seek the aid and assistance of a court, tribunal or other authority in a foreign proceeding by order or written request or otherwise as the court considers appropriate.

  • Marginal note:Foreign representative status

    (7) An application to the court by a foreign representative under this section does not submit the foreign representative to the jurisdiction of the court for any other purpose except with regard to the costs of the proceedings, but the court may make any order under this section conditional on the compliance by the foreign representative with any other order of the court.

  • Marginal note:Claims in foreign currency

    (8) Where a compromise or arrangement is proposed in respect of a debtor company, a claim for a debt that is payable in a currency other than Canadian currency shall be converted to Canadian currency as of the date of the first application made in respect of the company under section 10 unless otherwise provided in the proposed compromise or arrangement.

  • 1997, c. 12, s. 125

PART IIIGeneral

Marginal note:Certain sections of Winding-up and Restructuring Act do not apply

 Sections 65 and 66 of the Winding-up and Restructuring Act do not apply to any compromise or arrangement to which this Act applies.

  • R.S., 1985, c. C-36, s. 19
  • 1996, c. 6, s. 167

Marginal note:Act to be applied conjointly with other Acts

 The provisions of this Act may be applied together with the provisions of any Act of Parliament or of the legislature of any province, that authorizes or makes provision for the sanction of compromises or arrangements between a company and its shareholders or any class of them.

  • R.S., c. C-25, s. 20

Marginal note:Act binding on Her Majesty

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

  • 1997, c. 12, s. 126

Marginal note:Review by Parliament

  •  (1) This Act shall, on the expiration of five years after the coming into force of this section, stand referred to such committee of the Senate, of the House of Commons or of both Houses of Parliament as may be designated or established to review the administration and operation of this Act.

  • Marginal note:Report

    (2) The committee shall, within one year after beginning the review or within such further time as the Senate, the House of Commons or both Houses of Parliament, as the case may be, may authorize, submit a report on the review to that House or both Houses, including a statement of any changes to this Act that the committee would recommend.

  • 1997, c. 12, s. 126
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