An Act to establish the Wage Earner Protection Program Act, to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act and to make consequential amendments to other Acts (S.C. 2005, c. 47)
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Assented to 2005-11-25
AMENDMENTS TO THE BANKRUPTCY AND INSOLVENCY ACT
68. The Act is amended by adding the following after section 84:
Marginal note:Assignments
84.1 (1) The court may, on application by an insolvent person or a trustee, make an order assigning the rights and obligations of the insolvent person under any agreement to any person, specified by the court, who has agreed to the assignment.
Marginal note:Notice
(2) The applicant must give notice of the assignment, in the prescribed manner, to every party to the agreement.
Marginal note:Exceptions
(3) Subsection (1) does not apply in respect of rights and obligations
(a) under an eligible financial contract within the meaning of subsection 65.1(8);
(b) under a lease referred to in subsection 65.2(1);
(c) under a collective agreement; and
(d) that are not assignable by reason of their nature.
Marginal note:Factors to be considered
(4) In deciding whether to make an assignment, the court must consider, among other things,
(a) whether the person to whom the rights and obligations are to be assigned would be able to perform the obligations; and
(b) whether it would be appropriate to assign the rights and obligations to that person.
Marginal note:Restriction
(5) The court may not make the assignment if the court is satisfied that the insolvent person is in default under the agreement.
Marginal note:Certain rights limited
84.2 (1) No person may terminate or amend any agreement, including a security agreement, with an individual bankrupt, or claim an accelerated payment, or a forfeiture of the term, under any agreement, including a security agreement, with the bankrupt, by reason only of the bankruptcy.
Marginal note:Lease
(2) If the agreement referred to in subsection (1) is a lease, the lessor may not terminate or amend the lease by reason only of the bankruptcy or that the bankrupt has not paid rent in respect of any period before the date of bankruptcy.
Marginal note:Public utilities
(3) No public utility may discontinue service to an individual bankrupt by reason only of the bankruptcy or that the bankrupt has not paid for services rendered, or material provided, before the date of bankruptcy.
Marginal note:Certain acts not prevented
(4) Nothing in this section is to be construed as
(a) prohibiting a person from requiring payments to be made in cash for goods, services, use of leased property or other valuable consideration provided after the date of bankruptcy; or
(b) requiring the further advance of money or credit.
Marginal note:Provisions of section override agreement
(5) Any provision in an agreement that has the effect of providing for, or permitting, anything that, in substance, is contrary to this section is of no force or effect.
Marginal note:Powers of court
(6) The court may, on application by a party to an agreement, declare that this section does not apply, or applies only to the extent declared by the court, if the applicant satisfies the court that the operation of this section would likely cause the applicant significant financial hardship.
69. The portion of paragraph 86(2)(a) of the Act before subparagraph (i) is replaced by the following:
(a) to claims that are secured by a security or charge of a kind that can be obtained by persons other than Her Majesty or a workers’ compensation body
70. Subsection 87(1) of the Act is replaced by the following:
Marginal note:Statutory Crown securities
87. (1) A security provided for in federal or provincial legislation for the sole or principal purpose of securing a claim of Her Majesty in right of Canada or of a province or of a workers’ compensation body is valid in relation to a bankruptcy or proposal only if the security is registered under a prescribed system of registration before the date of the initial bankruptcy event.
71. Section 91 of the Act and the heading before it are replaced by the following:
Preferences
72. Section 94 of the Act is repealed.
73. Section 96 of the Act is replaced by the following:
Marginal note:Creditor — not at arm’s length
96. If the transfer, charge, payment, obligation or judicial proceeding referred to in section 95 has the effect of giving a creditor who is not at arm’s length a preference over other creditors, the period referred to in subsection 95(1) is one year instead of three months.
Marginal note:Examination of consideration in a transfer
96.1 (1) If a debtor has entered into a transaction with another party, the court may, on the application of the trustee, inquire into whether the transaction was a transfer at undervalue and whether or not the other party was at arm’s length with the debtor.
Marginal note:Judgment for difference — at arm’s length
(2) If the court finds that the other party in the transaction was at arm’s length with the debtor and that the transaction was a transfer at undervalue, the court may give judgment to the trustee against the other party to the transaction, against any other person being privy to the transaction with the debtor or against all those persons for the difference between the actual consideration given or received by the debtor and the fair market value, as determined by the court, of the property or services concerned in the transaction, if
(a) the transaction occurred during the period that begins on the day that is one year before the date of the initial bankruptcy event and that ends on the date of the bankruptcy; and
(b) the debtor was insolvent at the time of, or was rendered insolvent by, the transaction, and the debtor intended to defeat the interests of creditors.
Marginal note:Judgment for difference — not at arm’s length
(3) If the court finds that the other party in the transaction was not at arm’s length with the debtor and that the transaction was a transfer at undervalue, the court may give judgment to the trustee against the other party to the transaction, against any other person being privy to the transaction with the debtor or against all those persons for the difference between the actual consideration given or received by the debtor and the fair market value, as determined by the court, of the property or services concerned in the transaction, if the transaction occurred during the period
(a) that begins on the day that is one year before the date of the initial bankruptcy event and ends on the date of the bankruptcy; or
(b) that begins five years before the date of the initial bankruptcy event and that ends one day before one year before the date of the initial bankruptcy event in the case where
(i) the debtor was insolvent at the time of, or was rendered insolvent by, the transaction, or
(ii) the debtor intended to defeat the interests of creditors.
Marginal note:Establishing values
(4) In making the application referred to in this section, the trustee shall state what, in the trustee’s opinion, was the fair market value of the property or services concerned in the transaction and what, in the trustee’s opinion, was the value of the actual consideration given or received by the debtor in the transaction, and the values on which the court makes any finding under this section are the values so stated by the trustee unless other values are proved.
74. The portion of subsection 97(1) of the Act before paragraph (a) is replaced by the following:
Marginal note:Protected transactions
97. (1) No payment, contract, dealing or transaction to, by or with a bankrupt made between the date of the initial bankruptcy event and the date of the bankruptcy is valid, except the following, which are valid if made in good faith, subject to the provisions of this Act with respect to the effect of bankruptcy on an execution, attachment or other process against property, and subject to the provisions of this Act respecting preferences and transfers at undervalue:
75. The Act is amended by adding the following after section 98:
Marginal note:General assignments of book debts ineffective
98.1 (1) If a person engaged in any trade or business makes an assignment of their existing or future book debts, or any class or part of those debts, and subsequently becomes bankrupt, the assignment of book debts is void as against, or, in the Province of Quebec, may not be set up against, the trustee with respect to any book debts that have not been paid at the date of the bankruptcy.
Marginal note:Foregoing provisions not to apply in some cases
(2) Subsection (1) does not apply to an assignment of book debts that is registered under any statute of any province providing for the registration of assignments of book debts if the assignment is valid in accordance with the laws of the province.
Marginal note:Other cases
(3) Nothing in subsection (1) renders void or, in the Province of Quebec, null any assignment of book debts due at the date of the assignment from specified debtors, or of debts growing due under specified contracts, or any assignment of book debts included in a transfer of a business made in good faith and for adequate valuable consideration.
Definition of “assignment”
(4) For the purposes of this section, “assignment” includes assignment by way of security, hypothec and other charges on book debts.
76. Section 100 of the Act is repealed.
77. Subsection 102(3) of the Act is replaced by the following:
Marginal note:Information and notice
(3) In the case of the bankruptcy of an individual, the trustee shall set out in the notice, in the prescribed form, information concerning the financial situation of the bankrupt and the obligation of the bankrupt, if any, to make payments required under section 68 to the estate of the bankrupt.
78. Subsection 104(1) of the Act is replaced by the following:
Marginal note:Notice of subsequent meetings
104. (1) Meetings of creditors other than the first shall be called by sending a notice of the time and place of the meeting together with an agenda outlining the items for discussion with a reasonable explanation of what is expected to be discussed for each item, not less than five days before the time of each meeting to each creditor at the address given in the creditor’s proof of claim.
79. Subsection 105(4) of the Act is replaced by the following:
Marginal note:Minutes of meeting
(4) The chair of any meeting of creditors shall, within a reasonable time after each meeting, cause minutes of the proceedings at the meeting to be prepared. The minutes shall be signed by the chair or by the chair of the next meeting and shall be retained as part of the books, records and documents referred to in section 26 relating to the administration of the estate.
80. (1) Subsection 109(1) of the English version of the Act is replaced by the following:
Marginal note:Right of creditor to vote
109. (1) A person is not entitled to vote as a creditor at any meeting of creditors unless the person has duly proved a claim provable in bankruptcy and the proof of claim has been duly filed with the trustee before the time appointed for the meeting.
(2) Subsections 109(6) and (7) of the Act are replaced by the following:
Marginal note:Vote of creditors not dealing at arm’s length
(6) If, in respect of the vote on any particular matter at a meeting of creditors, the chair is of the opinion that the outcome of the vote was determined by the vote of a person who did not deal with the debtor at arm’s length at any time within the period that begins on the day that is one year before the date of the initial bankruptcy event and that ends on the date of the bankruptcy, the chair shall redetermine the outcome of the vote by not including the votes of all such creditors, and that new outcome, as redetermined by the chair, is the outcome of the vote, unless an application is made to the court within 10 days by one of the creditors whose vote was not included and the court, if it decides to include the vote of the applicant, determines another outcome for the vote.
81. Subsection 110(1) of the Act is replaced by the following:
Marginal note:Claims acquired after date of bankruptcy
110. (1) No person is entitled to vote on a claim acquired after the date of bankruptcy in respect of a debtor unless the entire claim is acquired.
82. (1) Subsections 113(1) and (2) of the Act are replaced by the following:
Marginal note:Trustee may vote
113. (1) If the trustee is a proxyholder for a creditor, the trustee may vote as a creditor at any meeting of creditors.
Marginal note:Trustee’s vote not to count in respect of certain resolutions
(2) The vote of the trustee — or of the partner, clerk or legal counsel of the trustee, or of the clerk of the legal counsel of the trustee — as proxyholder for a creditor, shall not be counted in respect of any resolution affecting the remuneration or conduct of the trustee.
(2) The portion of subsection 113(3) of the Act before paragraph (a) is replaced by the following:
Marginal note:Persons not entitled to vote
(3) The following persons are not entitled to vote on the appointment of a trustee — and except with the permission of the court and on any condition that the court may impose, the following persons are not entitled to vote on the appointment of inspectors:
83. Subsection 116(1) of the Act is replaced by the following:
Marginal note:Resolution respecting inspectors
116. (1) At the first or a subsequent meeting of creditors, the creditors shall, by resolution, appoint up to five inspectors of the estate of the bankrupt or agree not to appoint any inspectors.
84. Section 118 of the Act is replaced by the following:
Marginal note:Obligation of trustee when inspectors fail to exercise their powers
118. If the inspectors fail to exercise the powers conferred on them, the trustee shall call a meeting of the creditors for the purpose of substituting other inspectors and for the purpose of taking any action or giving any directions that may be necessary.
85. Subsection 120(3) of the Act is replaced by the following:
Marginal note:Duty of inspectors
(3) In addition to the other duties that are attributed to them under this Act, the inspectors shall from time to time verify the bank balance of the estate, examine the trustee’s accounts and inquire into the adequacy of the security filed by the trustee and, subject to subsection (4), shall approve the trustee’s final statement of receipts and disbursements, dividend sheet and disposition of unrealized property.
86. Subsection 124(5) of the Act is repealed.
87. (1) Subsection 126(1) of the English version of the Act is replaced by the following:
Marginal note:Who may examine proofs
126. (1) Every creditor who has filed a proof of claim is entitled to see and examine the proofs of other creditors.
(2) Subsection 126(2) of the Act is replaced by the following:
Marginal note:Worker’s wage claims
(2) Proofs of claims for wages of workers and others employed by the bankrupt may be made in one proof by the bankrupt, by someone on the bankrupt’s behalf, by a representative of a federal or provincial ministry responsible for labour matters, by a representative of a union representing workers and others employed by the bankrupt or by a court-appointed representative, and that proof is to be made by attaching to it a schedule setting out the names and addresses of the workers and others and the amounts severally due to them, but that proof does not disentitle any worker or other wage earner to file a separate proof on his or her own behalf.
88. Paragraph 136(1)(d) of the Act is replaced by the following:
(d) the amount of any wages, salaries, commissions, compensation or disbursements referred to in sections 81.3 and 81.4 that was not paid;
(d.01) the amount equal to the difference a secured creditor would have received but for the operation of sections 81.3 and 81.4 and the amount actually received by the secured creditor;
(d.02) the amount equal to the difference a secured creditor would have received but for the operation of sections 81.5 and 81.6 and the amount actually received by the secured creditor;
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