• Marginal note:Customer indebted to securities firm

  (3) If a customer to whom customer name securities belong and who is indebted to the securities firm on account of customer name securities not fully paid for, or on another account, does not discharge their indebtedness in full, the trustee may, on notice to the customer, sell sufficient customer name securities to discharge the indebtedness, and those securities are then free of any right, title or interest of the customer. If the trustee so discharges the customer’s indebtedness, the trustee shall deliver any remaining customer name securities to the customer.

PART XIIICROSS-BORDER INSOLVENCIES

Purpose

Marginal note:Purpose

267. The purpose of this Part is to provide mechanisms for dealing with cases of cross-border insolvencies and to promote

• (a) cooperation between the courts and other competent authorities in Canada with those of foreign jurisdictions in cases of cross-border insolvencies;

• (b) greater legal certainty for trade and investment;

• (c) the fair and efficient administration of cross-border insolvencies that protects the interests of creditors and other interested persons, and those of debtors;

• (d) the protection and the maximization of the value of debtors’ property; and

• (e) the rescue of financially troubled businesses to protect investment and preserve employment.

Interpretation

Marginal note:Definitions

• 268. (1) The following definitions apply in this Part.

  “foreign court”

  « tribunal étranger »

  “foreign court” means a judicial or other authority competent to control or supervise a foreign proceeding.

  “foreign main proceeding”

  « principale »

  “foreign main proceeding” means a foreign proceeding in a jurisdiction where the debtor has the centre of the debtor’s main interests.

  “foreign non-main proceeding”

  « secondaire »

  “foreign non-main proceeding” means a foreign proceeding, other than a foreign main proceeding.

  “foreign proceeding”

  « instances étrangères »

  “foreign proceeding” means a judicial or an administrative proceeding, including an interim proceeding, in a jurisdiction outside Canada dealing with creditor’s collective interests generally under any law relating to bankruptcy or insolvency in which a debtor’s property and affairs are subject to control or supervision by a foreign court for the purpose of reorganization or liquidation.

  “foreign representative”

  « représentant étranger »

  “foreign representative” means a person or body, including one appointed on an interim basis, who is authorized, in a foreign proceeding in respect of a debtor, to

  • (a) administer the debtor’s property or affairs for the purpose of reorganization or liquidation; or

  • (b) act as a representative in respect of the foreign proceeding.

• Marginal note:Centre of debtor’s main interests

  (2) For the purposes of this Part, in the absence of proof to the contrary, a debtor’s registered office and, in the case of a debtor who is an individual, the debtor’s ordinary place of residence are deemed to be the centre of the debtor’s main interests.

Recognition of Foreign Proceeding

Marginal note:Application for recognition of a foreign proceeding

• 269. (1) A foreign representative may apply to the court for recognition of the foreign proceeding in respect of which he or she is a foreign representative.

• Marginal note:Documents that must accompany application

  (2) Subject to subsection (3), the application must be accompanied by

  • (a) a certified copy of the instrument, however designated, that commenced the foreign proceeding or a certificate from the foreign court affirming the existence of the foreign proceeding;

  • (b) a certified copy of the instrument, however designated, authorizing the foreign representative to act in that capacity or a certificate from the foreign court affirming the foreign representative’s authority to act in that capacity; and

  • (c) a statement identifying all foreign proceedings in respect of the debtor that are known to the foreign representative.

• Marginal note:Documents may be considered as proof

  (3) The court may, without further proof, accept the documents referred to in paragraphs (2)(a) and (b) as evidence that the proceeding to which they relate is a foreign proceeding and that the applicant is a foreign representative in respect of the foreign proceeding.

• Marginal note:Other evidence

  (4) In the absence of the documents referred to in paragraphs (2)(a) and (b), the court may accept any other evidence of the existence of the foreign proceeding and of the foreign represent­ative’s authority that it considers appropriate.

• Marginal note:Translation

  (5) The court may require a translation of any document accompanying the application.

Marginal note:Order recognizing foreign proceeding

• 270. (1) If the court is satisfied that the application for the recognition of a foreign proceeding relates to a foreign proceeding and that the applicant is a foreign representative in respect of that foreign proceeding, the court shall make an order recognizing the foreign proceeding.

• Marginal note:Nature of foreign proceeding to be specified

  (2) The court shall specify in the order whether the foreign proceeding is a foreign main proceeding or a foreign non-main proceeding.

Marginal note:Effects of recognition of a foreign main proceeding

• 271. (1) Subject to subsections (2) to (4), on the making of an order recognizing a foreign proceeding that is specified to be a foreign main proceeding,

  • (a) no person shall commence or continue any action, execution or other proceedings concerning the debtor’s property, debts, liabilities or obligations;

  • (b) if the debtor carries on a business, the debtor shall not, outside the ordinary course of the business, sell or otherwise dispose of any of the debtor’s property in Canada that relates to the business and shall not sell or otherwise dispose of any other property of the debtor in Canada; and

  • (c) if the debtor is an individual, the debtor shall not sell or otherwise dispose of any property of the debtor in Canada.

• Marginal note:When subsection (1) does not apply

  (2) Subsection (1) does not apply if any proceedings under this Act have been commenced in respect of the debtor at the time the order recognizing the foreign proceeding is made.

• Marginal note:Exceptions

  (3) The prohibitions in paragraphs (1)(a) and (b) are subject to the exceptions specified by the court in the order recognizing the foreign proceeding that would apply in Canada had the foreign proceeding taken place in Canada under this Act.

• Marginal note:Application of this and other Acts

  (4) Nothing in subsection (1) precludes the commencement or the continuation of proceedings under this Act, the Companies’ Creditors Arrangement Act or the Winding-up and Restructuring Act in respect of the debtor.

Marginal note:Orders

• 272. (1) If an order recognizing a foreign proceeding is made, the court may, on application by the foreign representative who applied for the order, if the court is satisfied that it is necessary for the protection of the debtor’s property or the interests of a creditor or creditors, make any order that it considers appropriate, including an order

  • (a) if the foreign proceeding is a foreign non-main proceeding, imposing the prohibitions referred to in paragraphs 271(1)(a) to (c) and specifying the exceptions to those prohibitions, taking subsection 271(3) into account;

  • (b) respecting the examination of witnesses, the taking of evidence or the delivery of information concerning the debtor’s property, affairs, debts, liabilities and obligations;

  • (c) entrusting the administration or realization of all or part of the debtor’s property located in Canada to the foreign representative or to any other person designated by the court; and

  • (d) appointing a trustee as receiver of all or any part of the debtor’s property in Canada, for any term that the court considers appropriate and directing the receiver to do all or any of the following, namely,

    • (i) to take possession of all or part of the debtor’s property specified in the appointment and to exercise the control over the property and over the debtor’s business that the court considers appropriate, and

    • (ii) to take any other action that the court considers appropriate.

• Marginal note:Restriction

  (2) If any proceedings under this Act have been commenced in respect of the debtor at the time an order recognizing the foreign proceeding is made, an order made under subsection (1) must be consistent with any order that may be made in any proceedings under this Act.

• Marginal note:Application of this and other Acts

  (3) The making of an order under paragraph (1)(a) does not preclude the commencement or the continuation of proceedings under this Act, the Companies’ Creditors Arrangement Act or the Winding-up and Restructuring Act in respect of the debtor.

Marginal note:Terms and conditions of orders

273. An order under this Part may be made on any terms and conditions that the court considers appropriate in the circumstances.

Marginal note:Commencement or continuation of proceedings

274. If an order recognizing a foreign proceeding is made, the foreign representative may commence or continue any proceedings under sections 43, 46 to 47.1 and 49 and subsections 50(1) and 50.4(1) in respect of a debtor as if the foreign representative were a creditor of the debtor, or the debtor, as the case may be.

Obligations

Marginal note:Cooperation — court

• 275. (1) If an order recognizing a foreign proceeding is made, the court shall cooperate, to the maximum extent possible, with the foreign representative and the foreign court involved in the foreign proceeding.

• Marginal note:Cooperation — other authorities in Canada

  (2) If any proceedings under this Act have been commenced in respect of a debtor and an order recognizing a foreign proceeding is made in respect of the debtor, every person who exercises any powers or performs duties and functions in any proceedings under this Act shall cooperate, to the maximum extent possible, with the foreign representative and the foreign court involved in the foreign proceeding.

Marginal note:Obligations of foreign representative

276. If an order recognizing a foreign proceeding is made, the foreign representative who applied for the order shall

• (a) without delay, inform the court of

  • (i) any substantial change in the status of the recognized foreign proceeding,

  • (ii) any substantial change in the status of the foreign representative’s authority to act in that capacity, and

  • (iii) any other foreign proceeding in respect of the same debtor that becomes known to the foreign representative; and

• (b) publish, without delay after the order is made, once a week for two consecutive weeks, or as otherwise directed by the court, in one or more newspapers in Canada specified by the court, a notice containing the prescribed information.

Multiple Proceedings

Marginal note:Concurrent proceedings

277. If any proceedings under this Act in respect of a debtor are commenced at any time after an order recognizing the foreign proceeding is made,

• (a) the court shall review any order made under section 272 and, if it determines that the order is inconsistent with any orders made in the proceedings under this Act, the court shall amend or revoke the order; and

• (b) if the foreign proceeding is a foreign main proceeding, the court shall make an order terminating the application of the prohibitions in paragraphs 271(1)(a) to (c) if the court determines that those prohibitions are inconsistent with any similar prohibitions imposed in the proceedings under this Act.

Marginal note:Multiple foreign proceedings

• 278. (1) If, at any time after an order is made in respect of a foreign non-main proceeding in respect of a debtor, an order recognizing a foreign main proceeding is made in respect of the debtor, the court shall review any order made under section 272 in respect of the foreign non-main proceeding and, if it determines that the order is inconsistent with any orders made under that section in respect of the foreign main proceedings, the court shall amend or revoke the order.

• Marginal note:Multiple foreign proceedings

  (2) If, at any time after an order is made in respect of a foreign non-main proceeding in respect of the debtor, an order recognizing another foreign non-main proceeding is made in respect of the debtor, the court shall, for the purpose of facilitating the coordination of the foreign non-main proceedings, review any order made under section 272 in respect of the first recognized proceeding and amend or revoke that order if it considers it appropriate.

Miscellaneous Provisions

Marginal note:Authorization to act as representative of proceeding under this Act

279. The court may authorize any person or body to act as a representative in respect of any proceeding under this Act for the purpose of having them recognized in a jurisdiction outside Canada.

Marginal note:Foreign representative status

280. An application by a foreign representative for any order under this Part does not submit the foreign representative to the jurisdiction of the court for any other purpose except with regard to the costs of the proceedings, but the court may make any order under this Part conditional on the compliance by the foreign representative with any other court order.

Marginal note:Foreign proceeding appeal

281. A foreign representative is not prevented from making an application to the court under this Part by reason only that proceedings by way of appeal or review have been taken in a foreign proceeding, and the court may, on an application if such proceedings have been taken, grant relief as if the proceedings had not been taken.

Marginal note:Presumption of insolvency

282. For the purposes of this Part, if a bankruptcy, an insolvency or a reorganization or a similar order has been made in respect of a debtor in a foreign proceeding, a certified copy of the order is, in the absence of evidence to the contrary, proof that the debtor is insolvent and proof of the appointment of the foreign representative made by the order.

Marginal note:Credit for recovery in other jurisdictions

• 283. (1) If a bankruptcy order, a proposal or an assignment is made in respect of a debtor under this Act, the following shall be taken into account in the distribution of dividends to the debtor’s creditors in Canada as if they were a part of that distribution:

  • (a) the amount that a creditor receives or is entitled to receive outside Canada by way of a dividend in a foreign proceeding in respect of the debtor; and

  • (b) the value of any property of the debtor that the creditor acquires outside Canada on account of a provable claim of the creditor or that the creditor acquires outside Canada by way of a transfer that, if the transfer were subject to this Act, would be a preference over other creditors or a transfer at undervalue.

• Marginal note:Restriction

  (2) Despite subsection (1), the creditor is not entitled to receive a dividend from the distribution in Canada until every other creditor who has a claim of equal rank in the order of priority established under this Act has received a dividend whose amount is the same percentage of that other creditor’s claim as the aggregate of the amount referred to in paragraph (1)(a) and the value referred to in paragraph (1)(b) is of that creditor’s claim.

Marginal note:Court not prevented from applying certain rules

• 284. (1) Nothing in this Part prevents the court, on the application of a foreign represent­ative or any other interested person, from applying any legal or equitable rules governing the recognition of foreign insolvency orders and assistance to foreign representatives that are not inconsistent with the provisions of this Act.

• Marginal note:Court not compelled to give effect to certain orders

  (2) Nothing in this Part requires the court to make any order that is not in compliance with the laws of Canada or to enforce any order made by a foreign court.

PART XIVREVIEW OF ACT

Marginal note:Review of Act

• 285. (1) Within five years after the coming into force of this section, the Minister shall cause to be laid before both Houses of Parliament a report on the provisions and operation of this Act, including any recommendations for amendments to those provisions.

• Marginal note:Reference to parliamentary committee

  (2) The report stands referred to the committee of the Senate, the House of Commons or both Houses of Parliament that is designated or established for that purpose, which shall

  • (a) as soon as possible after the laying of the report, review the report; and

  • (b) report to the Senate, the House of Commons or both Houses of Parliament, as the case may be, within one year after the laying of the Minister’s report, or any further time authorized by the Senate, the House of Commons or both Houses of Parliament.