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

Marginal note:Trustee not obliged to carry on business

32 The trustee is not under obligation to carry on the business of the bankrupt where in his opinion the realizable value of the property of the bankrupt is insufficient to protect him fully against possible loss occasioned by so doing and the creditors or inspectors, on demand made by the trustee, neglect or refuse to secure him against such possible loss.

Marginal note:Reimbursement only of trustee’s disbursement advances

33 The court may make an order providing for the sale of any or all of the assets of the estate of the bankrupt, either by tender, private sale or public auction, setting out the terms and conditions of the sale and directing that the proceeds from the sale are to be used for the purpose of reimbursing the trustee in respect of any costs that may be owing to the trustee or of any moneys the trustee may have advanced as disbursements for the benefit of the estate.

Marginal note:Trustee may apply to court for directions

• 34 (1) A trustee may apply to the court for directions in relation to any matter affecting the administration of the estate of a bankrupt and the court shall give in writing such directions, if any, as to it appear proper in the circumstances.

• Marginal note:To report to court after three years

  (2) Where an estate has not been fully administered within three years after the bankruptcy, the trustee shall, if requested to do so by the Superintendent, report that fact to the court as soon as practicable thereafter, and the court shall make such order as it considers fit to expedite the administration.

• Marginal note:Notice to Superintendent’s division office

  (3) The trustee must send notice to the Superintendent’s division office of the day and time when any application for directions made under subsection (1) is to be heard and of the day and time when the trustee intends to report to the court as required by the Superintendent under subsection (2).

Marginal note:Redirection of mail

• 35 (1) Subject to subsection (2), the trustee may, by sending to the Canada Post Corporation

  • (a) a notice in the prescribed form, and

  • (b) a copy of the trustee’s certificate of appointment,

  request that any mail addressed to a bankrupt that is directed to any place referred to in the notice be redirected or sent by the Canada Post Corporation to the trustee or to such other person as the trustee may designate and when Canada Post Corporation receives those documents, it shall so redirect or send that mail.

• Marginal note:Permission for residence

  (2) A notice referred to in subsection (1) may refer to a bankrupt’s residence only where the trustee has, on application, obtained permission from the court.

• Marginal note:Time limitation

  (3) If a bankrupt is an individual, a notice referred to in subsection (1) is operative only during the three-month period immediately after the date of the bankruptcy unless the court, on application, extends that period on any terms that it considers fit.

Marginal note:Duty of former trustee on substitution

• 36 (1) On the appointment of a substituted trustee, the former trustee shall without delay pass his or her accounts before the court and deliver to the substituted trustee all the property of the estate, together with all books, records and documents of the bankrupt and of the administration of the estate, as well as a statement of receipts and disbursements that contains a complete account of all moneys received by the trustee out of the property of the bankrupt or otherwise, the amount of interest received by the trustee, all moneys disbursed and expenses incurred and the remuneration claimed by the trustee, together with full particulars, description and value of all the bankrupt’s property that has not been sold or realized, setting out the reason why the property has not been sold or realized and the disposition made of the property.

• Marginal note:Duty of substituted trustee

  (2) A substituted trustee shall

  • (a) [Repealed, 1992, c. 27, s. 14]

  • (b) if appointed by the creditors, file with the court a copy of the minutes of the meeting signed by the chair;

  • (c) notify the Superintendent of his appointment;

  • (d) if required by the inspectors, register a notice of the appointment in the land register of any land titles or registry office where the assignment or bankruptcy order has been registered; and

  • (e) as soon as funds are available, pay to the former trustee his remuneration and disbursements as approved by the court.

Marginal note:Appeal to court against trustee

37 Where the bankrupt or any of the creditors or any other person is aggrieved by any act or decision of the trustee, he may apply to the court and the court may confirm, reverse or modify the act or decision complained of and make such order in the premises as it thinks just.

Marginal note:Proceeding by creditor when trustee refuses to act

• 38 (1) Where a creditor requests the trustee to take any proceeding that in his opinion would be for the benefit of the estate of a bankrupt and the trustee refuses or neglects to take the proceeding, the creditor may obtain from the court an order authorizing him to take the proceeding in his own name and at his own expense and risk, on notice being given the other creditors of the contemplated proceeding, and on such other terms and conditions as the court may direct.

• Marginal note:Transfer to creditor

  (2) On an order under subsection (1) being made, the trustee shall assign and transfer to the creditor all his right, title and interest in the chose in action or subject-matter of the proceeding, including any document in support thereof.

• Marginal note:Benefits belong to creditor

  (3) Any benefit derived from a proceeding taken pursuant to subsection (1), to the extent of his claim and the costs, belongs exclusively to the creditor instituting the proceeding, and the surplus, if any, belongs to the estate.

• Marginal note:Trustee may institute proceeding

  (4) Where, before an order is made under subsection (1), the trustee, with the permission of the inspectors, signifies to the court his readiness to institute the proceeding for the benefit of the creditors, the order shall fix the time within which he shall do so, and in that case the benefit derived from the proceeding, if instituted within the time so fixed, belongs to the estate.

Remuneration of Trustee

Marginal note:To be voted by creditors

• 39 (1) The remuneration of the trustee shall be such as is voted to the trustee by ordinary resolution at any meeting of creditors.

• Marginal note:Not to exceed 7½ per cent

  (2) Where the remuneration of the trustee has not been fixed under subsection (1), the trustee may insert in his final statement and retain as his remuneration, subject to increase or reduction as hereinafter provided, a sum not exceeding seven and one-half per cent of the amount remaining out of the realization of the property of the debtor after the claims of the secured creditors have been paid or satisfied.

• Marginal note:For carrying on debtor’s business or in case of a proposal

  (3) Where the business of the debtor has been carried on by the trustee or under his supervision, he may be allowed such special remuneration for such services as the creditors or the inspectors may by resolution authorize, and, in the case of a proposal, such special remuneration as may be agreed to by the debtor, or in the absence of agreement with the debtor such amount as may be approved by the court.

• Marginal note:Successive trustees

  (4) In the case of two or more trustees acting in succession, the remuneration shall be apportioned between the trustees in accordance with the services rendered by each, and in the absence of agreement between the trustees the court shall determine the amount payable to each.

• Marginal note:Court may increase or reduce

  (5) On application by the trustee, a creditor or the debtor and on notice to such parties as the court may direct, the court may make an order increasing or reducing the remuneration.

Discharge of Trustee

Marginal note:Disposal of unrealizable property

• 40 (1) Any property of a bankrupt that is listed in the statement of affairs referred to in paragraph 158(d) or otherwise disclosed to the trustee before the bankrupt’s discharge and that is found incapable of realization must be returned to the bankrupt before the trustee’s application for discharge, but if inspectors have been appointed, the trustee may do so only with their permission.

• Marginal note:Final disposition of property

  (2) Where a trustee is unable to dispose of any property as provided in this section, the court may make such order as it may consider necessary.

Marginal note:Application to court

• 41 (1) When a trustee has completed the duties required of him with respect to the administration of the property of a bankrupt, he shall apply to the court for a discharge.

• Marginal note:Discharge of trustee

  (2) The court may discharge a trustee with respect to any estate on full administration thereof or, for sufficient cause, before full administration.

• Marginal note:When another trustee has been appointed

  (3) A trustee when replaced by another trustee is entitled to be discharged if he has accounted to the satisfaction of the inspectors and the court for all property that came to his hands, and a period of three months has elapsed after the date of the replacement without any undisposed of claim or objection having been made by the bankrupt or any creditor.

• Marginal note:When estate deemed fully administered

  (4) When a trustee’s accounts have been approved by the inspectors and taxed by the court and all objections, applications, oppositions, motions and appeals have been settled or disposed of and all dividends have been paid, the estate is deemed to have been fully administered.

• Marginal note:Objections to be filed with court and trustee

  (5) Any interested person desiring to object to the discharge of a trustee shall, at least five days prior to the date of the hearing, file notice of objection with the registrar of the court setting out the reasons for the objection and serve a copy of the notice on the trustee.

• Marginal note:Court may grant discharge

  (6) The court shall consider the objection filed under subsection (5) and may grant or withhold a discharge accordingly or give such directions as it may deem proper in the circumstances.

• Marginal note:Fraud or breach of trust

  (7) Nothing in or done under authority of this section relieves or discharges or shall be deemed to relieve or discharge a trustee from the results of any fraud.

• Marginal note:Effect of discharge of trustee

  (8) The discharge of a trustee discharges him from all liability

  • (a) in respect of any act done or default made by him in the administration of the property of the bankrupt, and

  • (b) in relation to his conduct as trustee,

  but any discharge may be revoked by the court on proof that it was obtained by fraud or by suppression or concealment of any material fact.

• Marginal note:Investigation not precluded

  (8.1) Nothing in subsection (8) is to be construed as preventing an inquiry, investigation or proceeding in respect of a trustee under subsection 14.01(1).

• Marginal note:Security released

  (9) The discharge of a trustee under this section operates as a release of the security provided pursuant to subsection 16(1).

• Marginal note:Trustee remains

  (10) Notwithstanding his discharge, the trustee remains the trustee of the estate for the performance of such duties as may be incidental to the full administration of the estate.

• Marginal note:Appointment of trustee by court to complete administration

  (11) The court, on being satisfied that there are assets that have not been realized or distributed, may, on the application of any interested person, appoint a trustee to complete the administration of the estate of the bankrupt, and the trustee shall be governed by the provisions of this Act, in so far as they are applicable.

PART IIBankruptcy Orders and Assignments

Acts of Bankruptcy

Marginal note:Acts of bankruptcy

• 42 (1) A debtor commits an act of bankruptcy in each of the following cases:

  • (a) if in Canada or elsewhere he makes an assignment of his property to a trustee for the benefit of his creditors generally, whether it is an assignment authorized by this Act or not;

  • (b) if in Canada or elsewhere the debtor makes a fraudulent gift, delivery or transfer of the debtor’s property or of any part of it;

  • (c) if in Canada or elsewhere the debtor makes any transfer of the debtor’s property or any part of it, or creates any charge on it, that would under this Act be void or, in the Province of Quebec, null as a fraudulent preference;

  • (d) if, with intent to defeat or delay his creditors, he departs out of Canada, or, being out of Canada, remains out of Canada, or departs from his dwelling-house or otherwise absents himself;

  • (e) if the debtor permits any execution or other process issued against the debtor under which any of the debtor’s property is seized, levied on or taken in execution to remain unsatisfied until within five days after the time fixed by the executing officer for the sale of the property or for fifteen days after the seizure, levy or taking in execution, or if any of the debtor’s property has been sold by the executing officer, or if the execution or other process has been held by the executing officer for a period of fifteen days after written demand for payment without seizure, levy or taking in execution or satisfaction by payment, or if it is returned endorsed to the effect that the executing officer can find no property on which to levy or to seize or take, but if interpleader or opposition proceedings have been instituted with respect to the property seized, the time elapsing between the date at which the proceedings were instituted and the date at which the proceedings are finally disposed of, settled or abandoned shall not be taken into account in calculating the period of fifteen days;

  • (f) if he exhibits to any meeting of his creditors any statement of his assets and liabilities that shows that he is insolvent, or presents or causes to be presented to any such meeting a written admission of his inability to pay his debts;

  • (g) if he assigns, removes, secretes or disposes of or attempts or is about to assign, remove, secrete or dispose of any of his property with intent to defraud, defeat or delay his creditors or any of them;

  • (h) if he gives notice to any of his creditors that he has suspended or that he is about to suspend payment of his debts;

  • (i) if he defaults in any proposal made under this Act; and

  • (j) if he ceases to meet his liabilities generally as they become due.

• Marginal note:Unauthorized assignments are void or null

  (2) Every assignment of an insolvent debtor’s property other than an assignment authorized by this Act, made by an insolvent debtor for the general benefit of their creditors, is void or, in the Province of Quebec, null.