Winding-up and Restructuring Act (R.S.C., 1985, c. W-11)

Marginal note:Certain corporations excepted

7 This Act does not apply to building societies that do not have a capital stock or to railway or telegraph companies.

PART IGeneral

Limitation of Part

Marginal note:Subject to Part II

8 In their application to authorized foreign banks, the provisions of this Part are subject to the provisions of Part II.

Marginal note:Subject to Part III

9 In the case of insurance companies, the provisions of this Part are subject to the provisions of Part III.

Winding-up Order

Marginal note:Cases where winding-up order may be made

10 A court may make a winding-up order in respect of a company

• (a) where the period, if any, fixed for the duration of the company by the Act, charter or instrument of incorporation of the company has expired, or where an event, if any, has occurred, on the occurrence of which it is provided by the Act, charter or instrument of incorporation that the company is to be dissolved;

• (b) if the company at a special meeting of shareholders — or, if the company is a federal credit union, at a special meeting of members or shareholders — called for the purpose has passed a resolution requiring the company to be wound up;

• (c) when the company is insolvent;

• (d) when the capital stock of the company is impaired to the extent of twenty-five per cent thereof, and when it is shown to the satisfaction of the court that the lost capital will not likely be restored within one year; or

• (e) when the court is of opinion that for any other reason it is just and equitable that the company should be wound up.

Marginal note:Other winding-up circumstances

10.1 If the Superintendent has taken control of a financial institution or of the assets of a financial institution under any of paragraphs 648(1)(b) or (1.11)(b) to (d) of the Bank Act, paragraph 442(1)(b) of the Cooperative Credit Associations Act, any of paragraphs 679(1)(b) or (1.21)(b) to (d) of the Insurance Companies Act or any of paragraphs 510(1)(b) or (1.11)(b) to (d) of the Trust and Loan Companies Act or, in the case of an authorized foreign bank, has taken control of its assets under paragraph 619(1)(b) or (2.1)(b) or (c) of the Bank Act or, in the case of a foreign insurance company, has taken control of its assets under subparagraph 679(1)(b)(i) or (ii) or paragraph 679(1.21)(b) or (c) of the Insurance Companies Act, a court may make a winding-up order in respect of the financial institution, authorized foreign bank or insurance business in Canada of the foreign insurance company if the court is of the opinion that for any reason it is just and equitable that the financial institution, authorized foreign bank or insurance business in Canada of the foreign insurance company should be wound up or if, in the case of

• (a) a bank to which the Bank Act applies, the control was taken on a ground referred to in paragraph 648(1.1)(a), (c), (e) or (f) of that Act or for reasons related to national security;

• (a.1) an authorized foreign bank, control of its assets was taken on a ground referred to in paragraph 619(2)(a), (b), (d) or (f) of the Bank Act or for reasons related to national security;

• (b) a company to which the Trust and Loan Companies Act applies, the control was taken on a ground referred to in paragraph 510(1.1)(a), (c), (e) or (f) of that Act or for reasons related to national security;

• (c) an insurance company to which the Insurance Companies Act applies, other than a foreign insurance company, the control was taken on a ground referred to in paragraph 679(1.1)(a), (c), (e) or (f) of that Act or for reasons related to national security;

• (d) a foreign insurance company to which the Insurance Companies Act applies, the control of its assets was taken on a ground referred to in paragraph 679(1.2)(a), (c) or (e) of that Act or for reasons related to national security; or

• (e) an association to which the Cooperative Credit Associations Act applies, the control was taken on a ground referred to in paragraph 442(1.1)(a), (c), (e) or (f) of that Act.

Application for Order

Marginal note:Application for winding-up order

11 An application for a winding-up order may

• (a) in the cases mentioned in paragraphs 10(a) and (b), be made by the company or by a shareholder of the company, or, if the company is a federal credit union, by a member or shareholder of the company;

• (b) in the case mentioned in paragraph 10(c), be made by the company or by a creditor of the company for the sum of at least two hundred dollars or, except in the case of banks and insurance corporations, by a shareholder holding shares in the capital stock of the company to the amount of at least five hundred dollars par value, or holding five shares without nominal or par value in the capital stock of the company;

• (c) in the cases mentioned in paragraphs 10(d) and (e), be made by a shareholder holding shares in the capital stock of the company to the amount of at least five hundred dollars par value, or holding five shares without nominal or par value in the capital stock of the company; and

• (d) in the case mentioned in section 10.1, be made by the Attorney General of Canada.

Marginal note:How and where made

• 12 (1) An application for a winding-up order may be made by petition to the court in the province where the head office of the company is situated or in the province where its chief place or one of its chief places of business in Canada is situated.

• Marginal note:Notice of application

  (2) Except in cases where an application for a winding-up order is made by a company, four days notice of the application shall, unless otherwise directed by a court, be given to the company before the making of the application.

Marginal note:Power of court

13 A court may, on application for a winding-up order, make the order applied for, dismiss the application with or without costs, adjourn the hearing conditionally or unconditionally or make any interim or other order that it deems just.

Marginal note:Proceedings may be adjourned

14 If a company opposes an application for a winding-up order on the ground that it has not become insolvent, that its suspension or default was only temporary and was not caused by a deficiency in its assets, that its capital stock is not impaired to the extent described in paragraph 10(d), that the impairment does not endanger the capacity of the company to pay its debts in full or that there is a probability that its lost capital will be restored within a year or within a reasonable time thereafter, and shows reasonable cause for believing that its opposition is well founded, the court, in its discretion, may, from time to time, adjourn proceedings on the application, for a time not exceeding six months after the date of the application, and may order an accountant or other person to inquire into the affairs of the company and to report thereon within a period not exceeding thirty days after the date of that order.

Marginal note:Duty of company

15 On the service on the company of an order made under section 14 for an inquiry into the affairs of the company, the president, directors, officers and employees of the company and every other person shall respectively

• (a) exhibit to the accountant or other person named for the purpose of making the inquiry the books of account of the company and all inventories, papers and vouchers referring to the business of the company or of any person therewith that are in their possession, custody or control; and

• (b) give all such information as is required by the accountant or other person named for the purpose of making the inquiry in order to form a just estimate of the affairs of the company.

Marginal note:Power of the court

16 On receiving the report of the accountant or person ordered to inquire into the affairs of the company under section 14, and after hearing such shareholders or creditors of the company, or, if the company is a federal credit union, such of its members, shareholders or creditors, as desire to be heard in respect of the report, the court may either refuse the application or make the winding-up order.

Staying Proceedings

Marginal note:Actions against company may be stayed

17 A court may, on the application of a company, or of any creditor, contributory, liquidator or petitioner for the winding-up order, at any time after the presentation of a petition for the order and before making the order, restrain further proceedings in any action, suit or proceeding against the company, on such terms as the court thinks fit.

Marginal note:Court may stay winding-up proceedings

18 A court may, on the application of any creditor, contributory, liquidator or petitioner for the winding-up order, at any time after the order is made, and on proof, to the satisfaction of the court, that all proceedings in relation to the winding-up ought to be stayed, make an order staying those proceedings, either altogether or for a limited time, on such terms and subject to such conditions as the court thinks fit.

Effect of Winding-up Order

Marginal note:Company to cease business

19 A company, from the time of the making of a winding-up order, shall cease to carry on its business, except in so far as is, in the opinion of the liquidator, required for the beneficial winding-up thereof, but the corporate state and all the corporate powers of the company, notwithstanding that it is otherwise provided by the Act, charter or instrument of incorporation of the company, continue until the affairs of the company are wound up.

Marginal note:Transfer of shares void

20 All transfers of shares of a company referred to in section 19 — or, if the company referred to in that section is a federal credit union, all transfers of membership shares or shares — except transfers made to or with the sanction of the liquidator, under the authority of the court, and every alteration in the status of the members of the company, after the commencement of the winding-up, are void.

Marginal note:Effect of winding-up order

21 After a winding-up order is made in respect of a company, no suit, action or other proceeding shall be proceeded with or commenced against the company, except with the leave of the court and subject to such terms as the court imposes.

Marginal note:Execution, etc.

22 Every attachment, sequestration, distress or execution put in force against the estate or effects of a company after the making of a winding-up order is void.

Marginal note:Permitted actions

• 22.1 (1) Nothing in this Act or an order made under this Act prevents or prohibits the following actions from being taken in accordance with the provisions of an eligible financial contract:

  • (a) the termination of the contract;

  • (b) the netting or setting off or compensation of obligations between a company in respect of which winding-up proceedings under this Act are commenced and another party to the contract; and

  • (c) any dealing with financial collateral including

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

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

• Marginal note:Net termination values

  (1.01) If the net termination values determined in accordance with the eligible financial contract referred to in subsection (1) 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 provable against the company in respect of the net termination values.

• Marginal note:Application to authorized foreign banks

  (1.1) In its application to authorized foreign banks, subsection (1) only applies to the eligible financial contracts and obligations between the authorized foreign bank, in respect of its business in Canada, and another party.

• Marginal note:Definitions

  (2) In subsection (1),

  eligible financial contract

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

  financial collateral

  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

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

  title transfer credit support agreement

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

• Marginal note:Regulations

  (3) The Governor in Council may make regulations prescribing kinds of agreements for the purposes of the definition eligible financial contract in subsection (2).