Bankruptcy and Insolvency Act

Marginal note:Disclaimer or resiliation of agreements

• 65.11 (1) Subject to subsections (3) and (4), a debtor in respect of whom a notice of intention was filed under section 50.4 or a proposal was filed under subsection 62(1) may — on notice given in the prescribed form and manner to the other parties to the agreement and the trustee — disclaim or resiliate any agreement to which the debtor is a party on the day on which the notice of intention or proposal was filed. The debtor may not give notice unless the trustee approves the proposed disclaimer or resiliation.

• Marginal note:Individuals

  (2) In the case of an individual,

  • (a) they may not disclaim or resiliate an agreement under subsection (1) unless they are carrying on a business; and

  • (b) only an agreement in relation to the business may be disclaimed or resiliated.

• Marginal note:Court may prohibit disclaimer or resiliation

  (3) Within 15 days after the day on which the debtor gives notice under subsection (1), a party to the agreement may, on notice to the other parties to the agreement and the trustee, apply to a court for an order that the agreement is not to be disclaimed or resiliated.

• Marginal note:Court ordered disclaimer or resiliation

  (4) If the trustee does not approve the proposed disclaimer or resiliation, the debtor may, on notice to the other parties to the agreement and the trustee, apply to a court for an order that the agreement be disclaimed or resiliated.

• Marginal note:Factors to be considered

  (5) In deciding whether to make the order, the court is to consider, among other things,

  • (a) whether the trustee approved the proposed disclaimer or resiliation;

  • (b) whether the disclaimer or resiliation would enhance the prospects of a viable proposal being made in respect of the debtor; and

  • (c) whether the disclaimer or resiliation would likely cause significant financial hardship to a party to the agreement.

• Marginal note:Date of disclaimer or resiliation

  (6) An agreement is disclaimed or resiliated

  • (a) if no application is made under subsection (3), on the day that is 30 days after the day on which the debtor gives notice under subsection (1);

  • (b) if the court dismisses the application made under subsection (3), on the day that is 30 days after the day on which the debtor gives notice under subsection (1) or any later day fixed by the court; or

  • (c) if the court orders that the agreement is disclaimed or resiliated under subsection (4), on the day that is 30 days after the day on which the debtor gives notice or any later day fixed by the court.

• Marginal note:Intellectual property

  (7) If the debtor has granted a right to use intellectual property to a party to an agreement, the disclaimer or resiliation does not affect the party’s right to use the intellectual property — including the party’s right to enforce an exclusive use — during the term of the agreement, including any period for which the party extends the agreement as of right, as long as the party continues to perform its obligations under the agreement in relation to the use of the intellectual property.

• Marginal note:Loss related to disclaimer or resiliation

  (8) If an agreement is disclaimed or resiliated, a party to the agreement who suffers a loss in relation to the disclaimer or resiliation is considered to have a provable claim.

• Marginal note:Reasons for disclaimer or resiliation

  (9) A debtor shall, on request by a party to the agreement, provide in writing the reasons for the proposed disclaimer or resiliation within five days after the day on which the party requests them.

• Marginal note:Exceptions

  (10) This section does not apply in respect of

  • (a) an eligible financial contract;

  • (b) a lease referred to in subsection 65.2(1);

  • (c) a collective agreement;

  • (d) a financing agreement if the debtor is the borrower; or

  • (e) a lease of real property or of an immovable if the debtor is the lessor.