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

Act current to 2020-11-02 and last amended on 2019-11-01. Previous Versions

PART IIIProposals (continued)

DIVISION IGeneral Scheme for Proposals (continued)

Marginal note:Application for authorization to serve a notice to bargain

  •  (1) An insolvent person in respect of whom a notice of intention is filed under section 50.4 or a proposal is filed under subsection 62(1) who is a party to a collective agreement and who is unable to reach a voluntary agreement with the bargaining agent to revise any of its provisions may, on giving five days notice to the bargaining agent, apply to the court for an order authorizing the insolvent person to serve a notice to bargain under the laws of the jurisdiction governing collective bargaining between the insolvent person and the bargaining agent.

  • Marginal note:Conditions for issuance of order

    (2) The court may issue the order only if it is satisfied that

    • (a) the insolvent person would not be able to make a viable proposal, taking into account the terms of the collective agreement;

    • (b) the insolvent person has made good faith efforts to renegotiate the provisions of the collective agreement; and

    • (c) the failure to issue the order is likely to result in irreparable damage to the insolvent person.

  • Marginal note:No delay on vote on proposal

    (3) The vote of the creditors in respect of a proposal may not be delayed solely because the period provided in the laws of the jurisdiction governing collective bargaining between the insolvent person and the bargaining agent has not expired.

  • Marginal note:Claims arising from revision of collective agreement

    (4) If the parties to the collective agreement agree to revise the collective agreement after proceedings have been commenced under this Act in respect of the insolvent person, the bargaining agent that is a party to the agreement has a claim, as an unsecured creditor, for an amount equal to the value of concessions granted by the bargaining agent with respect to the remaining term of the collective agreement.

  • Marginal note:Order to disclose information

    (5) On the application of the bargaining agent and on notice to the person to whom the application relates, the court may, subject to any terms and conditions it specifies, make an order requiring the person to make available to the bargaining agent any information specified by the court in the person’s possession or control that relates to the insolvent person’s business or financial affairs and that is relevant to the collective bargaining between the insolvent person and the bargaining agent. The court may make the order only after the insolvent person has been authorized to serve a notice to bargain under subsection (1).

  • Marginal note:Unrevised collective agreements remain in force

    (6) For greater certainty, any collective agreement that the insolvent person and the bargaining agent have not agreed to revise remains in force.

  • Marginal note:Parties

    (7) For the purpose of this section, the parties to a collective agreement are the insolvent person and the bargaining agent who are bound by the collective agreement.

  • 2005, c. 47, s. 44

Marginal note:Restriction on disposition of assets

  •  (1) An insolvent person in respect of whom a notice of intention is filed under section 50.4 or a proposal is filed under subsection 62(1) may not sell or otherwise dispose of assets outside the ordinary course of business unless authorized to do so by a court. Despite any requirement for shareholder approval, including one under federal or provincial law, the court may authorize the sale or disposition even if shareholder approval was not obtained.

  • Marginal note:Individuals

    (2) In the case of an individual who is carrying on a business, the court may authorize the sale or disposition only if the assets were acquired for or used in relation to the business.

  • Marginal note:Notice to secured creditors

    (3) An insolvent person who applies to the court for an authorization shall give notice of the application to the secured creditors who are likely to be affected by the proposed sale or disposition.

  • Marginal note:Factors to be considered

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

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

    • (b) whether the trustee approved the process leading to the proposed sale or disposition;

    • (c) whether the trustee filed with the court a report stating that in their opinion the sale or disposition would be more beneficial to the creditors than a sale or disposition under a bankruptcy;

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

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

    • (f) whether the consideration to be received for the assets is reasonable and fair, taking into account their market value.

  • Marginal note:Additional factors — related persons

    (5) If the proposed sale or disposition is to a person who is related to the insolvent person, the court may, after considering the factors referred to in subsection (4), grant the authorization only if it is satisfied that

    • (a) good faith efforts were made to sell or otherwise dispose of the assets to persons who are not related to the insolvent person; and

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

  • Marginal note:Related persons

    (6) For the purpose of subsection (5), a person who is related to the insolvent person includes

    • (a) a director or officer of the insolvent person;

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

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

  • Marginal note:Assets may be disposed of free and clear

    (7) The court may authorize a sale or disposition free and clear of any security, charge or other restriction and, if it does, it shall also order that other assets of the insolvent person or the proceeds of the sale or disposition be subject to a security, charge or other restriction in favour of the creditor whose security, charge or other restriction is to be affected by the order.

  • Marginal note:Restriction — employers

    (8) The court may grant the authorization only if the court is satisfied that the insolvent person can and will make the payments that would have been required under paragraphs 60(1.3)(a) and (1.5)(a) if the court had approved the proposal.

  • Marginal note:Restriction — intellectual property

    (9) If, on the day on which a notice of intention is filed under section 50.4 or a copy of the proposal is filed under subsection 62(1), the insolvent person is a party to an agreement that grants to another party a right to use intellectual property that is included in a sale or disposition authorized under subsection (7), that sale or disposition does not affect the other party’s right to use the intellectual property — including the other party’s right to enforce an exclusive use — during the term of the agreement, including any period for which the other party extends the agreement as of right, as long as the other party continues to perform its obligations under the agreement in relation to the use of the intellectual property.

  • 2005, c. 47, s. 44
  • 2007, c. 36, s. 27
  • 2018, c. 27, s. 266

Marginal note:Insolvent person may disclaim or resiliate commercial lease

  •  (1) At any time between the filing of a notice of intention and the filing of a proposal, or on the filing of a proposal, in respect of an insolvent person who is a commercial lessee under a lease of real property or an immovable, the insolvent person may disclaim or resiliate the lease on giving thirty days notice to the lessor in the prescribed manner, subject to subsection (2).

  • Marginal note:Lessor may challenge

    (2) Within fifteen days after being given notice of the disclaimer or resiliation of a lease under subsection (1), the lessor may apply to the court for a declaration that subsection (1) does not apply in respect of that lease, and the court, on notice to any parties that it may direct, shall, subject to subsection (3), make that declaration.

  • Marginal note:Circumstances for not making declaration

    (3) No declaration under subsection (2) shall be made if the court is satisfied that the insolvent person would not be able to make a viable proposal without the disclaimer or resiliation of the lease and all other leases that the lessee has disclaimed or resiliated under subsection (1).

  • Marginal note:Effects of disclaimer or resiliation

    (4) If a lease is disclaimed or resiliated under subsection (1),

    • (a) the lessor has no claim for accelerated rent;

    • (b) the proposal must indicate whether the lessor may file a proof of claim for the actual losses resulting from the disclaimer or resiliation, or for an amount equal to the lesser of

      • (i) the aggregate of

        • (A) the rent provided for in the lease for the first year of the lease following the date on which the disclaimer or resiliation becomes effective, and

        • (B) fifteen per cent of the rent for the remainder of the term of the lease after that year, and

      • (ii) three years’ rent; and

    • (c) the lessor may file a proof of claim as indicated in the proposal.

  • Marginal note:Classification of claim

    (5) The lessor’s claim shall be included in either

    • (a) a separate class of similar claims of lessors; or

    • (b) a class of unsecured claims that includes claims of creditors who are not lessors.

  • Marginal note:Lessor’s vote on proposal

    (6) The lessor is entitled to vote on the proposal in whichever class referred to in subsection (5) the lessor’s claim is included, and for the amount of the claim as proven.

  • Marginal note:Determination of classes

    (7) The court may, on application made at any time after the proposal is filed, determine the classes of claims of lessors and the class into which the claim of any of those particular lessors falls.

  • Marginal note:Section 146 not affected

    (8) Nothing in subsections (1) to (7) affects the operation of section 146 in the event of bankruptcy.

  • 1992, c. 27, s. 30
  • 1997, c. 12, s. 42
  • 2004, c. 25, s. 37
 
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