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

Application for Bankruptcy Order

Marginal note:Bankruptcy application

• 43 (1) Subject to this section, one or more creditors may file in court an application for a bankruptcy order against a debtor if it is alleged in the application that

  • (a) the debt or debts owing to the applicant creditor or creditors amount to one thousand dollars; and

  • (b) the debtor has committed an act of bankruptcy within the six months preceding the filing of the application.

• Marginal note:If applicant creditor is a secured creditor

  (2) If the applicant creditor referred to in subsection (1) is a secured creditor, they shall in their application either state that they are willing to give up their security for the benefit of the creditors, in the event of a bankruptcy order being made against the debtor, or give an estimate of the value of the applicant creditor’s security, and in the latter case they may be admitted as an applicant creditor to the extent of the balance of the debt due to them after deducting the value so estimated, in the same manner as if they were an unsecured creditor.

• Marginal note:Affidavit

  (3) The application shall be verified by affidavit of the applicant or by someone duly authorized on their behalf having personal knowledge of the facts alleged in the application.

• Marginal note:Consolidation of applications

  (4) If two or more applications are filed against the same debtor or against joint debtors, the court may consolidate the proceedings or any of them on any terms that the court thinks fit.

• Marginal note:Place of filing

  (5) The application shall be filed in the court having jurisdiction in the judicial district of the locality of the debtor.

• Marginal note:Proof of facts, etc.

  (6) At the hearing of the application, the court shall require proof of the facts alleged in the application and of the service of the application, and, if satisfied with the proof, may make a bankruptcy order.

• Marginal note:Dismissal of application

  (7) If the court is not satisfied with the proof of the facts alleged in the application or of the service of the application, or is satisfied by the debtor that the debtor is able to pay their debts, or that for other sufficient cause no order ought to be made, it shall dismiss the application.

• Marginal note:Dismissal with respect to some respondents only

  (8) If there are more respondents than one to an application, the court may dismiss the application with respect to one or more of them, without prejudice to the effect of the application as against the other or others of them.

• Marginal note:Appointment of trustee

  (9) On a bankruptcy order being made, the court shall appoint a licensed trustee as trustee of the property of the bankrupt, having regard, as far as the court considers just, to the wishes of the creditors.

• Marginal note:Stay of proceedings if facts denied

  (10) If the debtor appears at the hearing of the application and denies the truth of the facts alleged in the application, the court may, instead of dismissing the application, stay all proceedings on the application on any terms that it may see fit to impose on the applicant as to costs or on the debtor to prevent alienation of the debtor’s property and for any period of time that may be required for trial of the issue relating to the disputed facts.

• Marginal note:Stay of proceedings for other reasons

  (11) The court may for other sufficient reason make an order staying the proceedings under an application, either altogether or for a limited time, on any terms and subject to any conditions that the court may think just.

• Marginal note:Security for costs

  (12) Applicants who are resident out of Canada may be ordered to give security for costs to the debtor, and proceedings under the application may be stayed until the security is furnished.

• Marginal note:Bankruptcy order on another application

  (13) If proceedings on an application have been stayed or have not been prosecuted with due diligence and effect, the court may, if by reason of the delay or for any other cause it is considered just, substitute or add as applicant any other creditor to whom the debtor may be indebted in the amount required by this Act and make a bankruptcy order on the application of the other creditor, and shall, immediately after making the order, dismiss on any terms that it may consider just the application in the stayed or non-prosecuted proceedings.

• Marginal note:Withdrawing application

  (14) An application shall not be withdrawn without the leave of the court.

• Marginal note:Application against one partner

  (15) Any creditor whose claim against a partnership is sufficient to entitle the creditor to present a bankruptcy application may present an application against any one or more partners of the firm without including the others.

• Marginal note:Court may consolidate proceedings

  (16) If a bankruptcy order has been made against one member of a partnership, any other application against a member of the same partnership shall be filed in or transferred to the same court, and the court may give any directions for consolidating the proceedings under the applications that it thinks just.

• Marginal note:Continuance of proceedings on death of debtor

  (17) If a debtor against whom an application has been filed dies, the proceedings shall, unless the court otherwise orders, be continued as if the debtor were alive.

Marginal note:Application against estate or succession

• 44 (1) Subject to section 43, an application for a bankruptcy order may be filed against the estate or succession of a deceased debtor.

• Marginal note:Personal liability

  (2) After service of an application for a bankruptcy order on the executor or administrator of the estate of a deceased debtor, or liquidator of the succession of a deceased debtor, the person on whom the order was served shall not make payment of any moneys or transfer any property of the deceased debtor, except as required for payment of the proper funeral and testamentary expenses, until the application is disposed of; otherwise, in addition to any penalties to which the person may be subject, the person is personally liable for the payment or transfer.

• Marginal note:Act done in good faith

  (3) Nothing in this section invalidates any payment or transfer of property made or any act or thing done, in good faith, by the executor, administrator of the estate or liquidator of the succession before the service of an application referred to in subsection (2).

Marginal note:Costs of application

• 45 (1) If a bankruptcy order is made, the costs of the applicant shall be taxed and be payable out of the estate, unless the court otherwise orders.

• Marginal note:Insufficient proceeds

  (2) If the proceeds of the estate are not sufficient for the payment of any costs incurred by the trustee, the court may order the costs to be paid by the applicant.

Interim Receiver

Marginal note:Appointment of interim receiver

• 46 (1) The court may, if it is shown to be necessary for the protection of the estate of a debtor, at any time after the filing of an application for a bankruptcy order and before a bankruptcy order is made, appoint a licensed trustee as interim receiver of the property or any part of the property of the debtor and direct the interim receiver to take immediate possession of the property or any part of it on an undertaking being given by the applicant that the court may impose with respect to interference with the debtor’s legal rights and with respect to damages in the event of the application being dismissed.

• Marginal note:Powers of interim receiver

  (2) The interim receiver appointed under subsection (1) may, under the direction of the court, take conservatory measures and summarily dispose of property that is perishable or likely to depreciate rapidly in value and exercise such control over the business of the debtor as the court deems advisable, but the interim receiver shall not unduly interfere with the debtor in the carrying on of his business except as may be necessary for conservatory purposes or to comply with the order of the court.

• Marginal note:Place of filing

  (3) An application under subsection (1) is to be filed in a court having jurisdiction in the judicial district of the locality of the debtor.

Marginal note:Appointment of interim receiver

• 47 (1) If the court is satisfied that a notice is about to be sent or was sent under subsection 244(1), it may, subject to subsection (3), appoint a trustee as interim receiver of all or any part of the debtor’s property that is subject to the security to which the notice relates until the earliest of

  • (a) the taking of possession by a receiver, within the meaning of subsection 243(2), of the debtor’s property over which the interim receiver was appointed,

  • (b) the taking of possession by a trustee of the debtor’s property over which the interim receiver was appointed, and

  • (c) the expiry of 30 days after the day on which the interim receiver was appointed or of any period specified by the court.

• Marginal note:Directions to interim receiver

  (2) The court may direct an interim receiver appointed under subsection (1) to do any or all of the following:

  • (a) take possession of all or part of the debtor’s property mentioned in the appointment;

  • (b) exercise such control over that property, and over the debtor’s business, as the court considers advisable;

  • (c) take conservatory measures; and

  • (d) summarily dispose of property that is perishable or likely to depreciate rapidly in value.

• Marginal note:When appointment may be made

  (3) An appointment of an interim receiver may be made under subsection (1) only if it is shown to the court to be necessary for the protection of

  • (a) the debtor’s estate; or

  • (b) the interests of the creditor who sent the notice under subsection 244(1).

• Marginal note:Place of filing

  (4) An application under subsection (1) is to be filed in a court having jurisdiction in the judicial district of the locality of the debtor.

Marginal note:Appointment of interim receiver

• 47.1 (1) If a notice of intention has been filed under section 50.4 or a proposal has been filed under subsection 62(1), the court may at any time after the filing, subject to subsection (3), appoint as interim receiver of all or any part of the debtor’s property,

  • (a) the trustee under the notice of intention or proposal;

  • (b) another trustee; or

  • (c) the trustee under the notice of intention or proposal and another trustee jointly.

• Marginal note:Duration of appointment

  (1.1) The appointment expires on the earliest of

  • (a) the taking of possession by a receiver, within the meaning of subsection 243(2), of the debtor’s property over which the interim receiver was appointed,

  • (b) the taking of possession by a trustee of the debtor’s property over which the interim receiver was appointed, and

  • (c) court approval of the proposal.

• Marginal note:Directions to interim receiver

  (2) The court may direct an interim receiver appointed under subsection (1) to do any or all of the following:

  • (a) carry out the duties set out in subsection 50(10) or 50.4(7), in substitution for the trustee referred to in that subsection or jointly with that trustee;

  • (b) take possession of all or part of the debtor’s property mentioned in the order of the court;

  • (c) exercise such control over that property, and over the debtor’s business, as the court considers advisable;

  • (d) take conservatory measures; and

  • (e) summarily dispose of property that is perishable or likely to depreciate rapidly in value.

• Marginal note:When appointment may be made

  (3) An appointment of an interim receiver may be made under subsection (1) only if it is shown to the court to be necessary for the protection of

  • (a) the debtor’s estate; or

  • (b) the interests of one or more creditors, or of the creditors generally.

• Marginal note:Place of filing

  (4) An application under subsection (1) is to be filed in a court having jurisdiction in the judicial district of the locality of the debtor.

Marginal note:Orders respecting fees and expenses

• 47.2 (1) If an appointment of an interim receiver is made under section 47 or 47.1, the court may make any order respecting the payment of fees and disbursements of the interim receiver that it considers proper, including an order giving the interim receiver security, ranking ahead of any or all secured creditors, over any or all of the assets of the debtor in respect of the interim receiver’s claim for fees or disbursements, but the court shall not make such an order unless it is satisfied that all secured creditors who would be materially affected by the order were given reasonable advance notification and an opportunity to make representations to the court.

• Marginal note:Meaning of disbursements

  (2) In subsection (1), “disbursements” do not include payments made in operating a business of the debtor.

• Marginal note:Accounts, discharge of interim receivers

  (3) With respect to interim receivers appointed under section 46, 47 or 47.1,

  • (a) the form and content of their accounts, including their final statement of receipts and disbursements,

  • (b) the procedure for the preparation and taxation of those accounts, and

  • (c) the procedure for the discharge of the interim receiver

  shall be as prescribed.

Marginal note:Application of sections 43 to 46

48 Sections 43 to 46 do not apply to individuals whose principal occupation and means of livelihood is fishing, farming or the tillage of the soil or to any individual who works for wages, salary, commission or hire at a rate of compensation not exceeding twenty-five hundred dollars per year and does not on their own account carry on business.

Assignments

Marginal note:Assignment for general benefit of creditors

• 49 (1) An insolvent person or, if deceased, the executor or administrator of their estate or the liquidator of the succession, with the leave of the court, may make an assignment of all the insolvent person’s property for the general benefit of the insolvent person’s creditors.

• Marginal note:Sworn statement

  (2) The assignment must be accompanied by a sworn statement in the prescribed form showing the debtor’s property that is divisible among his or her creditors, the names and addresses of all his or her creditors and the amounts of their respective claims.

• Marginal note:Filing of assignment

  (3) The assignment made under subsection (1) shall be offered to the official receiver in the locality of the debtor, and it is inoperative until filed with that official receiver, who shall refuse to file the assignment unless it is in the prescribed form or to the like effect and accompanied by the sworn statement required by subsection (2).

• Marginal note:Appointment of trustee

  (4) Where the official receiver files the assignment made under subsection (1), he shall appoint as trustee a licensed trustee whom he shall, as far as possible, select by reference to the wishes of the most interested creditors if ascertainable at the time, and the official receiver shall complete the assignment by inserting therein as grantee the name of the trustee.

• Marginal note:Cancellation of assignment

  (5) Where the official receiver is unable to find a licensed trustee who is willing to act, the official receiver shall, after giving the bankrupt five days notice, cancel the assignment.

• Marginal note:Procedure in small estates

  (6) Where the bankrupt is not a corporation and in the opinion of the official receiver the realizable assets of the bankrupt, after the claims of secured creditors are deducted, will not exceed five thousand dollars or such other amount as is prescribed, the provisions of this Act relating to the summary administration of estates shall apply.

• Marginal note:Future property not to be considered

  (7) In the determination of the realizable assets of a bankrupt for the purposes of subsection (6), no regard shall be had to any property that may be acquired by the bankrupt or devolve on the bankrupt before the bankrupt’s discharge.

• Marginal note:Where subsection (6) ceases to apply

  (8) The official receiver may direct that subsection (6) shall cease to apply in respect of the bankrupt where the official receiver determines that

  • (a) the realizable assets of the bankrupt, after the claims of secured creditors are deducted, exceed five thousand dollars or the amount prescribed, as the case may be, or

  • (b) the costs of realization of the assets of the bankrupt are a significant proportion of the realizable value of the assets,

  and the official receiver considers that such a direction is appropriate.