PART IIIProposals (continued)
DIVISION IGeneral Scheme for Proposals (continued)
Marginal note:Secured creditor may file proof of secured claim
50.1 (1) Subject to subsections (2) to (4), a secured creditor to whom a proposal has been made in respect of a particular secured claim may respond to the proposal by filing with the trustee a proof of secured claim in the prescribed form, and may vote, on all questions relating to the proposal, in respect of that entire claim, and sections 124 to 126 apply, in so far as they are applicable, with such modifications as the circumstances require, to proofs of secured claim.
Marginal note:Proposed assessed value
(2) Where a proposal made to a secured creditor in respect of a claim includes a proposed assessed value of the security in respect of the claim, the secured creditor may file with the trustee a proof of secured claim in the prescribed form, and may vote as a secured creditor on all questions relating to the proposal in respect of an amount equal to the lesser of
(3) Where the proposed assessed value is less than the amount of the secured creditor’s claim, the secured creditor may file with the trustee a proof of claim in the prescribed form, and may vote as an unsecured creditor on all questions relating to the proposal in respect of an amount equal to the difference between the amount of the claim and the proposed assessed value.
(4) Where a secured creditor is dissatisfied with the proposed assessed value of his security, the secured creditor may apply to the court, within fifteen days after the proposal is sent to the creditors, to have the proposed assessed value revised, and the court may revise the proposed assessed value, in which case the revised value henceforth applies for the purposes of this Part.
Marginal note:Where no secured creditor in a class takes action
(5) Where no secured creditor having a secured claim of a particular class files a proof of secured claim at or before the meeting of creditors, the secured creditors having claims of that class shall be deemed to have voted for the refusal of the proposal.
- 1992, c. 27, s. 19
- 1997, c. 12, s. 31(F)
Marginal note:Excluded secured creditor
50.2 A secured creditor to whom a proposal has not been made in respect of a particular secured claim may not file a proof of secured claim in respect of that claim.
- 1992, c. 27, s. 19
Marginal note:Rights in bankruptcy
50.3 On the bankruptcy of an insolvent person who made a proposal to one or more secured creditors in respect of secured claims, any proof of secured claim filed pursuant to section 50.1 ceases to be valid or effective, and sections 112 and 127 to 134 apply in respect of a proof of claim filed by any secured creditor in the bankruptcy.
- 1992, c. 27, s. 19
Marginal note:Notice of intention
50.4 (1) Before filing a copy of a proposal with a licensed trustee, an insolvent person may file a notice of intention, in the prescribed form, with the official receiver in the insolvent person’s locality, stating
(a) the insolvent person’s intention to make a proposal,
(b) the name and address of the licensed trustee who has consented, in writing, to act as the trustee under the proposal, and
(c) the names 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,
and attaching thereto a copy of the consent referred to in paragraph (b).
Marginal note:Certain things to be filed
(2) Within ten days after filing a notice of intention under subsection (1), the insolvent person shall file with the official receiver
(a) a statement (in this section referred to as a “cash-flow statement”) indicating the projected cash-flow of the insolvent person on at least a monthly basis, prepared by the insolvent person, reviewed for its reasonableness by the trustee under the notice of intention and signed by the trustee and the insolvent person;
(b) a report on the reasonableness of the cash-flow statement, in the prescribed form, prepared and signed by the trustee; and
(c) a report containing prescribed representations by the insolvent person regarding the preparation of the cash-flow statement, in the prescribed form, prepared and signed by the insolvent person.
Marginal note:Creditors may obtain statement
(3) Subject to subsection (4), any creditor may obtain a copy of the cash-flow statement on request made to the trustee.
(4) The court may order that a cash-flow statement or any part thereof not be released to some or all of the creditors pursuant to subsection (3) where it is satisfied that
Marginal note:Trustee protected
(5) If the trustee acts in good faith and takes reasonable care in reviewing the cash-flow statement, the trustee is not liable for loss or damage to any person resulting from that person’s reliance on the cash-flow statement.
Marginal note:Trustee to notify creditors
(6) Within five days after the filing of a notice of intention under subsection (1), the trustee named in the notice shall send to every known creditor, in the prescribed manner, a copy of the notice including all of the information referred to in paragraphs (1)(a) to (c).
Marginal note:Trustee to monitor and report
(7) Subject to any direction of the court under paragraph 47.1(2)(a), the trustee under a notice of intention in respect of an insolvent person
(a) shall, for the purpose of monitoring the insolvent person’s business and financial affairs, have access to and examine the insolvent person’s property, including his premises, books, records and other financial documents, to the extent necessary to adequately assess the insolvent person’s business and financial affairs, from the filing of the notice of intention until a proposal is filed or the insolvent person becomes bankrupt;
(b) shall file a report on the state of the insolvent person’s business and financial affairs — containing the prescribed information, if any —
(i) with the official receiver without delay after ascertaining a material adverse change in the insolvent person’s projected cash-flow or financial circumstances, and
(ii) with the court at or before the hearing by the court of any application under subsection (9) and at any other time that the court may order; and
(c) shall send a report about the material adverse change to the creditors without delay after ascertaining the change.
Marginal note:Where assignment deemed to have been made
(8) Where an insolvent person fails to comply with subsection (2), or where the trustee fails to file a proposal with the official receiver under subsection 62(1) within a period of thirty days after the day the notice of intention was filed under subsection (1), or within any extension of that period granted under subsection (9),
(a) the insolvent person is, on the expiration of that period or that extension, as the case may be, 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, within five days after the day the certificate mentioned in paragraph (b.1) is issued, send notice of the meeting of creditors under section 102, at which 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.
Marginal note:Extension of time for filing proposal
(9) The insolvent person may, before the expiry of the 30-day period referred to in subsection (8) or of any extension granted under this subsection, apply to the court for an extension, or further extension, as the case may be, of that period, and the court, on notice to any interested persons that the court may direct, may grant the extensions, not exceeding 45 days for any individual extension and not exceeding in the aggregate five months after the expiry of the 30-day period referred to in subsection (8), if satisfied on each application that
(a) the insolvent person has acted, and is acting, in good faith and with due diligence;
(b) the insolvent person would likely be able to make a viable proposal if the extension being applied for were granted; and
(c) no creditor would be materially prejudiced if the extension being applied for were granted.
Marginal note:Court may not extend time
(10) Subsection 187(11) does not apply in respect of time limitations imposed by subsection (9).
Marginal note:Court may terminate period for making proposal
(11) The court may, on application by the trustee, the interim receiver, if any, appointed under section 47.1, or a creditor, declare terminated, before its actual expiration, the thirty day period mentioned in subsection (8) or any extension thereof granted under subsection (9) if the court is satisfied that
(a) the insolvent person has not acted, or is not acting, in good faith and with due diligence,
(b) the insolvent person will not likely be able to make a viable proposal before the expiration of the period in question,
(c) the insolvent person will not likely be able to make a proposal, before the expiration of the period in question, that will be accepted by the creditors, or
(d) the creditors as a whole would be materially prejudiced were the application under this subsection rejected,
and where the court declares the period in question terminated, paragraphs (8)(a) to (c) thereupon apply as if that period had expired.
- 1992, c. 27, s. 19
- 1997, c. 12, s. 32
- 2004, c. 25, s. 33(F)
- 2005, c. 47, s. 35
- 2007, c. 36, s. 17
- 2017, c. 26, s. 6(E)
- Date modified: