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

Short Title

Short title

1 This Act may be cited as the Bankruptcy and Insolvency Act.

Interpretation

Definitions

2 In this Act,

affidavit

affidavit includes statutory declaration and solemn affirmation; (affidavit)

aircraft objects

aircraft objects[Repealed, 2012, c. 31, s. 414]

application

application, with respect to a bankruptcy application filed in a court in the Province of Quebec, means a motion; (Version anglaise seulement)

assignment

assignment means an assignment filed with the official receiver; (cession)

bank

bank means

• (a) every bank and every authorized foreign bank within the meaning of section 2 of the Bank Act,

• (b) every other member of the Canadian Payments Association established by the Canadian Payments Act, and

• (c) every local cooperative credit society, as defined in subsection 2(1) of the Act referred to in paragraph (b), that is a member of a central cooperative credit society, as defined in that subsection, that is a member of that Association; (banque)

bankrupt

bankrupt means a person who has made an assignment or against whom a bankruptcy order has been made or the legal status of that person; (failli)

bankruptcy

bankruptcy means the state of being bankrupt or the fact of becoming bankrupt; (faillite)

bargaining agent

bargaining agent means any trade union that has entered into a collective agreement on behalf of the employees of a person; (agent négociateur)

child

child[Repealed, 2000, c. 12, s. 8]

claim provable in bankruptcy

claim provable in bankruptcy, provable claim or claim provable includes any claim or liability provable in proceedings under this Act by a creditor; (réclamation prouvable en matière de faillite ou réclamation prouvable)

collective agreement

collective agreement, in relation to an insolvent person, means a collective agreement within the meaning of the jurisdiction governing collective bargaining between the insolvent person and a bargaining agent; (convention collective)

common-law partner

common-law partner, in relation to an individual, means a person who is cohabiting with the individual in a conjugal relationship, having so cohabited for a period of at least one year; (conjoint de fait)

common-law partnership

common-law partnership means the relationship between two persons who are common-law partners of each other; (union de fait)

corporation

corporation means a company or legal person that is incorporated by or under an Act of Parliament or of the legislature of a province, an incorporated company, wherever incorporated, that is authorized to carry on business in Canada or has an office or property in Canada or an income trust, but does not include banks, authorized foreign banks within the meaning of section 2 of the Bank Act, insurance companies, trust companies or loan companies; (personne morale)

court

court, except in paragraphs 178(1)(a) and (a.1) and sections 204.1 to 204.3, means a court referred to in subsection 183(1) or (1.1) or a judge of that court, and includes a registrar when exercising the powers of the court conferred on a registrar under this Act; (tribunal)

creditor

creditor means a person having a claim provable as a claim under this Act; (créancier)

current assets

current assets means cash, cash equivalents — including negotiable instruments and demand deposits — inventory or accounts receivable, or the proceeds from any dealing with those assets; (actif à court terme)

date of the bankruptcy

date of the bankruptcy, in respect of a person, means the date of

• (a) the granting of a bankruptcy order against the person,

• (b) the filing of an assignment in respect of the person, or

• (c) the event that causes an assignment by the person to be deemed; (date de la faillite)

date of the initial bankruptcy event

date of the initial bankruptcy event, in respect of a person, means the earliest of the day on which any one of the following is made, filed or commenced, as the case may be:

• (a) an assignment by or in respect of the person,

• (b) a proposal by or in respect of the person,

• (c) a notice of intention by the person,

• (d) the first application for a bankruptcy order against the person, in any case

  • (i) referred to in paragraph 50.4(8)(a) or 57(a) or subsection 61(2), or

  • (ii) in which a notice of intention to make a proposal has been filed under section 50.4 or a proposal has been filed under section 62 in respect of the person and the person files an assignment before the court has approved the proposal,

• (e) the application in respect of which a bankruptcy order is made, in the case of an application other than one referred to in paragraph (d), or

• (f) proceedings under the Companies’ Creditors Arrangement Act; (ouverture de la faillite)

debtor

debtor includes an insolvent person and any person who, at the time an act of bankruptcy was committed by him, resided or carried on business in Canada and, where the context requires, includes a bankrupt; (débiteur)

director

director in respect of a corporation other than an income trust, means a person occupying the position of director by whatever name called and, in the case of an income trust, a person occupying the position of trustee by whatever name called; (administrateur)

eligible financial contract

eligible financial contract means an agreement of a prescribed kind; (contrat financier admissible)

equity claim

equity claim means a claim that is in respect of an equity interest, including a claim for, among others,

• (a) a dividend or similar payment,

• (b) a return of capital,

• (c) a redemption or retraction obligation,

• (d) a monetary loss resulting from the ownership, purchase or sale of an equity interest or from the rescission, or, in Quebec, the annulment, of a purchase or sale of an equity interest, or

• (e) contribution or indemnity in respect of a claim referred to in any of paragraphs (a) to (d); (réclamation relative à des capitaux propres)

equity interest

equity interest means

• (a) in the case of a corporation other than an income trust, a share in the corporation — or a warrant or option or another right to acquire a share in the corporation — other than one that is derived from a convertible debt, and

• (b) in the case of an income trust, a unit in the income trust — or a warrant or option or another right to acquire a unit in the income trust — other than one that is derived from a convertible debt; (intérêt relatif à des capitaux propres)

executing officer

executing officer includes a sheriff, a bailiff and any officer charged with the execution of a writ or other process under this Act or any other Act or proceeding with respect to any property of a debtor; (huissier- exécutant)

financial collateral

financial collateral means any of the following that is subject to an interest, or in the Province of Quebec a right, that secures payment or performance of an obligation in respect of an eligible financial contract or that is subject to a title transfer credit support agreement:

• (a) cash or cash equivalents, including negotiable instruments and demand deposits,

• (b) securities, a securities account, a securities entitlement or a right to acquire securities, or

• (c) a futures agreement or a futures account; (garantie financière)

General Rules

General Rules means the General Rules referred to in section 209; (Règles générales)

income trust

income trust means a trust that has assets in Canada if

• (a) its units are listed on a prescribed stock exchange on the date of the initial bankruptcy event, or

• (b) the majority of its units are held by a trust whose units are listed on a prescribed stock exchange on the date of the initial bankruptcy event; (fiducie de revenu)

insolvent person

insolvent person means a person who is not bankrupt and who resides, carries on business or has property in Canada, whose liabilities to creditors provable as claims under this Act amount to one thousand dollars, and

• (a) who is for any reason unable to meet his obligations as they generally become due,

• (b) who has ceased paying his current obligations in the ordinary course of business as they generally become due, or

• (c) the aggregate of whose property is not, at a fair valuation, sufficient, or, if disposed of at a fairly conducted sale under legal process, would not be sufficient to enable payment of all his obligations, due and accruing due; (personne insolvable)

legal counsel

legal counsel means any person qualified, in accordance with the laws of a province, to give legal advice; (conseiller juridique)

locality of a debtor

locality of a debtor means the principal place

• (a) where the debtor has carried on business during the year immediately preceding the date of the initial bankruptcy event,

• (b) where the debtor has resided during the year immediately preceding the date of the initial bankruptcy event, or

• (c) in cases not coming within paragraph (a) or (b), where the greater portion of the property of the debtor is situated; (localité)

Minister

Minister means the Minister of Industry; (ministre)

net termination value

net termination value means the net amount obtained after netting or setting off or compensating the mutual obligations between the parties to an eligible financial contract in accordance with its provisions; (valeurs nettes dues à la date de résiliation)

official receiver

official receiver means an officer appointed under subsection 12(2); (séquestre officiel)

person

person includes a partnership, an unincorporated association, a corporation, a cooperative society or a cooperative organization, the successors of a partnership, of an association, of a corporation, of a society or of an organization and the heirs, executors, liquidators of the succession, administrators or other legal representatives of a person; (personne)

prescribed

prescribed

• (a) in the case of the form of a document that is by this Act to be prescribed and the information to be given therein, means prescribed by directive issued by the Superintendent under paragraph 5(4)(e), and

• (b) in any other case, means prescribed by the General Rules; (prescrit)

property

property means any type of property, whether situated in Canada or elsewhere, and includes money, goods, things in action, land and every description of property, whether real or personal, legal or equitable, as well as obligations, easements and every description of estate, interest and profit, present or future, vested or contingent, in, arising out of or incident to property; (bien)

proposal

proposal means

• (a) in any provision of Division I of Part III, a proposal made under that Division, and

• (b) in any other provision, a proposal made under Division I of Part III or a consumer proposal made under Division II of Part III

and includes a proposal or consumer proposal, as the case may be, for a composition, for an extension of time or for a scheme or arrangement; (proposition concordataire ou proposition)

public utility

public utility includes a person or body who supplies fuel, water or electricity, or supplies telecommunications, garbage collection, pollution control or postal services; (entreprise de service public)

resolution

resolution or ordinary resolution means a resolution carried in the manner provided by section 115; (résolution ou résolution ordinaire)

secured creditor

secured creditor means a person holding a mortgage, hypothec, pledge, charge or lien on or against the property of the debtor or any part of that property as security for a debt due or accruing due to the person from the debtor, or a person whose claim is based on, or secured by, a negotiable instrument held as collateral security and on which the debtor is only indirectly or secondarily liable, and includes

• (a) a person who has a right of retention or a prior claim constituting a real right, within the meaning of the Civil Code of Québec or any other statute of the Province of Quebec, on or against the property of the debtor or any part of that property, or

• (b) any of

  • (i) the vendor of any property sold to the debtor under a conditional or instalment sale,

  • (ii) the purchaser of any property from the debtor subject to a right of redemption, or

  • (iii) the trustee of a trust constituted by the debtor to secure the performance of an obligation,

  if the exercise of the person’s rights is subject to the provisions of Book Six of the Civil Code of Québec entitled Prior Claims and Hypothecs that deal with the exercise of hypothecary rights; (créancier garanti)

settlement

settlement[Repealed, 2005, c. 47, s. 2]

shareholder

shareholder includes a member of a corporation — and, in the case of an income trust, a holder of a unit in an income trust — to which this Act applies; (actionnaire)

sheriff

sheriff[Repealed, 2004, c. 25, s. 7]

special resolution

special resolution means a resolution decided by a majority in number and three-fourths in value of the creditors with proven claims present, personally or by proxy, at a meeting of creditors and voting on the resolution; (résolution spéciale)

Superintendent

Superintendent means the Superintendent of Bankruptcy appointed under subsection 5(1); (surintendant)

Superintendent of Financial Institutions

Superintendent of Financial Institutions means the Superintendent of Financial Institutions appointed under subsection 5(1) of the Office of the Superintendent of Financial Institutions Act; (surintendant des institutions financières)

time of the bankruptcy

time of the bankruptcy, in respect of a person, means the time of

• (a) the granting of a bankruptcy order against the person,

• (b) the filing of an assignment by or in respect of the person, or

• (c) the event that causes an assignment by the person to be deemed; (moment de la faillite)

title transfer credit support agreement

title transfer credit support agreement means an agreement under which an insolvent person or a bankrupt has provided title to property for the purpose of securing the payment or performance of an obligation of the insolvent person or bankrupt in respect of an eligible financial contract; (accord de transfert de titres pour obtention de crédit)

transfer at undervalue

transfer at undervalue means a disposition of property or provision of services for which no consideration is received by the debtor or for which the consideration received by the debtor is conspicuously less than the fair market value of the consideration given by the debtor; (opération sous-évaluée)

trustee

trustee or licensed trustee means a person who is licensed or appointed under this Act. (syndic ou syndic autorisé)

Designation of beneficiary

2.1 A change in the designation of a beneficiary in an insurance contract is deemed to be a disposition of property for the purpose of this Act.

Superintendent’s division office

2.2 Any notification, document or other information that is required by this Act to be given, forwarded, mailed, sent or otherwise provided to the Superintendent, other than an application for a licence under subsection 13(1), shall be given, forwarded, mailed, sent or otherwise provided to the Superintendent at the Superintendent’s division office as specified in directives of the Superintendent.

3 [Repealed, 2005, c. 47, s. 4]

Definitions

• 4 (1) In this section,

  entity

  entity means a person other than an individual; (entité)

  related group

  related group means a group of persons each member of which is related to every other member of the group; (groupe lié)

  unrelated group

  unrelated group means a group of persons that is not a related group. (groupe non lié)

• Definition of related persons

  (2) For the purposes of this Act, persons are related to each other and are related persons if they are

  • (a) individuals connected by blood relationship, marriage, common-law partnership or adoption;

  • (b) an entity and

    • (i) a person who controls the entity, if it is controlled by one person,

    • (ii) a person who is a member of a related group that controls the entity, or

    • (iii) any person connected in the manner set out in paragraph (a) to a person described in subparagraph (i) or (ii); or

  • (c) two entities

    • (i) both controlled by the same person or group of persons,

    • (ii) each of which is controlled by one person and the person who controls one of the entities is related to the person who controls the other entity,

    • (iii) one of which is controlled by one person and that person is related to any member of a related group that controls the other entity,

    • (iv) one of which is controlled by one person and that person is related to each member of an unrelated group that controls the other entity,

    • (v) one of which is controlled by a related group a member of which is related to each member of an unrelated group that controls the other entity, or

    • (vi) one of which is controlled by an unrelated group each member of which is related to at least one member of an unrelated group that controls the other entity.

• Relationships

  (3) For the purposes of this section,

  • (a) if two entities are related to the same entity within the meaning of subsection (2), they are deemed to be related to each other;

  • (b) if a related group is in a position to control an entity, it is deemed to be a related group that controls the entity whether or not it is part of a larger group by whom the entity is in fact controlled;

  • (c) a person who has a right under a contract, in equity or otherwise, either immediately or in the future and either absolutely or contingently, to, or to acquire, ownership interests, however designated, in an entity, or to control the voting rights in an entity, is, except when the contract provides that the right is not exercisable until the death of an individual designated in the contract, deemed to have the same position in relation to the control of the entity as if the person owned the ownership interests;

  • (d) if a person has ownership interests in two or more entities, the person is, as holder of any ownership interest in one of the entities, deemed to be related to himself or herself as holder of any ownership interest in each of the other entities;

  • (e) persons are connected by blood relationship if one is the child or other descendant of the other or one is the brother or sister of the other;

  • (f) persons are connected by marriage if one is married to the other or to a person who is connected by blood relationship or adoption to the other;

  • (f.1) persons are connected by common-law partnership if one is in a common-law partnership with the other or with a person who is connected by blood relationship or adoption to the other; and

  • (g) persons are connected by adoption if one has been adopted, either legally or in fact, as the child of the other or as the child of a person who is connected by blood relationship, otherwise than as a brother or sister, to the other.

• Question of fact

  (4) It is a question of fact whether persons not related to one another were at a particular time dealing with each other at arm’s length.

• Presumptions

  (5) Persons who are related to each other are deemed not to deal with each other at arm’s length while so related. For the purpose of paragraph 95(1)(b) or 96(1)(b), the persons are, in the absence of evidence to the contrary, deemed not to deal with each other at arm’s length.

Her Majesty

Binding on Her Majesty

4.1 This Act is binding on Her Majesty in right of Canada or a province.

PART IAdministrative Officials

Superintendent

Appointment

• 5 (1) The Governor in Council shall appoint a Superintendent of Bankruptcy to hold office during good behaviour for a term of not more than five years, but the Superintendent may be removed from office by the Governor in Council for cause. The Superintendent’s term may be renewed for one or more further terms.

• Salary

  (1.1) The Superintendent shall be paid the salary that the Governor in Council may fix.

• Extent of supervision

  (2) The Superintendent shall supervise the administration of all estates and matters to which this Act applies.

• Duties

  (3) The Superintendent shall, without limiting the authority conferred by subsection (2),

  • (a) receive applications for licences to act as trustees under this Act and issue licences to persons whose applications have been approved;

  • (b) monitor the conditions that led to a trustee being issued a licence to determine whether those conditions continue to exist after the licence has been issued and take the appropriate action if he or she determines that the conditions no longer exist;

  • (c) where not otherwise provided for, require the deposit of one or more continuing guaranty bonds or continuing suretyships as security for the due accounting of all property received by trustees and for the due and faithful performance by them of their duties in the administration of estates to which they are appointed, in any amount that the Superintendent may determine, which amount may be increased or decreased as the Superintendent may deem expedient, and the security shall be in a form satisfactory to the Superintendent and may be enforced by the Superintendent for the benefit of the creditors;

  • (d) [Repealed, 1992, c. 27, s. 5]

  • (e) from time to time, make or cause to be made any inquiry or investigation of estates or other matters to which this Act applies, including the conduct of a trustee or a trustee acting as a receiver, within the meaning of subsection 243(2), or as an interim receiver, that the Superintendent considers appropriate, and for the purpose of the inquiry or investigation the Superintendent or any person appointed by the Superintendent for the purpose shall have access to and the right to examine and make copies of all books, records, data, including data in electronic form, documents and papers, that are relevant to an inquiry or investigation pertaining or relating to any estate or other matter to which this Act applies;

  • (f) receive and keep a record of all complaints from any creditor or other person interested in any estate and make such specific investigations with regard to such complaints as the Superintendent may determine; and

  • (g) examine trustees’ accounts of receipts and disbursements and final statements.

• Powers of Superintendent

  (4) The Superintendent may

  • (a) intervene in any matter or proceeding in court, where the Superintendent considers it expedient to do so, as if the Superintendent were a party thereto;

  • (b) issue, to official receivers, trustees, administrators of consumer proposals made under Division II of Part III and persons who provide counselling pursuant to this Act, directives with respect to the administration of this Act and, without restricting the generality of the foregoing, directives requiring them

    • (i) to keep such records as the Superintendent may require, and

    • (ii) to provide the Superintendent with such information as the Superintendent may require;

  • (c) issue such directives as may be necessary to give effect to any decision made by the Superintendent pursuant to this Act or to facilitate the carrying out of the purposes and provisions of this Act and the General Rules, including, without limiting the generality of the foregoing, directives relating to the powers, duties and functions of trustees, of receivers and of administrators as defined in section 66.11;

  • (d) issue directives governing the criteria to be applied by the Superintendent in determining whether a trustee licence is to be issued to a person and governing the qualifications and activities of trustees;

  • (d.1) issue directives respecting the rules governing hearings for the purposes of section 14.02; and

  • (e) issue directives prescribing the form of any document that is by this Act to be prescribed and the information to be given therein.

• Compliance with directives

  (5) Every person to whom a directive is issued by the Superintendent under paragraph (4)(b) or (c) shall comply with the directive in the manner and within the time specified therein.

• Directives

  (6) A directive issued by the Superintendent under this section shall be deemed not to be a statutory instrument within the meaning and for the purposes of the Statutory Instruments Act.

Outside investigations

• 6 (1) The Superintendent may engage any persons that the Superintendent considers advisable to conduct any inquiry or investigation or to take any other necessary action outside of the office of the Superintendent, and the cost and expenses of those persons shall, when certified by the Superintendent, be payable out of the appropriation for the office of the Superintendent.

• Superintendent may examine bank account

  (2) The Superintendent, or any one duly authorized by him in writing on his behalf, is entitled to have access to and to examine and make copies of the banking accounts of a trustee in which estate funds may have been deposited, and, when required, all deposit slips, cancelled cheques or other documents relating thereto in the custody of the bank or the trustee shall be produced for examination.

• Superintendent may examine records and documents

  (3) The Superintendent, or anyone duly authorized in writing by or on behalf of the Superintendent, may with the leave of the court granted on an ex parte application examine the books, records, documents and deposit accounts of a trustee or any other person designated in the order granting that leave for the purpose of tracing or discovering the property or funds of an estate when there are reasonable grounds to believe or suspect that the property or funds of an estate have not been properly disclosed or dealt with and for that purpose may under a warrant from the court enter on and search any premises.

• Court order re payments from accounts

  (4) Where the Superintendent, on ex parte application, satisfies the court that it is necessary and in the public interest to do so, the court may issue an order directing a deposit-taking institution that holds a deposit account of a trustee or such other person as is designated in the order not to make payments out of the account until such time as the court otherwise directs.

7 and 8 [Repealed, 1992, c. 27, s. 6]

Appointment of employees

9 Such employees as are required to assist the Superintendent to perform his functions under this Act shall be appointed in accordance with the Public Service Employment Act.

Investigations or inquiries by Superintendent

• 10 (1) If, on information supplied by an official receiver, trustee or other person, the Superintendent suspects, on reasonable grounds, that a person has, in connection with any estate or matter to which this Act applies, committed an offence under this or any other Act of Parliament, the Superintendent may, if it appears to the Superintendent that the alleged offence might not otherwise be investigated, make or cause to be made any inquiries or investigations that the Superintendent considers appropriate.

• (2) [Repealed, 1992, c. 27, s. 7]

• Examination

  (3) If, on the application of the Superintendent or the Superintendent’s authorized representative, a subpoena has been issued by the court, the Superintendent may, for the purpose of an inquiry or investigation under subsection (1), examine or cause to be examined under oath before the registrar of the court or other authorized person, the trustee, the debtor, any person who the Superintendent suspects, on reasonable grounds, has knowledge of the affairs of the debtor, or any person who is or has been an agent or a mandatary, or a clerk, a servant, an officer, a director or an employee of the debtor or the trustee, with respect to the conduct, dealings and transactions of the debtor, the causes of the bankruptcy or insolvency of the debtor, the disposition of the debtor’s property or the administration of the estate, and may order any person liable to be so examined to produce any books, records, data, including data in electronic form, documents or papers in the person’s possession or under the person’s control.

• Questions

  (4) A person being examined pursuant to this section is bound to answer all questions relating to the conduct, dealings and transactions of the debtor, the causes of the debtor’s bankruptcy or insolvency and the disposition of the debtor’s property.

• Privilege of witness

  (5) Where a person being examined pursuant to this section objects to answering any question on the ground that his answer may tend to criminate him or may tend to establish his liability to a civil proceeding at the instance of the Crown or of any person and if, but for this section or section 5 of the Canada Evidence Act, he would have been excused from answering that question, the answer so given shall not be used or admitted in evidence against him in any proceeding, civil or criminal, thereafter taking place other than a prosecution for perjury in the giving of that evidence.

• Compliance

  (6) No person shall hinder, molest or interfere with any person doing anything that he is authorized by or pursuant to this section to do, or prevent or attempt to prevent any person doing any such thing, and, notwithstanding any other Act or law, every person shall, unless he is unable to do so, do everything he is required by or pursuant to this section to do.

• Copies

  (7) Where any book, record, paper or other document is examined or produced in accordance with this section, the person by whom it is examined or to whom it is produced or the Superintendent may make or cause to be made one or more copies thereof, and a document purporting to be certified by the Superintendent or a person thereunto authorized by him to be a copy made pursuant to this section is admissible in evidence and has the same probative force as the original document would have if it were proven in the ordinary way.

Reporting offence to provincial authority

• 11 (1) Where after an investigation pursuant to section 10 or otherwise the Superintendent has obtained evidence of an offence having been committed in connection with an estate or matter to which this Act applies, the Superintendent shall report the alleged offence to the deputy attorney general of the province concerned or to such person as is duly designated by that deputy attorney general for that purpose.

• Costs and expenses

  (2) Notwithstanding section 136, a recovery made as the result of any inquiries or investigation made or caused to be made pursuant to section 10 shall be applied to the reimbursement of any costs and expenses incurred by the Superintendent thereon, not being ordinary costs or expenses of the office of the Superintendent, and the balance thereafter remaining in respect of the recovery shall be made available for the benefit of the creditors of the debtor.

Public Records

Public records

• 11.1 (1) The Superintendent shall keep, or cause to be kept, in such form as the Superintendent deems appropriate and for the prescribed period, a public record of

  • (a) proposals,

  • (b) bankruptcies,

  • (c) licences issued to trustees by the Superintendent, and appointments or designations of administrators made by the Superintendent, and

  • (d) notices sent to the Superintendent by receivers pursuant to subsection 245(1)

  and, on request therefor and on payment of such fee as may be prescribed, shall provide, or cause to be provided, any information contained in that public record.

• Other records

  (2) The Superintendent shall keep, or cause to be kept, in such form as the Superintendent deems appropriate and for the prescribed period, such other records relating to the administration of this Act as the Superintendent deems advisable.

• Agreement to provide compilation

  (3) The Superintendent may enter into an agreement to provide a compilation of all or part of the information that is contained in the public record.

Official Receivers

Bankruptcy districts and divisions

• 12 (1) Each of the provinces constitutes one bankruptcy district for the purposes of this Act but the Governor in Council may divide any bankruptcy district into two or more bankruptcy divisions and name or number them.

• Official receivers

  (2) The Governor in Council shall appoint one or more official receivers in each bankruptcy division who shall be deemed to be officers of the court and shall have and perform the duties and responsibilities specified by this Act and the General Rules.

• Report to Superintendent

  (3) The official receiver shall make a report to the Superintendent, in the prescribed form, of every bankruptcy originating in his division, and he shall also notify the Superintendent of any subsequent increase or decrease in the security filed by the trustee.

• Registrar to act for official receiver

  (4) In the absence or illness of the official receiver or pending the appointment of a successor when the office is vacant, the registrar of the court shall perform the duties of the official receiver.

Trustees

Licensing of Trustees

Application for licence

• 13 (1) A person who wishes to obtain a licence to act as a trustee shall file with the Superintendent an application for a licence in the prescribed form.

• Conditions of eligibility

  (2) The Superintendent, after such investigation concerning an applicant for a licence to act as a trustee as the Superintendent considers necessary, may issue the licence if the Superintendent is satisfied, having regard to the criteria referred to in paragraph 5(4)(d), that the applicant is qualified to obtain the licence.

• Non-eligibility

  (3) The Superintendent may refuse to issue a licence to an applicant who is insolvent or has been found guilty of an indictable offence that, in the Superintendent’s opinion, is of a character that would impair the trustee’s capacity to perform his or her fiduciary duties.

Form of licence

13.1 A licence shall

• (a) be in the prescribed form;

• (b) specify the bankruptcy district or part thereof in which the trustee is entitled to act; and

• (c) be subject to such conditions and limitations as the Superintendent considers appropriate and may specify therein.

Fees payable

• 13.2 (1) Prior to the issue of a licence, the applicant shall pay such fees as may be prescribed.

• Idem

  (2) On the December 31 following the day on which a licence is issued, and on December 31 in each year thereafter, the trustee shall pay such fees as may be prescribed.

• When licence invalid

  (3) A licence ceases to be valid on the failure of the trustee to pay a fee in accordance with subsection (2) or if the trustee becomes bankrupt.

• Superintendent may reinstate licence

  (4) Where a licence has ceased to be valid by reason of

  • (a) failure to pay fees, the Superintendent may reinstate it where the trustee pays the outstanding fees together with a prescribed penalty amount and provides a reasonable written explanation of the failure to pay them in accordance with subsection (2); or

  • (b) the trustee becoming bankrupt, the Superintendent may, on written representations made by the trustee, reinstate the licence subject to such conditions and limitations as the Superintendent considers appropriate and may specify therein.

• Suspension or cancellation

  (5) A licence may be suspended or cancelled by the Superintendent

  • (a) if the trustee has been found guilty of an indictable offence that, in the Superintendent’s opinion, is of a character that would impair the trustee’s capacity to perform his or her fiduciary duties;

  • (b) if the trustee has failed to comply with any of the conditions or limitations to which the licence is subject;

  • (c) if the trustee has ceased to act as a trustee; or

  • (d) at the request of the trustee.

• Notice of intended decision

  (6) Notice of an intended decision under subsection (5) shall be in writing setting out the Superintendent’s reasons therefor and shall be sent to the trustee at least ten days before the decision takes effect.

• Conditions

  (7) If a licence ceases to be valid by virtue of subsection (3) or is suspended or cancelled under subsection (5), the Superintendent may impose on the trustee any requirements that the Superintendent considers appropriate, including a requirement that the trustee provide security for the protection of an estate.

• Non-application of procedure

  (8) For greater certainty, section 14.02 does not apply in respect of a suspension or cancellation of a licence under subsection (5).

Conduct of Trustees

Where trustee is not qualified to act

• 13.3 (1) Except with the permission of the court and on such conditions as the court may impose, no trustee shall act as trustee in relation to the estate of a debtor

  • (a) where the trustee is, or at any time during the two preceding years was,

    • (i) a director or officer of the debtor,

    • (ii) an employer or employee of the debtor or of a director or officer of the debtor,

    • (iii) related to the debtor or to any director or officer of the debtor, or

    • (iv) the auditor, accountant or legal counsel, or a partner or an employee of the auditor, accountant or legal counsel, of the debtor; or

  • (b) where the trustee is

    • (i) the trustee under a trust indenture issued by the debtor or any person related to the debtor, or the holder of a power of attorney under an act constituting a hypothec within the meaning of the Civil Code of Québec that is granted by the debtor or any person related to the debtor, or

    • (ii) related to the trustee, or the holder of a power of attorney, referred to in subparagraph (i).

• Copy of application to Superintendent

  (1.1) A trustee who applies for the permission of the court for the purposes of subsection (1) shall without delay send a copy of the application to the Superintendent.

• Where disclosure required

  (2) No trustee shall act as a trustee in relation to the estate of a debtor where the trustee is already

  • (a) the trustee in the bankruptcy of, or in a proposal concerning, any person related to the debtor, or

  • (b) the receiver, within the meaning of subsection 243(2), or the liquidator of the property of any person related to the debtor,

  without making, at the time of being appointed as trustee in relation to the estate of the debtor and at the first meeting of creditors, full disclosure of that fact and of the potential conflict of interest.

Trustee may act for secured creditor

• 13.4 (1) No trustee may, while acting as the trustee of an estate, act for or assist a secured creditor to assert a claim against the estate or to realize or otherwise deal with a security that the secured creditor holds, unless the trustee has obtained a written opinion from independent legal counsel that the security is valid and enforceable against the estate.

• Notification by trustee

  (1.1) Forthwith on commencing to act for or assist a secured creditor of the estate in the manner set out in subsection (1), a trustee shall notify the Superintendent and the creditors or the inspectors

  • (a) that the trustee is acting for the secured creditor;

  • (b) of the basis of any remuneration from the secured creditor; and

  • (c) of the opinion referred to in subsection (1).

• Trustee to provide opinion

  (2) Within two days after receiving a request therefor, a trustee shall provide the Superintendent with a copy of the opinion referred to in subsection (1) and shall also provide a copy to each creditor who has made a request therefor.

Code of Ethics

13.5 A trustee shall comply with the prescribed Code of Ethics.

Persons disqualified from working for trustee

13.6 A trustee shall not engage the services of a person

• (a) whose trustee licence has been cancelled under paragraph 13.2(5)(a) or subsection 14.01(1); or

• (b) who is the subject of a direction made by the Superintendent under paragraph 14.03(1)(d).

Appointment and Substitution of Trustees

Appointment of trustee by creditors

14 The creditors may, at any meeting by special resolution, appoint or substitute another licensed trustee for the trustee named in an assignment, a bankruptcy order or a proposal, or otherwise appointed or substituted.

Decision affecting licence

• 14.01 (1) If, after making or causing to be made an inquiry or investigation into the conduct of a trustee, it appears to the Superintendent that

  • (a) a trustee has not properly performed the duties of a trustee or has been guilty of any improper management of an estate,

  • (b) a trustee has not fully complied with this Act, the General Rules, directives of the Superintendent or any law with regard to the proper administration of any estate, or

  • (c) it is in the public interest to do so,

  the Superintendent may do one or more of the following:

  • (d) cancel or suspend the licence of the trustee;

  • (e) place such conditions or limitations on the licence as the Superintendent considers appropriate including a requirement that the trustee successfully take an exam or enrol in a proficiency course;

  • (f) require the trustee to make restitution to the estate of such amount of money as the estate has been deprived of as a result of the trustee’s conduct; and

  • (g) require the trustee to do anything that the Superintendent considers appropriate and that the trustee has agreed to.

• Application to former trustees

  (1.1) This section and section 14.02 apply, in so far as they are applicable, in respect of former trustees, with such modifications as the circumstances require.

• Delegation

  (2) The Superintendent may delegate by written instrument, on such terms and conditions as are therein specified, any or all of the Superintendent’s powers, duties and functions under subsection (1), subsection 13.2(5), (6) or (7) or section 14.02 or 14.03.

• Notification to trustees

  (3) Where the Superintendent delegates in accordance with subsection (2), the Superintendent or the delegate shall

  • (a) where there is a delegation in relation to trustees generally, give written notice of the delegation to all trustees; and

  • (b) whether or not paragraph (a) applies, give written notice of the delegation of a power to any trustee who may be affected by the exercise of that power, either before the power is exercised or at the time the power is exercised.

Notice to trustee

• 14.02 (1) Before deciding whether to exercise any of the powers referred to in subsection 14.01(1), the Superintendent shall send the trustee written notice of the powers that the Superintendent may exercise and the reasons why they may be exercised and afford the trustee a reasonable opportunity for a hearing.

• Summons

  (1.1) The Superintendent may, for the purpose of the hearing, issue a summons requiring and commanding any person named in it

  • (a) to appear at the time and place mentioned in it;

  • (b) to testify to all matters within their knowledge relative to the subject matter of the inquiry or investigation into the conduct of the trustee; and

  • (c) to bring and produce any books, records, data, documents or papers — including those in electronic form — in their possession or under their control relative to the subject matter of the inquiry or investigation.

• Effect throughout Canada

  (1.2) A person may be summoned from any part of Canada by virtue of a summons issued under subsection (1.1).

• Fees and allowances

  (1.3) Any person summoned under subsection (1.1) is entitled to receive the like fees and allowances for so doing as if summoned to attend before the Federal Court.

• Procedure at hearing

  (2) At a hearing referred to in subsection (1), the Superintendent

  • (a) has the power to administer oaths;

  • (b) is not bound by any legal or technical rules of evidence in conducting the hearing;

  • (c) shall deal with the matters set out in the notice of the hearing as informally and expeditiously as the circumstances and a consideration of fairness permit; and

  • (d) shall cause a summary of any oral evidence to be made in writing.

• Record

  (3) The notice referred to in subsection (1) and, where applicable, the summary of oral evidence referred to in paragraph (2)(d), together with such documentary evidence as the Superintendent receives in evidence, form the record of the hearing and the record and the hearing are public, unless the Superintendent is satisfied that personal or other matters that may be disclosed are of such a nature that the desirability of avoiding public disclosure of those matters, in the interest of a third party or in the public interest, outweighs the desirability of the access by the public to information about those matters.

• Decision

  (4) The decision of the Superintendent after a hearing referred to in subsection (1), together with the reasons therefor, shall be given in writing to the trustee not later than three months after the conclusion of the hearing, and is public.

• Review by Federal Court

  (5) A decision of the Superintendent given pursuant to subsection (4) is deemed to be a decision of a federal board, commission or other tribunal that may be reviewed and set aside pursuant to the Federal Courts Act.

Conservatory measures

• 14.03 (1) Subject to subsection (2), the Superintendent may, for the protection of an estate, the rights of the creditors or the debtor,

  • (a) direct a person to deal with property of the estate described in the direction in such manner as may be indicated in the direction, including the continuation of the administration of the estate;

  • (b) direct any person to take such steps as the Superintendent considers necessary to preserve the books, records, data, including data in electronic form, and documents of the estate;

  • (c) direct a bank or other depository not to pay out funds held to the credit of the estate except in accordance with the direction; and

  • (d) direct the official receiver not to appoint the trustee in respect of any new estates until a decision is made under subsection 13.2(5) or 14.01(1).

• Circumstances

  (2) The circumstances in which the Superintendent is authorized to exercise the powers set out in subsection (1) are where

  • (a) an estate is left without a trustee by the death, removal or incapacity of the trustee;

  • (b) the Superintendent makes or causes to be made any inquiry or investigation under paragraph 5(3)(e);

  • (c) the Superintendent exercises any of the powers set out in section 14.01;

  • (d) the fees referred to in subsection 13.2(2) have not been paid in respect of the trustee’s licence;

  • (e) a trustee becomes insolvent;

  • (f) a trustee has been found guilty of an indictable offence that, in the Superintendent’s opinion, is of a character that would impair the trustee’s capacity to perform the trustee’s fiduciary duties, or has failed to comply with any of the conditions or limitations to which the trustee’s licence is subject; or

  • (g) a circumstance referred to in paragraph 13.2(5)(c) or (d) exists and the Superintendent is considering cancelling the licence under subsection 13.2(5).

• Contents and effect of direction

  (3) A direction given pursuant to subsection (1)

  • (a) shall state the statutory authority pursuant to which the direction is given;

  • (b) is binding on the person to whom it is given; and

  • (c) is, in favour of the person to whom it is given, conclusive proof of the facts set out therein.

• Liability ceases on compliance

  (4) A person who complies with a direction given pursuant to subsection (1) is not liable for any act done by the person only to comply with the direction.

Removal and appointment

14.04 The court, on the application of any interested person, may for cause remove a trustee and appoint another licensed trustee in the trustee’s place.

Where there is no licensed trustee, etc.

14.05 Where a debtor resides or carries on business in a locality in which there is no licensed trustee, and no licensed trustee can be found who is willing to act as trustee, the court or the official receiver may appoint a responsible person residing in the locality of the debtor to administer the estate of the debtor, and that person, for that purpose, has all the powers of a licensed trustee under this Act, and the provisions of this Act apply to that person as if a licence had been issued to that person under paragraph 5(3)(a).

No trustee is bound to act

• 14.06 (1) No trustee is bound to assume the duties of trustee in matters relating to assignments, bankruptcy orders or proposals, but having accepted an appointment in relation to those matters the trustee shall, until discharged or another trustee is appointed in the trustee’s stead, perform the duties required of a trustee under this Act.

• Application

  (1.1) In subsections (1.2) to (6), a reference to a trustee means a trustee in a bankruptcy or proposal and includes

  • (a) an interim receiver;

  • (b) a receiver within the meaning of subsection 243(2); and

  • (c) any other person who has been lawfully appointed to take, or has lawfully taken, possession or control of any property of an insolvent person or a bankrupt that was acquired for, or is used in relation to, a business carried on by the insolvent person or bankrupt.

• No personal liability in respect of matters before appointment

  (1.2) Despite anything in federal or provincial law, if a trustee, in that position, carries on the business of a debtor or continues the employment of a debtor’s employees, the trustee is not by reason of that fact personally liable in respect of a liability, including one as a successor employer,

  • (a) that is in respect of the employees or former employees of the debtor or a predecessor of the debtor or in respect of a pension plan for the benefit of those employees; and

  • (b) that exists before the trustee is appointed or that is calculated by reference to a period before the appointment.

• Status of liability

  (1.3) A liability referred to in subsection (1.2) is not to rank as costs of administration.

• Liability of other successor employers

  (1.4) Subsection (1.2) does not affect the liability of a successor employer other than the trustee.

• Liability in respect of environmental matters

  (2) Notwithstanding anything in any federal or provincial law, a trustee is not personally liable in that position for any environmental condition that arose or environmental damage that occurred

  • (a) before the trustee’s appointment; or

  • (b) after the trustee’s appointment unless it is established that the condition arose or the damage occurred as a result of the trustee’s gross negligence or wilful misconduct or, in the Province of Quebec, the trustee’s gross or intentional fault.

• Reports, etc., still required

  (3) Nothing in subsection (2) exempts a trustee from any duty to report or make disclosure imposed by a law referred to in that subsection.

• Non-liability re certain orders

  (4) Notwithstanding anything in any federal or provincial law but subject to subsection (2), where an order is made which has the effect of requiring a trustee to remedy any environmental condition or environmental damage affecting property involved in a bankruptcy, proposal or receivership, the trustee is not personally liable for failure to comply with the order, and is not personally liable for any costs that are or would be incurred by any person in carrying out the terms of the order,

  • (a) if, within such time as is specified in the order, within ten days after the order is made if no time is so specified, within ten days after the appointment of the trustee, if the order is in effect when the trustee is appointed, or during the period of the stay referred to in paragraph (b), the trustee

    • (i) complies with the order, or

    • (ii) on notice to the person who issued the order, abandons, disposes of or otherwise releases any interest in any real property, or any right in any immovable, affected by the condition or damage;

  • (b) during the period of a stay of the order granted, on application made within the time specified in the order referred to in paragraph (a), within ten days after the order is made or within ten days after the appointment of the trustee, if the order is in effect when the trustee is appointed, by

    • (i) the court or body having jurisdiction under the law pursuant to which the order was made to enable the trustee to contest the order, or

    • (ii) the court having jurisdiction in bankruptcy for the purposes of assessing the economic viability of complying with the order; or

  • (c) if the trustee had, before the order was made, abandoned or renounced or been divested of any interest in any real property, or any right in any immovable, affected by the condition or damage.

• Stay may be granted

  (5) The court may grant a stay of the order referred to in subsection (4) on such notice and for such period as the court deems necessary for the purpose of enabling the trustee to assess the economic viability of complying with the order.

• Costs for remedying not costs of administration

  (6) If the trustee has abandoned or renounced any interest in any real property, or any right in any immovable, affected by the environmental condition or environmental damage, claims for costs of remedying the condition or damage shall not rank as costs of administration.

• Priority of claims

  (7) Any claim by Her Majesty in right of Canada or a province against the debtor in a bankruptcy, proposal or receivership for costs of remedying any environmental condition or environmental damage affecting real property or an immovable of the debtor is secured by security on the real property or immovable affected by the environmental condition or environmental damage and on any other real property or immovable of the debtor that is contiguous with that real property or immovable and that is related to the activity that caused the environmental condition or environmental damage, and the security

  • (a) is enforceable in accordance with the law of the jurisdiction in which the real property or immovable is located, in the same way as a mortgage, hypothec or other security on real property or immovables; and

  • (b) ranks above any other claim, right, charge or security against the property, despite any other provision of this Act or anything in any other federal or provincial law.

• Claim for clean-up costs

  (8) Despite subsection 121(1), a claim against a debtor in a bankruptcy or proposal for the costs of remedying any environmental condition or environmental damage affecting real property or an immovable of the debtor shall be a provable claim, whether the condition arose or the damage occurred before or after the date of the filing of the proposal or the date of the bankruptcy.

Effect of defect or irregularity in appointment

14.07 No defect or irregularity in the appointment of a trustee vitiates any act done by the trustee in good faith.

Corporations as Trustees

Majority of officers and directors must hold licences

14.08 A body corporate may hold a licence as a trustee only if a majority of its directors and a majority of its officers hold licences as trustees.

Acts of body corporate

14.09 A body corporate that holds a licence as a trustee may perform the duties and exercise the powers of a trustee only through a director or officer of the body corporate who holds a licence as a trustee.

Not carrying on business of trust company

14.1 Every body corporate that is incorporated by or under an Act of Parliament and that holds a licence as a trustee may carry on the business of a trustee anywhere in Canada and shall not, in respect of its operations as a trustee, be construed to be carrying on the business of a trust company.

Official Name

Official name in bankruptcy and proposal proceedings

15 The official name of a trustee acting in bankruptcy proceedings is “The Trustee of the Estate of (insert name of the bankrupt), a bankrupt”, and the official name of a trustee acting with respect to a proposal by an insolvent person is “The Trustee acting in re the proposal of (insert the name of the debtor)”.

Status of Trustee

Declaration

15.1 A trustee is deemed to be a trustee for the purposes of the definition trustee in section 2 of the Criminal Code.

Duties and Powers of Trustees

Security to be given by trustee

• 16 (1) Every trustee duly appointed shall, as soon as they are appointed, give security in cash or by bond or suretyship of a guaranty company satisfactory to the official receiver for the due accounting for, the payment and the transfer of all property received by the trustee as trustee and for the due and faithful performance of the trustee’s duties.

• Security to be given by trustee

  (2) The security required to be given under subsection (1) shall be given to the official receiver in favour of the creditors generally and may be enforced by any succeeding trustee or by any one of the creditors on behalf of all by direction of the court, and may be increased or reduced by the official receiver.

• Trustee to take possession and make inventory

  (3) The trustee shall, as soon as possible, take possession of the deeds, books, records and documents and all property of the bankrupt and make an inventory, and for the purpose of making an inventory the trustee is entitled to enter, subject to subsection (3.1), on any premises on which the deeds, books, records, documents or property of the bankrupt may be, even if they are in the possession of an executing officer, a secured creditor or other claimant to them.

• Warrant required to enter

  (3.1) Where the premises referred to in subsection (3) are occupied by a person other than the bankrupt, the trustee may not enter the premises without the consent of that other person except under the authority of a warrant issued under section 189.

• Trustee to be receiver

  (4) The trustee shall, in relation to and for the purpose of acquiring or retaining possession of the property of the bankrupt, be in the same position as if he were a receiver of the property appointed by the court, and the court may on his application enforce the acquisition or retention accordingly.

• Right of trustee to books of account, etc.

  (5) No person is, as against the trustee, entitled to withhold possession of the books of account belonging to the bankrupt or any papers or documents, including material in electronic form, relating to the accounts or to any trade dealings of the bankrupt or to set up any lien or right of retention thereon.

Property to be delivered to trustee

• 17 (1) Where a person has in his possession or power any property of the bankrupt that he is not by law entitled to retain as against the bankrupt or the trustee, that person shall deliver the property to the trustee.

• Power to act anywhere

  (2) For the purpose of obtaining possession of and realizing on the property of the bankrupt, a trustee has power to act as such anywhere.

Conservatory measures

18 The trustee may when necessary in the interests of the estate of the bankrupt

• (a) take conservatory measures and summarily dispose of property that is perishable or likely to depreciate rapidly in value; and

• (b) carry on the business of the bankrupt until the date fixed for the first meeting of creditors.

Legal advice or action before first meeting

• 19 (1) The trustee may prior to the first meeting of creditors obtain such legal advice and take such court proceedings as he may consider necessary for the recovery or protection of the property of the bankrupt.

• In case of emergency

  (2) In the case of an emergency where the necessary authority cannot be obtained from the inspectors in time to take appropriate action, the trustee may obtain such legal advice and institute such legal proceedings and take such action as he may deem necessary in the interests of the estate of the bankrupt.

• (3) [Repealed, 2005, c. 47, s. 18]

Divesting property by trustee

• 20 (1) The trustee may, with the permission of the inspectors, divest all or any part of the trustee’s right, title or interest in any real property or immovable of the bankrupt by a notice of quit claim or renunciation by the trustee, and the official in charge of the land titles or registry office, as the case may be, where title to the real property or immovable is registered shall accept and register in the land register the notice when tendered for registration.

• Registration of notice

  (2) Registration of a notice under subsection (1) operates as a discharge or release of any documents previously registered in the land register by or on behalf of the trustee with respect to the property referred to in the notice.

Verifying bankrupt’s statement of affairs

21 The trustee shall verify the bankrupt’s statement of affairs referred to in paragraph 158(d).

Duties regarding returns

22 The trustee is not liable to make any return that the bankrupt was required to make more than one year prior to the commencement of the calendar year, or the fiscal year of the bankrupt where that is different from the calendar year, in which he became a bankrupt.

Trustee to permit inspection of records

23 The trustee shall at all reasonable times permit any authorized person to inspect the books and papers of the bankrupt in order to prepare or verify returns that the bankrupt is by statute required to file.

Insuring property

• 24 (1) The trustee shall forthwith temporarily insure and keep insured in his official name all the insurable property of the bankrupt, for such amount and against such hazards as he may deem advisable until the inspectors are appointed, whereupon the inspectors shall determine the amount for which and the hazards against which the bankrupt’s property shall be insured by the trustee.

• Losses payable to trustee

  (2) All insurance covering property of the bankrupt in force at the date of the bankruptcy shall in the event of loss suffered, without any notice to the insurer or other action on the part of the trustee and notwithstanding any statute or rule of law or contract or provision to a contrary effect, become payable immediately to the trustee as if the name of the trustee were written in the policy or contract of insurance as that of the insured or as if no change of title or ownership had come about and the trustee were the insured.

Trust account

• 25 (1) When acting under the authority of this Act, a trustee shall, without delay, deposit in a bank all funds received for an estate in a separate trust account for each estate.

• Other deposit-taking institutions must be insured

  (1.1) The trustee may deposit the funds in a deposit-taking institution, other than a bank as defined in section 2, only if deposits held by that institution are insured or guaranteed under a provincial or federal enactment that provides depositors with protection against the loss of funds on deposit with that institution.

• Foreign funds

  (1.2) If the funds are situated in a country other than Canada, the trustee may, if authorized by the Superintendent, deposit them in a financial institution in that country that is similar to a bank.

• Permission needed for certain acts

  (1.3) The trustee shall not withdraw any funds from the trust account of an estate without the permission in writing of the inspectors or, on application, the court, except for the payment of dividends and charges incidental to the administration of the estate.

• Payment by cheque

  (2) All payments made by a trustee under subsection (1.3) shall be made by cheque drawn on the estate account or in such manner as is specified in directives of the Superintendent.

• Not in private account

  (3) The trustee shall not deposit any funds received by the trustee when acting under the authority of this Act in any banking account kept by the trustee for the trustee’s personal use.

Books to be kept by trustee

• 26 (1) The trustee shall keep proper books and records of the administration of each estate to which he is appointed, in which shall be entered a record of all moneys received or disbursed by him, a list of all creditors filing claims, the amount and disposition of those claims, a copy of all notices sent out, the original signed copy of all minutes, proceedings had, and resolutions passed at any meeting of creditors or inspectors, court orders and all such other matters or proceedings as may be necessary to give a complete account of his administration of the estate.

• Trustee’s records to be property of estate

  (2) The estate books, records and documents relating to the administration of an estate are deemed to be the property of the estate, and, in the event of any change of trustee, shall forthwith be delivered to the substituted trustee.

• Records may be inspected

  (3) The trustee shall permit the books, records and documents referred to in subsection (2) to be inspected and copies of them made by the Superintendent, the bankrupt or any creditor or their representative at any reasonable time.

Reports by trustee

• 27 (1) The trustee shall from time to time report,

  • (a) when required by the inspectors, to every creditor,

  • (b) when required by any specific creditor, to the creditor, and

  • (c) when required by the Superintendent, to the Superintendent or the creditors,

  showing the condition of the bankrupt’s estate, the moneys on hand, if any, and particulars of any property remaining unsold.

• Disbursements

  (2) The trustee is entitled to charge against the estate of the bankrupt, for the preparation and delivery of any report referred to in subsection (1), only his actual disbursements.

Documents to be forwarded to Superintendent

• 28 (1) The trustee shall, without delay after their receipt or preparation, send to the Superintendent, in the prescribed manner, true copies of the documents referred to in section 155 and a true copy of

  • (a) the notice referred to in section 102,

  • (b) the statement referred to in paragraph 158(d),

  • (c) the trustee’s final statement of receipts and disbursements and the dividend sheet, and

  • (d) every order made by the court on the application for discharge of a bankrupt or annulling any bankruptcy,

  and file a copy of the documents referred to in paragraphs (b) and (c) in the court.

• Notices, etc., to be forwarded to Superintendent

  (2) The trustee shall forward promptly to the Superintendent copies of all notices, reports and statements sent by him to the creditors and, when required, copies of such other documents as the Superintendent may specify.

Duty of trustee on expiration of licence or removal

• 29 (1) Where

  • (a) the licence of a trustee has been cancelled or suspended, or has ceased to be valid by reason of failure to pay fees,

  • (b) a trustee has been removed from continuing the administration of an estate, or

  • (c) a trustee dies or becomes incapacitated,

  the trustee or the legal representative of the trustee shall, within such time as is fixed by the Superintendent, prepare and forward to the Superintendent a detailed financial statement of the receipts and disbursements together with a list of and report on the unadministered property of every estate under the trustee’s administration for which the trustee has not been discharged, and shall forward to such other trustee as may be appointed in the trustee’s stead or, pending the appointment of the other trustee, to the official receiver all the remaining property of every estate under the trustee’s administration together with all the books, records and documents relating thereto.

• (2) [Repealed, 2005, c. 47, s. 22]

Powers exercisable by trustee with permission of inspectors

• 30 (1) The trustee may, with the permission of the inspectors, do all or any of the following things:

  • (a) sell or otherwise dispose of for such price or other consideration as the inspectors may approve all or any part of the property of the bankrupt, including the goodwill of the business, if any, and the book debts due or growing due to the bankrupt, by tender, public auction or private contract, with power to transfer the whole thereof to any person or company, or to sell the same in parcels;

  • (b) lease any real property or immovable;

  • (c) carry on the business of the bankrupt, in so far as may be necessary for the beneficial administration of the estate of the bankrupt;

  • (d) bring, institute or defend any action or other legal proceeding relating to the property of the bankrupt;

  • (e) employ a barrister or solicitor or, in the Province of Quebec, an advocate, or employ any other representative, to take any proceedings or do any business that may be sanctioned by the inspectors;

  • (f) accept as the consideration for the sale of any property of the bankrupt a sum of money payable at a future time, subject to such stipulations as to security and otherwise as the inspectors think fit;

  • (g) incur obligations, borrow money and give security on any property of the bankrupt by mortgage, hypothec, charge, lien, assignment, pledge or otherwise, such obligations and money borrowed to be discharged or repaid with interest out of the property of the bankrupt in priority to the claims of the creditors;

  • (h) compromise and settle any debts owing to the bankrupt;

  • (i) compromise any claim made by or against the estate;

  • (j) divide in its existing form among the creditors, according to its estimated value, any property that from its peculiar nature or other special circumstances cannot be readily or advantageously sold;

  • (k) elect to retain for the whole part of its unexpired term, or to assign, surrender, disclaim or resiliate any lease of, or other temporary interest or right in, any property of the bankrupt; and

  • (l) appoint the bankrupt to aid in administering the estate of the bankrupt in such manner and on such terms as the inspectors may direct.

• Permission limited to particular thing or class

  (2) The permission given for the purposes of subsection (1) is not a general permission to do all or any of the things mentioned in that subsection, but is only a permission to do the particular thing or things or class of thing or things that the permission specifies.

• If no inspectors

  (3) If no inspectors are appointed, the trustee may do all or any of the things referred to in subsection (1).

• Sale or disposal to related persons

  (4) The trustee may sell or otherwise dispose of any of the bankrupt’s property to a person who is related to the bankrupt only with the court’s authorization.

• Related persons

  (5) For the purpose of subsection (4), in the case of a bankrupt other than an individual, a person who is related to the bankrupt includes

  • (a) a director or officer of the bankrupt;

  • (b) a person who has or has had, directly or indirectly, control in fact of the bankrupt; and

  • (c) a person who is related to a person described in paragraph (a) or (b).

• Factors to be considered

  (6) In deciding whether to grant the authorization, the court is to consider, among other things,

  • (a) whether the process leading to the proposed sale or disposition of the property was reasonable in the circumstances;

  • (b) the extent to which the creditors were consulted;

  • (c) the effects of the proposed sale or disposition on creditors and other interested parties;

  • (d) whether the consideration to be received for the property is reasonable and fair, taking into account the market value of the property;

  • (e) whether good faith efforts were made to sell or otherwise dispose of the property to persons who are not related to the bankrupt; and

  • (f) whether the consideration to be received is superior to the consideration that would be received under any other offer made in accordance with the process leading to the proposed sale or disposition of the property.

Borrowing powers with permission of court

• 31 (1) With the permission of the court, an interim receiver, a receiver within the meaning of subsection 243(2) or a trustee may make necessary or advisable advances, incur obligations, borrow money and give security on the debtor’s property in any amount, on any terms and on any property that may be authorized by the court and those advances, obligations and money borrowed must be repaid out of the debtor’s property in priority to the creditors’ claims.

• Security under Bank Act

  (2) For the purpose of giving security under section 427 of the Bank Act, the interim receiver, receiver or trustee, when carrying on the business of the bankrupt, is deemed to be a person engaged in the class of business previously carried on by the bankrupt.

• Limit of obligations and carrying on of business

  (3) The creditors or inspectors may by resolution limit the amount of the obligations that may be incurred, the advances that may be made or moneys that may be borrowed by the trustee and may limit the period of time during which the business of the bankrupt may be carried on by the trustee.

• Debts deemed to be debts of estate

  (4) All debts incurred and credit received in carrying on the business of a bankrupt are deemed to be debts incurred and credit received by the estate of the bankrupt.

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.

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.

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.

• 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.

• 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).

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.

• 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.

• 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.

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.

• 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.

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.

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.

• 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.

• 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.

• 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

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.

• 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.

• 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.

• 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.

• 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

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.

• 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.

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.

• 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.

• 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.

• 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.

• 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.

• 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.

• 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.

• 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.

• 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).

• Security released

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

• 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.

• 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

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.

• 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.

Application for Bankruptcy Order

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.

• 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.

• 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.

• 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.

• Place of filing

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

• 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.

• 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.

• 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.

• 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.

• 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.

• 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.

• 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.

• 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.

• Withdrawing application

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

• 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.

• 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.

• 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.

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.

• 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.

• 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).

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.

• 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

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.

• 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.

• 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.

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.

• 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.

• 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).

• 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.

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.

• 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.

• 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.

• 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.

• 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.

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.

• Meaning of disbursements

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

• 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.

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

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.

• 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.

• 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).

• 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.

• 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.

• 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.

• 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.

• 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.

PART IIIProposals

DIVISION IGeneral Scheme for Proposals

Who may make a proposal

• 50 (1) Subject to subsection (1.1), a proposal may be made by

  • (a) an insolvent person;

  • (b) a receiver, within the meaning of subsection 243(2), but only in relation to an insolvent person;

  • (c) a liquidator of an insolvent person’s property;

  • (d) a bankrupt; and

  • (e) a trustee of the estate of a bankrupt.

• Where proposal may not be made

  (1.1) A proposal may not be made under this Division with respect to a debtor in respect of whom a consumer proposal has been filed under Division II until the administrator under the consumer proposal has been discharged.

• To whom proposal made

  (1.2) A proposal must be made to the creditors generally, either as a mass or separated into classes as provided in the proposal, and may also be made to secured creditors in respect of any class or classes of secured claim, subject to subsection (1.3).

• Idem

  (1.3) Where a proposal is made to one or more secured creditors in respect of secured claims of a particular class, the proposal must be made to all secured creditors in respect of secured claims of that class.

• Classes of secured claims

  (1.4) Secured claims may be included in the same class if the interests or rights of the creditors holding those claims are sufficiently similar to give them a commonality of interest, taking into account

  • (a) the nature of the debts giving rise to the claims;

  • (b) the nature and rank of the security in respect of the claims;

  • (c) the remedies available to the creditors in the absence of the proposal, and the extent to which the creditors would recover their claims by exercising those remedies;

  • (d) the treatment of the claims under the proposal, and the extent to which the claims would be paid under the proposal; and

  • (e) such further criteria, consistent with those set out in paragraphs (a) to (d), as are prescribed.

• Court may determine classes

  (1.5) The court may, on application made at any time after a notice of intention or a proposal is filed, determine, in accordance with subsection (1.4), the classes of secured claims appropriate to a proposal, and the class into which any particular secured claim falls.

• Creditors’ response

  (1.6) Subject to section 50.1 as regards included secured creditors, any creditor may respond to the proposal as made to the creditors generally, by filing with the trustee a proof of claim in the manner provided for in

  • (a) sections 124 to 126, in the case of unsecured creditors; or

  • (b) sections 124 to 134, in the case of secured creditors.

• Effect of filing proof of claim

  (1.7) Hereinafter in this Division, a reference to an unsecured creditor shall be deemed to include a secured creditor who has filed a proof of claim under subsection (1.6), and a reference to an unsecured claim shall be deemed to include that secured creditor’s claim.

• Voting

  (1.8) All questions relating to a proposal, except the question of accepting or refusing the proposal, shall be decided by ordinary resolution of the creditors to whom the proposal was made.

• Documents to be filed

  (2) Subject to section 50.4, proceedings for a proposal shall be commenced, in the case of an insolvent person, by filing with a licensed trustee, and in the case of a bankrupt, by filing with the trustee of the estate,

  • (a) a copy of the proposal in writing setting out the terms of the proposal and the particulars of any securities or sureties proposed, signed by the person making the proposal and the proposed sureties if any; and

  • (b) the prescribed statement of affairs.

• Filing of documents with the official receiver

  (2.1) Copies of the documents referred to in subsection (2) must, at the time the proposal is filed under subsection 62(1), also be filed by the trustee with the official receiver in the locality of the debtor.

• Approval of inspectors

  (3) A proposal made in respect of a bankrupt shall be approved by the inspectors before any further action is taken thereon.

• Proposal, etc., not to be withdrawn

  (4) No proposal or any security, guarantee or suretyship tendered with the proposal may be withdrawn pending the decision of the creditors and the court.

• Assignment not prevented

  (4.1) Subsection (4) shall not be construed as preventing an insolvent person in respect of whom a proposal has been made from subsequently making an assignment.

• Duties of trustee

  (5) The trustee shall make or cause to be made such an appraisal and investigation of the affairs and property of the debtor as to enable the trustee to estimate with reasonable accuracy the financial situation of the debtor and the cause of the debtor’s financial difficulties or insolvency and report the result thereof to the meeting of the creditors.

• Trustee to file cash-flow statement

  (6) The trustee shall, when filing a proposal under subsection 62(1) in respect of an insolvent person, file with the proposal

  • (a) a statement — or a revised cash-flow statement if a cash-flow statement had previously been filed under subsection 50.4(2) in respect of that insolvent person — (in this section referred to as a “cash-flow statement”) indicating the projected cash-flow of the insolvent person on at least a monthly basis, prepared by the person making the proposal, reviewed for its reasonableness by the trustee and signed by the trustee and the person making the proposal;

  • (b) a report on the reasonableness of the cash-flow statement, in the prescribed form, prepared and signed by the trustee; and

  • (c) a report containing prescribed representations by the person making the proposal regarding the preparation of the cash-flow statement, in the prescribed form, prepared and signed by the person making the proposal.

• Creditors may obtain statement

  (7) Subject to subsection (8), any creditor may obtain a copy of the cash-flow statement on request made to the trustee.

• Exception

  (8) The court may order that a cash-flow statement or any part thereof not be released to some or all of the creditors pursuant to subsection (7) where it is satisfied that

  • (a) such release would unduly prejudice the insolvent person; and

  • (b) non-release would not unduly prejudice the creditor or creditors in question.

• Trustee protected

  (9) If the trustee acts in good faith and takes reasonable care in reviewing the cash-flow statement, he is not liable for loss or damage to any person resulting from that person’s reliance on the cash-flow statement.

• Trustee to monitor and report

  (10) Subject to any direction of the court under paragraph 47.1(2)(a), the trustee under a proposal in respect of an insolvent person shall, for the purpose of monitoring the insolvent person’s business and financial affairs, have access to and examine the insolvent person’s property, including his premises, books, records and other financial documents, to the extent necessary to adequately assess the insolvent person’s business and financial affairs, from the filing of the proposal until the proposal is approved by the court or the insolvent person becomes bankrupt, and shall

  • (a) file a report on the state of the insolvent person’s business and financial affairs — containing the prescribed information, if any —

    • (i) with the official receiver without delay after ascertaining a material adverse change in the insolvent person’s projected cash-flow or financial circumstances, and

    • (ii) with the court at any time that the court may order;

  • (a.1) send a report about the material adverse change to the creditors without delay after ascertaining the change; and

  • (b) send, in the prescribed manner, a report on the state of the insolvent person’s business and financial affairs — containing the trustee’s opinion as to the reasonableness of a decision, if any, to include in a proposal a provision that sections 95 to 101 do not apply in respect of the proposal and containing the prescribed information, if any — to the creditors and the official receiver at least 10 days before the day on which the meeting of creditors referred to in subsection 51(1) is to be held.

• Report to creditors

  (11) An interim receiver who has been directed under subsection 47.1(2) to carry out the duties set out in subsection (10) in substitution for the trustee shall deliver a report on the state of the insolvent person’s business and financial affairs, containing any prescribed information, to the trustee at least fifteen days before the meeting of creditors referred to in subsection 51(1), and the trustee shall send the report to the creditors and the official receiver, in the prescribed manner, at least ten days before the meeting of creditors referred to in that subsection.

• Court may declare proposal as deemed refused by creditors

  (12) The court may, on application by the trustee, the interim receiver, if any, appointed under section 47.1 or a creditor, at any time before the meeting of creditors, declare that the proposal is deemed to have been refused by the creditors if the court is satisfied that

  • (a) the debtor has not acted, or is not acting, in good faith and with due diligence;

  • (b) the proposal will not likely be accepted by the creditors; or

  • (c) the creditors as a whole would be materially prejudiced if the application under this subsection is rejected.

• Effect of declaration

  (12.1) If the court declares that the proposal is deemed to have been refused by the creditors, paragraphs 57(a) to (c) apply.

• Claims against directors — compromise

  (13) A proposal made in respect of a corporation may include in its terms provision for the compromise of claims against directors of the corporation that arose before the commencement of proceedings under this Act and that relate to the obligations of the corporation where the directors are by law liable in their capacity as directors for the payment of such obligations.

• Exception

  (14) A provision for the compromise of claims against directors may not include claims that

  • (a) relate to contractual rights of one or more creditors arising from contracts with one or more directors; or

  • (b) are based on allegations of misrepresentation made by directors to creditors or of wrongful or oppressive conduct by directors.

• Powers of court

  (15) The court may declare that a claim against directors shall not be compromised if it is satisfied that the compromise would not be just and equitable in the circumstances.

• Application of other provisions

  (16) Subsection 62(2) and section 122 apply, with such modifications as the circumstances require, in respect of claims against directors compromised under a proposal of a debtor corporation.

• Determination of classes of claims

  (17) The court, on application made at any time after a proposal is filed, may determine the classes of claims of claimants against directors and the class into which any particular claimant’s claim falls.

• Resignation or removal of directors

  (18) Where all of the directors have resigned or have been removed by the shareholders without replacement, any person who manages or supervises the management of the business and affairs of the corporation shall be deemed to be a director for the purposes of this section.

Secured creditor may file proof of secured claim

• 50.1 (1) Subject to subsections (2) to (4), a secured creditor to whom a proposal has been made in respect of a particular secured claim may respond to the proposal by filing with the trustee a proof of secured claim in the prescribed form, and may vote, on all questions relating to the proposal, in respect of that entire claim, and sections 124 to 126 apply, in so far as they are applicable, with such modifications as the circumstances require, to proofs of secured claim.

• Proposed assessed value

  (2) Where a proposal made to a secured creditor in respect of a claim includes a proposed assessed value of the security in respect of the claim, the secured creditor may file with the trustee a proof of secured claim in the prescribed form, and may vote as a secured creditor on all questions relating to the proposal in respect of an amount equal to the lesser of

  • (a) the amount of the claim, and

  • (b) the proposed assessed value of the security.

• Idem

  (3) Where the proposed assessed value is less than the amount of the secured creditor’s claim, the secured creditor may file with the trustee a proof of claim in the prescribed form, and may vote as an unsecured creditor on all questions relating to the proposal in respect of an amount equal to the difference between the amount of the claim and the proposed assessed value.

• Idem

  (4) Where a secured creditor is dissatisfied with the proposed assessed value of his security, the secured creditor may apply to the court, within fifteen days after the proposal is sent to the creditors, to have the proposed assessed value revised, and the court may revise the proposed assessed value, in which case the revised value henceforth applies for the purposes of this Part.

• Where no secured creditor in a class takes action

  (5) Where no secured creditor having a secured claim of a particular class files a proof of secured claim at or before the meeting of creditors, the secured creditors having claims of that class shall be deemed to have voted for the refusal of the proposal.

Excluded secured creditor

50.2 A secured creditor to whom a proposal has not been made in respect of a particular secured claim may not file a proof of secured claim in respect of that claim.

Rights in bankruptcy

50.3 On the bankruptcy of an insolvent person who made a proposal to one or more secured creditors in respect of secured claims, any proof of secured claim filed pursuant to section 50.1 ceases to be valid or effective, and sections 112 and 127 to 134 apply in respect of a proof of claim filed by any secured creditor in the bankruptcy.

Notice of intention

• 50.4 (1) Before filing a copy of a proposal with a licensed trustee, an insolvent person may file a notice of intention, in the prescribed form, with the official receiver in the insolvent person’s locality, stating

  • (a) the insolvent person’s intention to make a proposal,

  • (b) the name and address of the licensed trustee who has consented, in writing, to act as the trustee under the proposal, and

  • (c) the names of the creditors with claims amounting to two hundred and fifty dollars or more and the amounts of their claims as known or shown by the debtor’s books,

  and attaching thereto a copy of the consent referred to in paragraph (b).

• Certain things to be filed

  (2) Within ten days after filing a notice of intention under subsection (1), the insolvent person shall file with the official receiver

  • (a) a statement (in this section referred to as a “cash-flow statement”) indicating the projected cash-flow of the insolvent person on at least a monthly basis, prepared by the insolvent person, reviewed for its reasonableness by the trustee under the notice of intention and signed by the trustee and the insolvent person;

  • (b) a report on the reasonableness of the cash-flow statement, in the prescribed form, prepared and signed by the trustee; and

  • (c) a report containing prescribed representations by the insolvent person regarding the preparation of the cash-flow statement, in the prescribed form, prepared and signed by the insolvent person.

• Creditors may obtain statement

  (3) Subject to subsection (4), any creditor may obtain a copy of the cash-flow statement on request made to the trustee.

• Exception

  (4) The court may order that a cash-flow statement or any part thereof not be released to some or all of the creditors pursuant to subsection (3) where it is satisfied that

  • (a) such release would unduly prejudice the insolvent person; and

  • (b) non-release would not unduly prejudice the creditor or creditors in question.

• Trustee protected

  (5) If the trustee acts in good faith and takes reasonable care in reviewing the cash-flow statement, the trustee is not liable for loss or damage to any person resulting from that person’s reliance on the cash-flow statement.

• Trustee to notify creditors

  (6) Within five days after the filing of a notice of intention under subsection (1), the trustee named in the notice shall send to every known creditor, in the prescribed manner, a copy of the notice including all of the information referred to in paragraphs (1)(a) to (c).

• Trustee to monitor and report

  (7) Subject to any direction of the court under paragraph 47.1(2)(a), the trustee under a notice of intention in respect of an insolvent person

  • (a) shall, for the purpose of monitoring the insolvent person’s business and financial affairs, have access to and examine the insolvent person’s property, including his premises, books, records and other financial documents, to the extent necessary to adequately assess the insolvent person’s business and financial affairs, from the filing of the notice of intention until a proposal is filed or the insolvent person becomes bankrupt;

  • (b) shall file a report on the state of the insolvent person’s business and financial affairs — containing the prescribed information, if any —

    • (i) with the official receiver without delay after ascertaining a material adverse change in the insolvent person’s projected cash-flow or financial circumstances, and

    • (ii) with the court at or before the hearing by the court of any application under subsection (9) and at any other time that the court may order; and

  • (c) shall send a report about the material adverse change to the creditors without delay after ascertaining the change.

• Where assignment deemed to have been made

  (8) Where an insolvent person fails to comply with subsection (2), or where the trustee fails to file a proposal with the official receiver under subsection 62(1) within a period of thirty days after the day the notice of intention was filed under subsection (1), or within any extension of that period granted under subsection (9),

  • (a) the insolvent person is, on the expiration of that period or that extension, as the case may be, deemed to have thereupon made an assignment;

  • (b) the trustee shall, without delay, file with the official receiver, in the prescribed form, a report of the deemed assignment;

  • (b.1) the official receiver shall issue a certificate of assignment, in the prescribed form, which has the same effect for the purposes of this Act as an assignment filed under section 49; and

  • (c) the trustee shall, within five days after the day the certificate mentioned in paragraph (b.1) is issued, send notice of the meeting of creditors under section 102, at which meeting the creditors may by ordinary resolution, notwithstanding section 14, affirm the appointment of the trustee or appoint another licensed trustee in lieu of that trustee.

• Extension of time for filing proposal

  (9) The insolvent person may, before the expiry of the 30-day period referred to in subsection (8) or of any extension granted under this subsection, apply to the court for an extension, or further extension, as the case may be, of that period, and the court, on notice to any interested persons that the court may direct, may grant the extensions, not exceeding 45 days for any individual extension and not exceeding in the aggregate five months after the expiry of the 30-day period referred to in subsection (8), if satisfied on each application that

  • (a) the insolvent person has acted, and is acting, in good faith and with due diligence;

  • (b) the insolvent person would likely be able to make a viable proposal if the extension being applied for were granted; and

  • (c) no creditor would be materially prejudiced if the extension being applied for were granted.

• Court may not extend time

  (10) Subsection 187(11) does not apply in respect of time limitations imposed by subsection (9).

• Court may terminate period for making proposal

  (11) The court may, on application by the trustee, the interim receiver, if any, appointed under section 47.1, or a creditor, declare terminated, before its actual expiration, the thirty day period mentioned in subsection (8) or any extension thereof granted under subsection (9) if the court is satisfied that

  • (a) the insolvent person has not acted, or is not acting, in good faith and with due diligence,

  • (b) the insolvent person will not likely be able to make a viable proposal before the expiration of the period in question,

  • (c) the insolvent person will not likely be able to make a proposal, before the expiration of the period in question, that will be accepted by the creditors, or

  • (d) the creditors as a whole would be materially prejudiced were the application under this subsection rejected,

  and where the court declares the period in question terminated, paragraphs (8)(a) to (c) thereupon apply as if that period had expired.

Trustee to help prepare proposal

50.5 The trustee under a notice of intention shall, between the filing of the notice of intention and the filing of a proposal, advise on and participate in the preparation of the proposal, including negotiations thereon.

Order — interim financing

• 50.6 (1) On application by 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) and on notice to the secured creditors who are likely to be affected by the security or charge, a court may make an order declaring that all or part of the debtor’s property is subject to a security or charge — in an amount that the court considers appropriate — in favour of a person specified in the order who agrees to lend to the debtor an amount approved by the court as being required by the debtor, having regard to the debtor’s cash-flow statement referred to in paragraph 50(6)(a) or 50.4(2)(a), as the case may be. The security or charge may not secure an obligation that exists before the order is made.

• Individuals

  (2) In the case of an individual,

  • (a) they may not make an application under subsection (1) unless they are carrying on a business; and

  • (b) only property acquired for or used in relation to the business may be subject to a security or charge.

• Priority

  (3) The court may order that the security or charge rank in priority over the claim of any secured creditor of the debtor.

• Priority — previous orders

  (4) The court may order that the security or charge rank in priority over any security or charge arising from a previous order made under subsection (1) only with the consent of the person in whose favour the previous order was made.

• Factors to be considered

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

  • (a) the period during which the debtor is expected to be subject to proceedings under this Act;

  • (b) how the debtor’s business and financial affairs are to be managed during the proceedings;

  • (c) whether the debtor’s management has the confidence of its major creditors;

  • (d) whether the loan would enhance the prospects of a viable proposal being made in respect of the debtor;

  • (e) the nature and value of the debtor’s property;

  • (f) whether any creditor would be materially prejudiced as a result of the security or charge; and

  • (g) the trustee’s report referred to in paragraph 50(6)(b) or 50.4(2)(b), as the case may be.

Calling of meeting of creditors

• 51 (1) The trustee shall call a meeting of the creditors, to be held within twenty-one days after the filing of the proposal with the official receiver under subsection 62(1), by sending in the prescribed manner to every known creditor and to the official receiver, at least ten days before the meeting,

  • (a) a notice of the date, time and place of the meeting;

  • (b) a condensed statement of the assets and liabilities;

  • (c) a list of the creditors with claims amounting to two hundred and fifty dollars or more and the amounts of their claims as known or shown by the debtor’s books;

  • (d) a copy of the proposal;

  • (e) the prescribed forms, in blank, of

    • (i) proof of claim,

    • (ii) in the case of a secured creditor to whom the proposal was made, proof of secured claim, and

    • (iii) proxy,

    if not already sent; and

  • (f) a voting letter as prescribed.

• In case of a prior meeting

  (2) Where a meeting of his creditors at which a statement or list of the debtor’s assets, liabilities and creditors was presented was held before the trustee is required by this section to convene a meeting to consider the proposal and at the time when the debtor requires the convening of the meeting the condition of the debtor’s estate remains substantially the same as at the time of the former meeting, the trustee may omit observance of the provisions of paragraphs (1)(b) and (c).

• Chair of first meeting

  (3) The official receiver, or the nominee thereof, shall be the chair of the meeting referred to in subsection (1) and shall decide any questions or disputes arising at the meeting, and any creditor may appeal any such decision to the court.

Adjournment of meeting for further investigation and examination

52 Where the creditors by ordinary resolution at the meeting at which a proposal is being considered so require, the meeting shall be adjourned to such time and place as may be fixed by the chair

• (a) to enable a further appraisal and investigation of the affairs and property of the debtor to be made; or

• (b) for the examination under oath of the debtor or of such other person as may be believed to have knowledge of the affairs or property of the debtor, and the testimony of the debtor or such other person, if transcribed, shall be placed before the adjourned meeting or may be read in court on the application for the approval of the proposal.

Creditor may assent or dissent

53 Any creditor who has proved a claim, whether secured or unsecured, may indicate assent to or dissent from the proposal in the prescribed manner to the trustee prior to the meeting, and any assent or dissent, if received by the trustee at or prior to the meeting, has effect as if the creditor had been present and had voted at the meeting.

Vote on proposal by creditors

• 54 (1) The creditors may, in accordance with this section, resolve to accept or may refuse the proposal as made or as altered at the meeting or any adjournment thereof.

• Voting system

  (2) For the purpose of subsection (1),

  • (a) the following creditors with proven claims are entitled to vote:

    • (i) all unsecured creditors, and

    • (ii) those secured creditors in respect of whose secured claims the proposal was made;

  • (b) the creditors shall vote by class, according to the class of their respective claims, and for that purpose

    • (i) all unsecured claims constitute one class, unless the proposal provides for more than one class of unsecured claim, and

    • (ii) the classes of secured claims shall be determined as provided by subsection 50(1.4);

  • (c) the votes of the secured creditors do not count for the purpose of this section, but are relevant only for the purpose of subsection 62(2); and

  • (d) the proposal is deemed to be accepted by the creditors if, and only if, all classes of unsecured creditors — other than, unless the court orders otherwise, a class of creditors having equity claims — vote for the acceptance of the proposal by a majority in number and two thirds in value of the unsecured creditors of each class present, personally or by proxy, at the meeting and voting on the resolution.

• Certain Crown claims

  (2.1) For greater certainty, subsection 224(1.2) of the Income Tax Act shall not be construed as classifying as secured claims, for the purpose of subsection (2), claims of Her Majesty in right of Canada or a province for amounts that could be subject to a demand under

  • (a) subsection 224(1.2) of the Income Tax Act;

  • (b) any provision of the Canada Pension Plan or of the Employment Insurance Act that refers to subsection 224(1.2) of the Income Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, or a premium under Part VII.1 of that Act, and of any related interest, penalties or other amounts; or

  • (c) any provision of provincial legislation that has a similar purpose to subsection 224(1.2) of the Income Tax Act, or that refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, where the sum

    • (i) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or

    • (ii) is of the same nature as a contribution under the Canada Pension Plan if the province is a “province providing a comprehensive pension plan” as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a “provincial pension plan” as defined in that subsection.

• Where no quorum in a class

  (2.2) Where there is no quorum of secured creditors in respect of a particular class of secured claims, the secured creditors having claims of that class shall be deemed to have voted for the refusal of the proposal.

• Related creditor

  (3) A creditor who is related to the debtor may vote against but not for the acceptance of the proposal.

• Voting by trustee

  (4) The trustee, as a creditor, may not vote on the proposal.

Class — creditors having equity claims

54.1 Despite paragraphs 54(2)(a) and (b), creditors having equity claims are to be in the same class of creditors in relation to those claims unless the court orders otherwise and may not, as members of that class, vote at any meeting unless the court orders otherwise.

Creditors may provide for supervision of debtor’s affairs

55 At a meeting to consider a proposal, the creditors, with the consent of the debtor, may include such provisions or terms in the proposal with respect to the supervision of the affairs of the debtor as they may deem advisable.

Appointment of inspectors

56 The creditors may appoint one or more, but not exceeding five, inspectors of the estate of the debtor, who shall have the powers of an inspector under this Act, subject to any extension or restriction of those powers by the terms of the proposal.

Result of refusal of proposal

57 Where the creditors refuse a proposal in respect of an insolvent person,

• (a) the insolvent person is deemed to have thereupon made an assignment;

• (b) the trustee shall, without delay, file with the official receiver, in the prescribed form, a report of the deemed assignment;

• (b.1) the official receiver shall issue a certificate of assignment, in the prescribed form, which has the same effect for the purposes of this Act as an assignment filed under section 49; and

• (c) the trustee shall either

  • (i) forthwith call a meeting of creditors present at that time, which meeting shall be deemed to be a meeting called under section 102, or

  • (ii) if no quorum exists for the purpose of subparagraph (i), send notice, within five days after the day the certificate mentioned in paragraph (b.1) is issued, of the meeting of creditors under section 102,

  and at either meeting the creditors may by ordinary resolution, notwithstanding section 14, affirm the appointment of the trustee or appoint another licensed trustee in lieu of that trustee.

Appointment of new trustee

57.1 Where a declaration has been made under subsection 50(12) or 50.4(11), the court may, if it is satisfied that it would be in the best interests of the creditors to do so, appoint a trustee in lieu of the trustee appointed under the notice of intention or proposal that was filed.

Application for court approval

58 On acceptance of a proposal by the creditors, the trustee shall

• (a) within five days after the acceptance, apply to the court for an appointment for a hearing of the application for the court’s approval of the proposal;

• (b) send a notice of the hearing of the application, in the prescribed manner and at least fifteen days before the date of the hearing, to the debtor, to every creditor who has proved a claim, whether secured or unsecured, to the person making the proposal and to the official receiver;

• (c) forward a copy of the report referred to in paragraph (d) to the official receiver at least ten days before the date of the hearing; and

• (d) at least two days before the date of the hearing, file with the court, in the prescribed form, a report on the proposal.

Court to hear report of trustee, etc.

• 59 (1) The court shall, before approving the proposal, hear a report of the trustee in the prescribed form respecting the terms thereof and the conduct of the debtor, and, in addition, shall hear the trustee, the debtor, the person making the proposal, any opposing, objecting or dissenting creditor and such further evidence as the court may require.

• Court may refuse to approve the proposal

  (2) Where the court is of the opinion that the terms of the proposal are not reasonable or are not calculated to benefit the general body of creditors, the court shall refuse to approve the proposal, and the court may refuse to approve the proposal whenever it is established that the debtor has committed any one of the offences mentioned in sections 198 to 200.

• Reasonable security

  (3) Where any of the facts mentioned in section 173 are proved against the debtor, the court shall refuse to approve the proposal unless it provides reasonable security for the payment of not less than fifty cents on the dollar on all the unsecured claims provable against the debtor’s estate or such percentage thereof as the court may direct.

• Court may order amendment

  (4) If a court approves a proposal, it may order that the debtor’s constating instrument be amended in accordance with the proposal to reflect any change that may lawfully be made under federal or provincial law.

Priority of claims

• 60 (1) No proposal shall be approved by the court that does not provide for the payment in priority to other claims of all claims directed to be so paid in the distribution of the property of a debtor and for the payment of all proper fees and expenses of the trustee on and incidental to the proceedings arising out of the proposal or in the bankruptcy.

• Certain Crown claims

  (1.1) Unless Her Majesty consents, no proposal shall be approved by the court that does not provide for the payment in full to Her Majesty in right of Canada or a province, within six months after court approval of the proposal, of all amounts that were outstanding at the time of the filing of the notice of intention or of the proposal, if no notice of intention was filed, and are of a kind that could be subject to a demand under

  • (a) subsection 224(1.2) of the Income Tax Act;

  • (b) any provision of the Canada Pension Plan or of the Employment Insurance Act that refers to subsection 224(1.2) of the Income Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, or a premium under Part VII.1 of that Act, and of any related interest, penalties or other amounts; or

  • (c) any provision of provincial legislation that has a similar purpose to subsection 224(1.2) of the Income Tax Act, or that refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, where the sum

    • (i) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or

    • (ii) is of the same nature as a contribution under the Canada Pension Plan if the province is a “province providing a comprehensive pension plan” as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a “provincial pension plan” as defined in that subsection.

• Idem

  (1.2) No proposal shall be approved by the court if, at the time the court hears the application for approval, Her Majesty in right of Canada or a province satisfies the court that the debtor is in default on any remittance of an amount referred to in subsection (1.1) that became due after the filing

  • (a) of the notice of intention; or

  • (b) of the proposal, if no notice of intention was filed.

• Proposals by employers

  (1.3) No proposal in respect of an employer shall be approved by the court unless

  • (a) it provides for payment to the employees and former employees, immediately after court approval of the proposal, of amounts at least equal to the amounts that they would be qualified to receive under paragraph 136(1)(d) if the employer became bankrupt on the date of the filing of the notice of intention, or proposal if no notice of intention was filed, as well as wages, salaries, commissions or compensation for services rendered after that date and before the court approval of the proposal, together with, in the case of travelling salespersons, disbursements properly incurred by them in and about the bankrupt’s business during the same period; and

  • (b) the court is satisfied that the employer can and will make the payments as required under paragraph (a).

• Voting on proposal

  (1.4) For the purpose of voting on any question relating to a proposal in respect of an employer, no person has a claim for an amount referred to in paragraph (1.3)(a).

• Proposals by employers — prescribed pension plans

  (1.5) No proposal in respect of an employer who participates in a prescribed pension plan for the benefit of its employees shall be approved by the court unless

  • (a) the proposal provides for payment of the following amounts that are unpaid to the fund established for the purpose of the pension plan:

    • (i) an amount equal to the sum of all amounts that were deducted from the employees’ remuneration for payment to the fund,

    • (ii) if the prescribed pension plan is regulated by an Act of Parliament,

      • (A) an amount equal to the normal cost, within the meaning of subsection 2(1) of the Pension Benefits Standards Regulations, 1985, that was required to be paid by the employer to the fund, and

      • (B) an amount equal to the sum of all amounts that were required to be paid by the employer to the fund under a defined contribution provision, within the meaning of subsection 2(1) of the Pension Benefits Standards Act, 1985,

      • (C) an amount equal to the sum of all amounts that were required to be paid by the employer to the administrator of a pooled registered pension plan, as defined in subsection 2(1) of the Pooled Registered Pension Plans Act, and

    • (iii) in the case of any other prescribed pension plan,

      • (A) an amount equal to the amount that would be the normal cost, within the meaning of subsection 2(1) of the Pension Benefits Standards Regulations, 1985, that the employer would be required to pay to the fund if the prescribed plan were regulated by an Act of Parliament, and

      • (B) an amount equal to the sum of all amounts that would have been required to be paid by the employer to the fund under a defined contribution provision, within the meaning of subsection 2(1) of the Pension Benefits Standards Act, 1985, if the prescribed plan were regulated by an Act of Parliament,

      • (C) an amount equal to the sum of all amounts that would have been required to be paid by the employer in respect of a prescribed plan, if it were regulated by the Pooled Registered Pension Plans Act; and

  • (b) the court is satisfied that the employer can and will make the payments as required under paragraph (a).

• Non-application of subsection (1.5)

  (1.6) Despite subsection (1.5), the court may approve a proposal that does not allow for the payment of the amounts referred to in that subsection if it is satisfied that the relevant parties have entered into an agreement, approved by the relevant pension regulator, respecting the payment of those amounts.

• Payment — equity claims

  (1.7) No proposal that provides for the payment of an equity claim is to be approved by the court unless the proposal provides that all claims that are not equity claims are to be paid in full before the equity claim is to be paid.

• Payment to trustee

  (2) All moneys payable under the proposal shall be paid to the trustee and, after payment of all proper fees and expenses mentioned in subsection (1), shall be distributed by him to the creditors.

• Distribution of promissory notes, stock, etc., of debtor

  (3) Where the proposal provides for the distribution of property in the nature of promissory notes or other evidence of obligations by or on behalf of the debtor or, when the debtor is a corporation, shares in the capital stock of the corporation, the property shall be dealt with in the manner prescribed in subsection (2) as nearly as may be.

• Section 147 applies

  (4) Section 147 applies to all distributions made to the creditors by the trustee pursuant to subsection (2) or (3).

• Power of court

  (5) Subject to subsections (1) to (1.7), the court may either approve or refuse to approve the proposal.

Annulment of bankruptcy

• 61 (1) The approval by the court of a proposal made after bankruptcy operates to annul the bankruptcy and to revest in the debtor, or in such other person as the court may approve, all the right, title and interest of the trustee in the property of the debtor, unless the terms of the proposal otherwise provide.

• Non-approval of proposal by court

  (2) Where the court refuses to approve a proposal in respect of an insolvent person a copy of which has been filed under section 62,

  • (a) the insolvent person is deemed to have thereupon made an assignment;

  • (b) the trustee shall, without delay, file with the official receiver, in the prescribed form, a report of the deemed assignment;

  • (b.1) the official receiver shall issue a certificate of assignment, in the prescribed form, which has the same effect for the purposes of this Act as an assignment filed under section 49; and

  • (c) the trustee shall, within five days after the day the certificate mentioned in paragraph (b.1) is issued, send notice of the meeting of creditors under section 102, at which meeting the creditors may by ordinary resolution, notwithstanding section 14, affirm the appointment of the trustee or appoint another licensed trustee in lieu of that trustee.

• (3) [Repealed, 1992, c. 27, s. 25]

• Costs when proposal refused

  (4) No costs incurred by a debtor on or incidental to an application to approve a proposal, other than the costs incurred by the trustee, shall be allowed out of the estate of the debtor if the court refuses to approve the proposal.

Filing of proposal

• 62 (1) If a proposal is made in respect of an insolvent person, the trustee shall file with the official receiver a copy of the proposal and the prescribed statement of affairs.

• Determination of claims

  (1.1) Except in respect of claims referred to in subsection 14.06(8), where a proposal is made in respect of an insolvent person, the time with respect to which the claims of creditors shall be determined is the time of the filing of

  • (a) the notice of intention; or

  • (b) the proposal, if no notice of intention was filed.

• Determination of claims re bankrupt

  (1.2) Except in respect of claims referred to in subsection 14.06(8), where a proposal is made in respect of a bankrupt, the time with respect to which the claims of creditors shall be determined is the date on which the bankrupt became bankrupt.

• On whom approval binding

  (2) Subject to subsection (2.1), a proposal accepted by the creditors and approved by the court is binding on creditors in respect of

  • (a) all unsecured claims; and

  • (b) the secured claims in respect of which the proposal was made and that were in classes in which the secured creditors voted for the acceptance of the proposal by a majority in number and two thirds in value of the secured creditors present, or represented by a proxyholder, at the meeting and voting on the resolution to accept the proposal.

• When insolvent person is released from debt

  (2.1) A proposal accepted by the creditors and approved by the court does not release the insolvent person from any particular debt or liability referred to in subsection 178(1) unless the proposal explicitly provides for the compromise of that debt or liability and the creditor in relation to that debt or liability voted for the acceptance of the proposal.

• Certain persons not released

  (3) The acceptance of a proposal by a creditor does not release any person who would not be released under this Act by the discharge of the debtor.

Default in performance of proposal

62.1 Where

• (a) default is made in the performance of any provision in a proposal,

• (b) the default is not waived

  • (i) by the inspectors, or

  • (ii) if there are no inspectors, by the creditors, and

• (c) the default is not remedied by the insolvent person within the prescribed time,

the trustee shall, within such time and in such form and manner as are prescribed, so inform all the creditors and the official receiver.

Receiving order on default, etc.

• 63 (1) Where default is made in the performance of any provision in a proposal, or where it appears to the court that the proposal cannot continue without injustice or undue delay or that the approval of the court was obtained by fraud, the court may, on application thereto, with such notice as the court may direct to the debtor, and, if applicable to the trustee and to the creditors, annul the proposal.

• Validity of things done

  (2) An order made under subsection (1) shall be made without prejudice to the validity of any sale, disposition of property or payment duly made, or anything duly done under or in pursuance of the proposal, and notwithstanding the annulment of the proposal, a guarantee given pursuant to the proposal remains in full force and effect in accordance with its terms.

• Annulment for offence

  (3) A proposal, although accepted or approved, may be annulled by order of the court at the request of the trustee or of any creditor whenever the debtor is afterwards convicted of any offence under this Act.

• Effect of annulling order

  (4) On the annulment of a proposal, the debtor shall be deemed to have thereupon made an assignment and the order annulling the proposal shall so state.

• Meeting of creditors to be called

  (5) Where an order annulling a proposal has been made, the trustee shall, within five days after the order is made, send notice of the meeting of creditors under section 102, at which meeting the creditors may by ordinary resolution, notwithstanding section 14, affirm the appointment of the trustee or appoint another licensed trustee in lieu of that trustee.

• Consequences of annulment

  (6) Where an order annulling the proposal described in subsection (5) has been made, the trustee shall forthwith file a report thereof in the prescribed form with the official receiver, who shall thereupon issue a certificate of assignment in the prescribed form, which has the same effect for the purposes of this Act as an assignment filed pursuant to section 49.

Removal of directors

• 64 (1) The court may, on the application of any person interested in the matter, make an order removing from office any director of a debtor in respect of whom a notice of intention has been filed under section 50.4 or a proposal has been filed under subsection 62(1) if the court is satisfied that the director is unreasonably impairing or is likely to unreasonably impair the possibility of a viable proposal being made in respect of the debtor or is acting or is likely to act inappropriately as a director in the circumstances.

• Filling vacancy

  (2) The court may, by order, fill any vacancy created under subsection (1).

Security or charge relating to director’s indemnification

• 64.1 (1) On application by a person in respect of whom a notice of intention is filed under section 50.4 or a proposal is filed under subsection 62(1) and on notice to the secured creditors who are likely to be affected by the security or charge, a court may make an order declaring that all or part of the property of the person is subject to a security or charge — in an amount that the court considers appropriate — in favour of any director or officer of the person to indemnify the director or officer against obligations and liabilities that they may incur as a director or officer after the filing of the notice of intention or the proposal, as the case may be.

• Priority

  (2) The court may order that the security or charge rank in priority over the claim of any secured creditor of the person.

• Restriction — indemnification insurance

  (3) The court may not make the order if in its opinion the person could obtain adequate indemnification insurance for the director or officer at a reasonable cost.

• Negligence, misconduct or fault

  (4) The court shall make an order declaring that the security or charge does not apply in respect of a specific obligation or liability incurred by a director or officer if in its opinion the obligation or liability was incurred as a result of the director’s or officer’s gross negligence or wilful misconduct or, in Quebec, the director’s or officer’s gross or intentional fault.

Court may order security or charge to cover certain costs

• 64.2 (1) On notice to the secured creditors who are likely to be affected by the security or charge, the court may make an order declaring that all or part of the property of a person in respect of whom a notice of intention is filed under section 50.4 or a proposal is filed under subsection 62(1) is subject to a security or charge, in an amount that the court considers appropriate, in respect of the fees and expenses of

  • (a) the trustee, including the fees and expenses of any financial, legal or other experts engaged by the trustee in the performance of the trustee’s duties;

  • (b) any financial, legal or other experts engaged by the person for the purpose of proceedings under this Division; and

  • (c) any financial, legal or other experts engaged by any other interested person if the court is satisfied that the security or charge is necessary for the effective participation of that person in proceedings under this Division.

• Priority

  (2) The court may order that the security or charge rank in priority over the claim of any secured creditor of the person.

• Individual

  (3) In the case of an individual,

  • (a) the court may not make the order unless the individual is carrying on a business; and

  • (b) only property acquired for or used in relation to the business may be subject to a security or charge.

Where proposal is conditional on purchase of new securities

65 A proposal made conditional on the purchase of shares or securities or on any other payment or contribution by the creditors shall provide that the claim of any creditor who elects not to participate in the proposal shall be valued by the court and shall be paid in cash on approval of the proposal.

Certain rights limited

• 65.1 (1) If a notice of intention or a proposal has been filed in respect of an insolvent person, no person may terminate or amend any agreement, including a security agreement, with the insolvent person, or claim an accelerated payment, or a forfeiture of the term, under any agreement, including a security agreement, with the insolvent person, by reason only that

  • (a) the insolvent person is insolvent; or

  • (b) a notice of intention or a proposal has been filed in respect of the insolvent person.

• Idem

  (2) Where the agreement referred to in subsection (1) is a lease or a licensing agreement, subsection (1) shall be read as including the following paragraph:

  • “(c) the insolvent person has not paid rent or royalties, as the case may be, or other payments of a similar nature, in respect of a period preceding the filing of

    • (i) the notice of intention, if one was filed, or

    • (ii) the proposal, if no notice of intention was filed.”

• Idem

  (3) Where a notice of intention or a proposal has been filed in respect of an insolvent person, no public utility may discontinue service to that insolvent person by reason only that

  • (a) the insolvent person is insolvent;

  • (b) a notice of intention or a proposal has been filed in respect of the insolvent person; or

  • (c) the insolvent person has not paid for services rendered, or material provided, before the filing of

    • (i) the notice of intention, if one was filed, or

    • (ii) the proposal, if no notice of intention was filed.

• Certain acts not prevented

  (4) Nothing in subsections (1) to (3) shall be construed

  • (a) as prohibiting a person from requiring immediate payment for goods, services, use of leased or licensed property or other valuable consideration provided after the filing of

    • (i) the notice of intention, if one was filed, or

    • (ii) the proposal, if no notice of intention was filed;

  • (b) as requiring the further advance of money or credit; or

  • (c) [Repealed, 2012, c. 31, s. 415]

• 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 subsections (1) to (3) is of no force or effect.

• Powers of court

  (6) The court may, on application by a party to an agreement or by a public utility, declare that subsections (1) to (3) do not apply, or apply only to the extent declared by the court, where the applicant satisfies the court that the operation of those subsections would likely cause it significant financial hardship.

• Eligible financial contracts

  (7) Subsection (1) does not apply

  • (a) in respect of an eligible financial contract; or

  • (b) to prevent a member of the Canadian Payments Association established by the Canadian Payments Act from ceasing to act as a clearing agent or group clearer for an insolvent person in accordance with that Act and the by-laws and rules of that Association.

• (8) [Repealed, 2007, c. 29, s. 92]

• Permitted actions

  (9) Despite subsections 69(1) and 69.1(1), the following actions are permitted in respect of an eligible financial contract that is entered into before the filing, in respect of an insolvent person of a notice of intention or, where no notice of intention is filed, a proposal, and that is terminated on or after that filing, but only in accordance with the provisions of that contract:

  • (a) the netting or setting off or compensation of obligations between the insolvent person and the other parties to the eligible financial contract; and

  • (b) any dealing with financial collateral including

    • (i) the sale or foreclosure or, in the Province of Quebec, the surrender of financial collateral, and

    • (ii) the setting off or compensation of financial collateral or the application of the proceeds or value of financial collateral.

• Net termination values

  (10) If net termination values determined in accordance with an eligible financial contract referred to in subsection (9) are owed by the insolvent person to another party to the eligible financial contract, that other party is deemed, for the purposes of paragraphs 69(1)(a) and 69.1(1)(a), to be a creditor of the insolvent person with a claim provable in bankruptcy in respect of those net termination values.

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.

• 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.

• 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.

• 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.

• 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.

• 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.

• 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.

• 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.

• 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.

• 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.

Application for authorization to serve a notice to bargain

• 65.12 (1) An insolvent person in respect of whom a notice of intention is filed under section 50.4 or a proposal is filed under subsection 62(1) who is a party to a collective agreement and who is unable to reach a voluntary agreement with the bargaining agent to revise any of its provisions may, on giving five days notice to the bargaining agent, apply to the court for an order authorizing the insolvent person to serve a notice to bargain under the laws of the jurisdiction governing collective bargaining between the insolvent person and the bargaining agent.

• Conditions for issuance of order

  (2) The court may issue the order only if it is satisfied that

  • (a) the insolvent person would not be able to make a viable proposal, taking into account the terms of the collective agreement;

  • (b) the insolvent person has made good faith efforts to renegotiate the provisions of the collective agreement; and

  • (c) the failure to issue the order is likely to result in irreparable damage to the insolvent person.

• No delay on vote on proposal

  (3) The vote of the creditors in respect of a proposal may not be delayed solely because the period provided in the laws of the jurisdiction governing collective bargaining between the insolvent person and the bargaining agent has not expired.

• Claims arising from revision of collective agreement

  (4) If the parties to the collective agreement agree to revise the collective agreement after proceedings have been commenced under this Act in respect of the insolvent person, the bargaining agent that is a party to the agreement has a claim, as an unsecured creditor, for an amount equal to the value of concessions granted by the bargaining agent with respect to the remaining term of the collective agreement.

• Order to disclose information

  (5) On the application of the bargaining agent and on notice to the person to whom the application relates, the court may, subject to any terms and conditions it specifies, make an order requiring the person to make available to the bargaining agent any information specified by the court in the person’s possession or control that relates to the insolvent person’s business or financial affairs and that is relevant to the collective bargaining between the insolvent person and the bargaining agent. The court may make the order only after the insolvent person has been authorized to serve a notice to bargain under subsection (1).

• Unrevised collective agreements remain in force

  (6) For greater certainty, any collective agreement that the insolvent person and the bargaining agent have not agreed to revise remains in force.

• Parties

  (7) For the purpose of this section, the parties to a collective agreement are the insolvent person and the bargaining agent who are bound by the collective agreement.

Restriction on disposition of assets

• 65.13 (1) An insolvent person in respect of whom a notice of intention is filed under section 50.4 or a proposal is filed under subsection 62(1) may not sell or otherwise dispose of assets outside the ordinary course of business unless authorized to do so by a court. Despite any requirement for shareholder approval, including one under federal or provincial law, the court may authorize the sale or disposition even if shareholder approval was not obtained.

• Individuals

  (2) In the case of an individual who is carrying on a business, the court may authorize the sale or disposition only if the assets were acquired for or used in relation to the business.

• Notice to secured creditors

  (3) An insolvent person who applies to the court for an authorization shall give notice of the application to the secured creditors who are likely to be affected by the proposed sale or disposition.

• Factors to be considered

  (4) In deciding whether to grant the authorization, the court is to consider, among other things,

  • (a) whether the process leading to the proposed sale or disposition was reasonable in the circumstances;

  • (b) whether the trustee approved the process leading to the proposed sale or disposition;

  • (c) whether the trustee filed with the court a report stating that in their opinion the sale or disposition would be more beneficial to the creditors than a sale or disposition under a bankruptcy;

  • (d) the extent to which the creditors were consulted;

  • (e) the effects of the proposed sale or disposition on the creditors and other interested parties; and

  • (f) whether the consideration to be received for the assets is reasonable and fair, taking into account their market value.

• Additional factors — related persons

  (5) If the proposed sale or disposition is to a person who is related to the insolvent person, the court may, after considering the factors referred to in subsection (4), grant the authorization only if it is satisfied that

  • (a) good faith efforts were made to sell or otherwise dispose of the assets to persons who are not related to the insolvent person; and

  • (b) the consideration to be received is superior to the consideration that would be received under any other offer made in accordance with the process leading to the proposed sale or disposition.

• Related persons

  (6) For the purpose of subsection (5), a person who is related to the insolvent person includes

  • (a) a director or officer of the insolvent person;

  • (b) a person who has or has had, directly or indirectly, control in fact of the insolvent person; and

  • (c) a person who is related to a person described in paragraph (a) or (b).

• Assets may be disposed of free and clear

  (7) The court may authorize a sale or disposition free and clear of any security, charge or other restriction and, if it does, it shall also order that other assets of the insolvent person or the proceeds of the sale or disposition be subject to a security, charge or other restriction in favour of the creditor whose security, charge or other restriction is to be affected by the order.

• Restriction — employers

  (8) The court may grant the authorization only if the court is satisfied that the insolvent person can and will make the payments that would have been required under paragraphs 60(1.3)(a) and (1.5)(a) if the court had approved the proposal.

Insolvent person may disclaim or resiliate commercial lease

• 65.2 (1) At any time between the filing of a notice of intention and the filing of a proposal, or on the filing of a proposal, in respect of an insolvent person who is a commercial lessee under a lease of real property or an immovable, the insolvent person may disclaim or resiliate the lease on giving thirty days notice to the lessor in the prescribed manner, subject to subsection (2).

• Lessor may challenge

  (2) Within fifteen days after being given notice of the disclaimer or resiliation of a lease under subsection (1), the lessor may apply to the court for a declaration that subsection (1) does not apply in respect of that lease, and the court, on notice to any parties that it may direct, shall, subject to subsection (3), make that declaration.

• Circumstances for not making declaration

  (3) No declaration under subsection (2) shall be made if the court is satisfied that the insolvent person would not be able to make a viable proposal without the disclaimer or resiliation of the lease and all other leases that the lessee has disclaimed or resiliated under subsection (1).

• Effects of disclaimer or resiliation

  (4) If a lease is disclaimed or resiliated under subsection (1),

  • (a) the lessor has no claim for accelerated rent;

  • (b) the proposal must indicate whether the lessor may file a proof of claim for the actual losses resulting from the disclaimer or resiliation, or for an amount equal to the lesser of

    • (i) the aggregate of

      • (A) the rent provided for in the lease for the first year of the lease following the date on which the disclaimer or resiliation becomes effective, and

      • (B) fifteen per cent of the rent for the remainder of the term of the lease after that year, and

    • (ii) three years’ rent; and

  • (c) the lessor may file a proof of claim as indicated in the proposal.

• Classification of claim

  (5) The lessor’s claim shall be included in either

  • (a) a separate class of similar claims of lessors; or

  • (b) a class of unsecured claims that includes claims of creditors who are not lessors.

• Lessor’s vote on proposal

  (6) The lessor is entitled to vote on the proposal in whichever class referred to in subsection (5) the lessor’s claim is included, and for the amount of the claim as proven.

• Determination of classes

  (7) The court may, on application made at any time after the proposal is filed, determine the classes of claims of lessors and the class into which the claim of any of those particular lessors falls.

• Section 146 not affected

  (8) Nothing in subsections (1) to (7) affects the operation of section 146 in the event of bankruptcy.

Lease disclaimer or resiliation if lessee is a bankrupt

65.21 If, in respect of a proposal concerning a bankrupt person who is a commercial lessee under a lease of real property or an immovable, the lessee’s lease has been surrendered, disclaimed or resiliated in the bankruptcy proceedings, subsections 65.2(3) to (7) apply in the same manner and to the same extent as if the person was not a bankrupt but was an insolvent person in respect of which a disclaimer or resiliation referred to in those subsections applies.

Bankruptcy after court approval

65.22 If an insolvent person who has disclaimed or resiliated a lease under subsection 65.2(1) becomes bankrupt after the court approval of the proposal and before the proposal is fully performed, any claim of the lessor in respect of losses resulting from the disclaimer or resiliation, including any claim for accelerated rent, shall be reduced by the amount of compensation paid under the proposal for losses resulting from the disclaimer or resiliation.

Certificate where proposal performed

65.3 Where a proposal is fully performed, the trustee shall give a certificate to that effect, in the prescribed form, to the debtor and to the official receiver.

Act to apply

• 66 (1) All the provisions of this Act, except Division II of this Part, in so far as they are applicable, apply, with such modifications as the circumstances require, to proposals made under this Division.

• Assignments

  (1.1) For the purposes of subsection (1), in deciding whether to make an order under subsection 84.1(1), the court is to consider, in addition to the factors referred to in subsection 84.1(3), whether the trustee approved the proposed assignment.

• Final statement of receipts and disbursements

  (1.2) For the purposes of subsection (1), the trustee is to prepare the final statement of receipts and disbursements referred to in section 151 without delay after

  • (a) the debtor files or is deemed to have filed an assignment;

  • (b) the trustee informs the creditors and the official receiver of a default made in the performance of any provision in a proposal; or

  • (c) the trustee gives the certificate referred to in section 65.3 in respect of the proposal.

• Examination by official receiver

  (1.3) For the purposes of subsection (1), the examination under oath by the official receiver under subsection 161(1) is to be held — on the attendance of the person in respect of whom a notice of intention is filed under section 50.4 or a proposal is filed under subsection 62(1) — before the proposal is approved by the court or the person becomes bankrupt.

• Division to be applied conjointly with other Acts

  (1.4) The provisions of this Division may be applied together with the provisions of an Act of Parliament, or of the legislature of a province, that authorizes or provides for the sanction of compromises or arrangements between a corporation and its shareholders or any class of its shareholders.

• Effect of Companies’ Creditors Arrangement Act

  (2) Notwithstanding the Companies’ Creditors Arrangement Act,

  • (a) proceedings commenced under that Act shall not be dealt with or continued under this Act; and

  • (b) proceedings shall not be commenced under Part III of this Act in respect of a company if a compromise or arrangement has been proposed in respect of the company under the Companies’ Creditors Arrangement Act and the compromise or arrangement has not been agreed to by the creditors or sanctioned by the court under that Act.

DIVISION IIConsumer Proposals

Definitions

66.11 In this Division,

administrator

administrator means

• (a) a trustee, or

• (b) a person appointed or designated by the Superintendent to administer consumer proposals; (administrateur)

consumer debtor

consumer debtor means an individual who is bankrupt or insolvent and whose aggregate debts, excluding any debts secured by the individual’s principal residence, are not more than $250,000 or any other prescribed amount; (débiteur consommateur)

consumer proposal

consumer proposal means a proposal made under this Division. (proposition de consommateur)

Consumer proposal

• 66.12 (1) A consumer proposal may be made by a consumer debtor, subject to subsections (2) and 66.32(1).

• Dealing with certain consumer proposals together

  (1.1) Two or more consumer proposals may, in such circumstances as are specified in directives of the Superintendent, be dealt with as one consumer proposal where they could reasonably be dealt with together because of the financial relationship of the consumer debtors involved.

• Restriction

  (2) A consumer debtor who has filed a notice of intention or a proposal under Division I may not make a consumer proposal until the trustee appointed in respect of the notice of intention or proposal under Division I has been discharged.

• To whom consumer proposal is made

  (3) A consumer proposal shall be made to the creditors generally.

• Creditors’ response

  (4) Any creditor may respond to a consumer proposal by filing with the administrator a proof of claim in the manner provided for in

  • (a) sections 124 to 126, in the case of unsecured creditors; or

  • (b) sections 124 to 134, in the case of secured creditors.

• Term of consumer proposal

  (5) A consumer proposal must provide that its performance is to be completed within five years.

• Priority of claims, fees

  (6) A consumer proposal must provide

  • (a) for the payment in priority to other claims of all claims directed to be so paid in the distribution of the property of the consumer debtor;

  • (b) for the payment of all prescribed fees and expenses

    • (i) of the administrator on and incidental to proceedings arising out of the consumer proposal, and

    • (ii) of any person in respect of counselling provided pursuant to paragraph 66.13(2)(b); and

  • (c) for the manner of distributing dividends.

Commencement of proceedings

• 66.13 (1) A consumer debtor who wishes to make a consumer proposal shall commence proceedings by

  • (a) obtaining the assistance of an administrator in preparing the consumer proposal; and

  • (b) providing the administrator with the prescribed information on the consumer debtor’s current financial situation.

• Duties of administrator

  (2) An administrator who agrees to assist a consumer debtor shall

  • (a) investigate, or cause to be investigated, the consumer debtor’s property and financial affairs so as to be able to assess with reasonable accuracy the consumer debtor’s financial situation and the cause of his insolvency;

  • (b) provide, or provide for, counselling in accordance with directives issued by the Superintendent pursuant to paragraph 5(4)(b);

  • (c) prepare a consumer proposal in the prescribed form; and

  • (d) subject to subsection (3), file with the official receiver a copy of the consumer proposal, signed by the consumer debtor, and the prescribed statement of affairs.

• Where consumer proposal not to be filed

  (3) The administrator shall not file a consumer proposal under paragraph (2)(d) if he has reason to believe that

  • (a) the debtor is not eligible to make a consumer proposal; or

  • (b) there has been non-compliance with anything required by this section or section 66.12.

• Where consumer proposal wrongly filed

  (4) Where the administrator determines, after filing a consumer proposal under paragraph (2)(d), that it should not have been filed because the debtor was not eligible to make a consumer proposal, the administrator shall forthwith so inform the creditors and the official receiver, but the consumer proposal is not invalid by reason only that the debtor was not eligible to make the consumer proposal.

Duties of administrator

66.14 The administrator shall, within ten days after filing a consumer proposal with the official receiver,

• (a) prepare and file with the official receiver a report in the prescribed form setting out

  • (i) the results of the investigation made under paragraph 66.13(2)(a),

  • (ii) the administrator’s opinion as to whether the consumer proposal is reasonable and fair to the consumer debtor and the creditors, and whether the consumer debtor will be able to perform it, and

  • (iii) [Repealed, 2005, c. 47, s. 49]

  • (iv) a list of the creditors whose claims exceed two hundred and fifty dollars; and

• (b) send to every known creditor, in the prescribed form and manner,

  • (i) a copy of the consumer proposal and a copy of the statement of affairs referred to in paragraph 66.13(2)(d),

  • (ii) a copy of the report referred to in paragraph (a),

  • (iii) a form of proof of claim as prescribed, and

  • (iv) a statement explaining that a meeting of creditors will be called only if required under section 66.15 and that a review of the consumer proposal by a court will be made only if it is requested in accordance with subsection 66.22(1).

Meeting of creditors

• 66.15 (1) The official receiver may, at any time within the forty-five day period following the filing of the consumer proposal, direct the administrator to call a meeting of creditors.

• Idem

  (2) The administrator shall call a meeting of creditors

  • (a) forthwith after being so directed by the official receiver under subsection (1), or

  • (b) at the expiration of the forty-five day period following the filing of the consumer proposal, if at that time creditors having in the aggregate at least twenty-five per cent in value of the proven claims have so requested,

  and any meeting of creditors must be held within twenty-one days after being called.

• Notice to be sent to creditors

  (3) The administrator shall, at least ten days before a meeting called pursuant to this section, send to the consumer debtor, every known creditor and the official receiver, in the prescribed form and manner, a notice setting out

  • (a) the time and place of the meeting;

  • (b) a form of proxy as prescribed; and

  • (c) such other information and documentation as is prescribed.

Chair of meeting

• 66.16 (1) The official receiver, or the nominee thereof, shall be the chair of a meeting called pursuant to section 66.15 and subsection 66.37(1) and shall decide any questions or disputes arising at the meeting, and any creditor may appeal any such decision to the court.

• Adjournment of meeting for further investigation and examination

  (2) Where the creditors by ordinary resolution at the meeting so require, the meeting shall be adjourned to such time and place as may be fixed by the chair

  • (a) to enable a further appraisal and investigation of the affairs and property of the consumer debtor to be made; or

  • (b) for the examination under oath of the consumer debtor or of such other person as may be believed to have knowledge of the affairs or property of the consumer debtor, and the testimony of the consumer debtor or such other person, if transcribed, shall be placed before the adjourned meeting or may be read in court on the application, if any, for the approval of the consumer proposal.

Creditor may indicate assent or dissent

• 66.17 (1) Any creditor who has proved a claim may indicate assent to or dissent from the consumer proposal in the prescribed manner to the administrator at or prior to a meeting of creditors, or prior to the expiration of the forty-five day period following the filing of the consumer proposal.

• Effect of assent or dissent

  (2) Unless it is rescinded, any assent or dissent received by the administrator at or before a meeting of creditors has effect as if the creditor had been present and had voted at the meeting.

Where consumer proposal deemed accepted

• 66.18 (1) Where, at the expiration of the forty-five day period following the filing of the consumer proposal, no obligation has arisen under subsection 66.15(2) to call a meeting of creditors, the consumer proposal is deemed to be accepted by the creditors.

• Idem

  (2) Where there is no quorum at a meeting of creditors, the consumer proposal shall be deemed to be accepted by the creditors.

Voting on consumer proposal

• 66.19 (1) At a meeting of creditors, the creditors may by ordinary resolution, voting all as one class, accept or refuse the consumer proposal as filed or as altered at the meeting or any adjournment thereof, subject to the rights of secured creditors.

• Related creditor

  (2) A creditor who is related to the consumer debtor may vote against but not for the acceptance of the consumer proposal.

• Voting by administrator

  (3) The administrator, as a creditor, may not vote on the consumer proposal.

Creditors may provide for supervision of consumer debtor’s affairs

66.2 The creditors, with the consent of the consumer debtor, may include such provisions or terms in the consumer proposal with respect to the supervision of the affairs of the consumer debtor as they may deem advisable.

Appointment of inspectors

66.21 The creditors may appoint up to three inspectors of the estate of the consumer debtor, who shall have the powers of an inspector under this Act, subject to any extension or restriction of those powers by the terms of the consumer proposal.

Application to court

• 66.22 (1) Where a consumer proposal is accepted or deemed accepted by the creditors, the administrator shall, if requested by the official receiver or any other interested party within fifteen days after the day of acceptance or deemed acceptance, forthwith apply to the court to have the consumer proposal reviewed.

• Where consumer proposal deemed approved by court

  (2) Where, at the expiration of the fifteenth day after the day of acceptance or deemed acceptance of the consumer proposal by the creditors, no obligation has arisen under subsection (1) to apply to the court, the consumer proposal is deemed to be approved by the court.

Procedure for application to court

66.23 Where the administrator applies to the court pursuant to subsection 66.22(1), the administrator shall

• (a) send a notice of the hearing of the application, in the prescribed manner and at least fifteen days before the date of the hearing, to the consumer debtor, to every creditor who has proved a claim and to the official receiver;

• (b) forward a copy of the report referred to in paragraph (c) to the official receiver at least ten days before the date of the hearing; and

• (c) at least two days before the date of the hearing, file with the court a report in the prescribed form on the consumer proposal and the conduct of the consumer debtor.

Court to hear report of administrator, etc.

• 66.24 (1) The court shall, before approving the consumer proposal, hear the report mentioned in paragraph 66.23(c) and, in addition, shall hear the official receiver, the administrator, the consumer debtor, any opposing, objecting or dissenting creditor or other interested party, and such further evidence as the court may require.

• Refusal to approve the consumer proposal

  (2) Where the court is of the opinion that the terms of the consumer proposal are not reasonable or are not fair to the consumer debtor and the creditors, the court shall refuse to approve the consumer proposal, and the court may refuse to approve the consumer proposal whenever it is established that the consumer debtor

  • (a) has committed any one of the offences mentioned in sections 198 to 200; or

  • (b) was not eligible to make a consumer proposal when the consumer proposal was filed with the official receiver.

• Proposal must comply with Act

  (3) The court shall refuse to approve a consumer proposal if it does not comply with subsections 66.12(5) and (6).

• Power of court

  (4) Subject to subsections (1) to (3), the court may either approve or refuse to approve the consumer proposal.

Withdrawal of consumer proposal

66.25 A consumer debtor may withdraw a consumer proposal

• (a) at any time before its deemed approval by the court by virtue of subsection 66.22(2), where no court review is requested; or

• (b) where a court review is requested, at any time before its actual approval or refusal by the court pursuant to section 66.24.

Where periodic payments not provided for

66.251 Where a proposal is approved or deemed approved by the court and the terms of the proposal do not provide for the distribution of available moneys at least once every three months, the administrator shall forthwith, upon ascertaining any change in the consumer debtor’s circumstances that leads the administrator to conclude, after consultation with the debtor where practicable, that such change could jeopardize the consumer debtor’s ability to meet the terms of the proposal, in writing, notify the official receiver and every known creditor of the change.

Payments to administrator

• 66.26 (1) All moneys payable under the consumer proposal shall be paid to the administrator and, after payment of all fees and expenses mentioned in paragraph 66.12(6)(b), the administrator shall distribute available moneys to the creditors in accordance with the terms of the consumer proposal.

• Deposit of moneys

  (2) In such circumstances as are specified in directives of the Superintendent and with the approval of the Superintendent, the administrator may deposit all moneys relating to the administration of consumer proposals in a single trust account.

• Section 147 applies

  (3) Section 147 applies, with such modifications as the circumstances require, to all distributions made to the creditors by the administrator pursuant to subsection (1).

Notifications

66.27 The administrator shall, within five days after

• (a) the refusal of a consumer proposal by the creditors,

• (b) the refusal of a consumer proposal by the court, and

• (c) the withdrawal of a consumer proposal by the consumer debtor,

so notify in the prescribed form and manner the consumer debtor, every known creditor and the official receiver.

Time for determining claims

• 66.28 (1) The time with respect to which the claims of creditors shall be determined is the time of the filing of the consumer proposal.

• On whom approval binding

  (2) Subject to subsection (2.1), a consumer proposal accepted, or deemed accepted, by the creditors and approved, or deemed approved, by the court is binding on creditors in respect of

  • (a) all unsecured claims; and

  • (b) secured claims for which proofs of claim have been filed in the manner provided for in sections 124 to 134.

• When consumer debtor is released from debt

  (2.1) A consumer proposal accepted, or deemed accepted, by the creditors and approved, or deemed approved, by the court does not release the consumer debtor from any particular debt or liability referred to in subsection 178(1) unless the consumer proposal explicitly provides for the compromise of that debt or liability and the creditor in relation to that debt or liability voted for the acceptance of the consumer proposal.

• Certain persons not released

  (3) The acceptance of a consumer proposal by a creditor does not release any person who would not be released under this Act by the discharge of the consumer debtor.

Administrator may issue certificate

• 66.29 (1) If a consumer proposal is approved or deemed approved by the court, the administrator may, if the administrator believes on reasonable grounds that the debtor owns land or other valuable property, issue a certificate in respect of the proposal, and may cause the certificate to be filed in any place where a certificate of judgment, writ of seizure and sale or other like document may be filed or where a legal hypothec of judgment creditors may be registered.

• Effect of filing certificate

  (2) A certificate filed under subsection (1) operates as a certificate of judgment, writ of execution or legal hypothec of judgment creditors until the proposal is fully performed.

Annulment of consumer proposal

• 66.3 (1) Where default is made in the performance of any provision in a consumer proposal, or where it appears to the court

  • (a) that the debtor was not eligible to make a consumer proposal when the consumer proposal was filed,

  • (b) that the consumer proposal cannot continue without injustice or undue delay, or

  • (c) that the approval of the court was obtained by fraud,

  the court may, on application, with such notice as the court may direct to the consumer debtor and, if applicable, to the administrator and to the creditors, annul the consumer proposal.

• Validity of things done

  (2) An order made under subsection (1) shall be made without prejudice to the validity of any sale, disposition of property or payment duly made, or anything duly done under or in pursuance of the consumer proposal, and notwithstanding the annulment of the consumer proposal, a guarantee given pursuant to the consumer proposal remains in full force and effect in accordance with its terms.

• Annulment for offence

  (3) A consumer proposal, although accepted or approved, may be annulled by order of the court at the request of the administrator or of any creditor whenever the consumer debtor is afterwards convicted of any offence under this Act.

• Notification of annulment

  (4) Where an order annulling the consumer proposal of a consumer debtor who is not a bankrupt has been made pursuant to this section, the administrator shall forthwith so inform the creditors and file a report thereof in the prescribed form with the official receiver.

• Annulment effect

  (5) Where a consumer proposal made by a bankrupt is annulled,

  • (a) the consumer debtor is deemed on the annulment to have made an assignment and the order annulling the proposal shall so state;

  • (b) the trustee who is the administrator of the proposal shall, within five days after the order is made, send notice of the meeting of creditors under section 102, at which meeting the creditors may by ordinary resolution, notwithstanding section 14, affirm the appointment of the trustee or appoint another trustee in lieu of that trustee; and

  • (c) the trustee shall forthwith file a report thereof in the prescribed form with the official receiver, who shall thereupon issue a certificate of assignment in the prescribed form, which has the same effect for the purposes of this Act as an assignment filed pursuant to section 49.

Deemed annulment — default of payment

• 66.31 (1) Unless the court has previously ordered otherwise or unless an amendment to the consumer proposal has previously been filed, a consumer proposal is deemed to be annulled on

  • (a) in the case when payments under the consumer proposal are to be made monthly or more frequently, the day on which the consumer debtor is in default for an amount that is equal to or more than the amount of three payments; or

  • (b) in the case when payments under the consumer proposal are to be made less frequently than monthly, the day that is three months after the day on which the consumer debtor is in default in respect of any payment.

• Deemed annulment — amendment withdrawn or refused

  (2) If an amendment to a consumer proposal filed before the deemed annulment of the consumer proposal under subsection (1) is withdrawn or refused by the creditors or the court, the consumer proposal is deemed to be annulled at the time that the amendment is withdrawn or refused.

• Duties of administrator in relation to deemed annulment

  (3) Without delay after a consumer proposal is deemed to be annulled, the administrator shall

  • (a) file with the official receiver a report in the prescribed form in relation to the deemed annulment; and

  • (b) send a notice to the creditors informing them of the deemed annulment.

• Effects of deemed annulment — consumer proposal made by a bankrupt

  (4) If a consumer proposal made by a bankrupt is deemed to be annulled,

  • (a) the consumer debtor is deemed to have made an assignment on the day on which the consumer proposal is deemed to be annulled;

  • (b) the trustee who is the administrator of the consumer proposal shall, within five days after the day on which the consumer proposal is deemed to be annulled, send notice of the meeting of creditors under section 102, at which meeting the creditors may by ordinary resolution, despite section 14, affirm the appointment of the trustee or appoint another trustee in lieu of that trustee; and

  • (c) the trustee shall, without delay, file with the official receiver, in the prescribed form, a report of the deemed annulment and the official receiver shall, without delay, issue a certificate of assignment, in the prescribed form, which has the same effect for the purposes of this Act as an assignment filed under section 49.

• Validity of things done before deemed annulment

  (5) A deemed annulment of a consumer proposal does not prejudice the validity of any sale or disposition of property or payment duly made, or anything duly done under or in pursuance of the consumer proposal and, despite the deemed annulment, a guarantee given under the consumer proposal remains in full force and effect in accordance with its terms.

• Notice of possibility of consumer proposal being automatically revived

  (6) In the case of a deemed annulment of a consumer proposal made by a person other than a bankrupt, if the administrator considers it appropriate to do so in the circumstances, he or she may, with notice to the official receiver, send to the creditors — within 30 days, or any other number of days that is prescribed, after the day on which the consumer proposal was deemed to be annulled — a notice in the prescribed form informing them that the consumer proposal will be automatically revived 60 days, or any other number of days that is prescribed, after the day on which it was deemed to be annulled unless one of them files with the administrator, in the prescribed manner, a notice of objection to the revival.

• Automatic revival

  (7) If the notice is sent by the administrator and no notice of objection is filed during the period referred to in subsection (6), the consumer proposal is automatically revived on the expiry of that period.

• Notice if no automatic revival

  (8) If a notice of objection is filed during the period referred to in subsection (6), the administrator is to send, without delay, to the official receiver and to each creditor a notice in the prescribed form informing them that the consumer proposal is not going to be automatically revived on the expiry of that period.

• Administrator may apply to court to revive consumer proposal

  (9) The administrator may at any time apply to the court, with notice to the official receiver and the creditors, for an order reviving any consumer proposal of a consumer debtor who is not a bankrupt that was deemed to be annulled, and the court, if it considers it appropriate to do so in the circumstances, may make an order reviving the consumer proposal, on any terms that the court considers appropriate.

• Duty of administrator if consumer proposal is revived

  (10) Without delay after a consumer proposal is revived, the administrator shall

  • (a) file with the official receiver a report in the prescribed form in relation to the revival; and

  • (b) send a notice to the creditors informing them of the revival.

• Validity of things done before revival

  (11) The revival of a consumer proposal does not prejudice the validity of anything duly done — between the day on which the consumer proposal is deemed to be annulled and the day on which it is revived — by a creditor in the exercise of any rights revived by subsection 66.32(2).

Effects of annulment

• 66.32 (1) Unless the court otherwise orders, where a consumer proposal is annulled or deemed annulled, the consumer debtor

  • (a) may not make another consumer proposal, and

  • (b) is not entitled to any relief provided by sections 69 to 69.2

  until all claims for which proofs of claim were filed and accepted are either paid in full or are extinguished by the operation of subsection 178(2).

• Idem

  (2) Where a consumer proposal is annulled or deemed annulled, the rights of the creditors are revived for the amount of their claims less any dividends received.

66.33 [Repealed, 2005, c. 47, s. 54]

Certain rights limited

• 66.34 (1) If a consumer proposal has been filed in respect of a consumer debtor, no person may terminate or amend any agreement, including a security agreement, with the consumer debtor, or claim an accelerated payment, or the forfeiture of the term, under any agreement, including a security agreement, with the consumer debtor, by reason only that

  • (a) the consumer debtor is insolvent, or

  • (b) a consumer proposal has been filed in respect of the consumer debtor

  until the consumer proposal has been withdrawn, refused by the creditors or the court, annulled or deemed annulled.

• Idem

  (2) Where the agreement referred to in subsection (1) is a lease, subsection (1) shall be read as including the following paragraph:

  • “(c) the consumer debtor has not paid rent in respect of a period preceding the filing of the consumer proposal.”

• Idem

  (3) Where a consumer proposal has been filed in respect of a consumer debtor, no public utility may discontinue service to that consumer debtor by reason only that

  • (a) the consumer debtor is insolvent,

  • (b) a consumer proposal has been filed in respect of the consumer debtor, or

  • (c) the consumer debtor has not paid for services rendered, or material provided, before the filing of the consumer proposal

  until the consumer proposal has been withdrawn, refused by the creditors or the court, annulled or deemed annulled.

• Certain acts not prevented

  (4) Nothing in subsections (1) to (3) shall be construed

  • (a) as 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 filing of the consumer proposal; or

  • (b) as requiring the further advance of money or credit.

• 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 subsections (1) to (3) is of no force or effect.

• Powers of court

  (6) The court may, on application by a party to an agreement or by a public utility, declare that this section does not apply, or applies only to the extent declared by the court, where the applicant satisfies the court that the operation of this section would likely cause it significant financial hardship.

• Eligible financial contracts

  (7) Subsection (1) does not apply in respect of an eligible financial contract.

• Permitted actions

  (8) Despite section 69.2, the following actions are permitted in respect of an eligible financial contract that is entered into before the filing of a consumer proposal and is terminated on or after that filing, but only in accordance with the provisions of that contract:

  • (a) the netting or setting off or compensation of obligations between the consumer debtor and the other parties to the eligible financial contract; and

  • (b) any dealing with financial collateral including

    • (i) the sale or foreclosure or, in the Province of Quebec, the surrender of financial collateral, and

    • (ii) the setting off or compensation of financial collateral or the application of the proceeds or value of financial collateral.

• Net termination values

  (9) If net termination values determined in accordance with an eligible financial contract referred to in subsection (8) are owed by the consumer debtor to another party to the eligible financial contract, that other party is deemed, for the purposes of subsection 69.2(1), to be a creditor of the consumer debtor with a claim provable in bankruptcy in respect of those net termination values.

Assignment of wages

• 66.35 (1) An assignment of existing or future wages made by a consumer debtor before the filing of a consumer proposal is of no effect in respect of wages earned after the filing of the consumer proposal.

• Assignment of debts at request of administrator

  (2) In order to ensure compliance with the terms of a consumer proposal, the administrator may, at any time after the consumer proposal is filed, require of, and take from, the consumer debtor an assignment of any amount payable to the consumer debtor, including wages, that may become payable in the future, but no such assignment can, unless the consumer debtor agrees, be for an amount greater than is due and payable pursuant to the terms of the consumer proposal.

• Third parties protected

  (3) An assignment made pursuant to subsection (2) is of no effect against a person owing the amount payable until a notice of the assignment is served on that person.

• When section ceases to apply

  (4) This section ceases to apply where the consumer proposal is refused by the creditors or by the court, or is withdrawn, annulled or deemed annulled.

No dismissal, etc., of employee

66.36 No employer shall dismiss, suspend, lay off or otherwise discipline a consumer debtor on the sole ground that a consumer proposal has been filed in respect of that consumer debtor.

Amendment to consumer proposal

66.37 If an administrator files an amendment to a consumer proposal before the withdrawal, refusal, approval or deemed approval by the court of the consumer proposal, or after the approval or deemed approval by the court of the consumer proposal and before it has been fully performed or annulled or deemed annulled, the provisions of this Division apply to the consumer proposal and the amended consumer proposal, with any modifications that the circumstances require, and, for that purpose, the definition consumer debtor in section 66.11 is to be read as follows:

consumer debtor

consumer debtor means an individual who is insolvent;

Certificate if consumer proposal performed

• 66.38 (1) If a consumer proposal is fully performed, the administrator shall issue a certificate to that effect, in the prescribed form, to the consumer debtor and to the official receiver.

• Effect if counselling refused

  (2) Subsection (1) does not apply in respect of a consumer debtor who has refused or neglected to receive counselling provided under paragraph 66.13(2)(b).

Administrator’s accounts, discharge

66.39 The form and content of the administrator’s accounts, the procedure for the preparation and taxation of those accounts and the procedure for the discharge of the administrator shall be as prescribed.

Act to apply

• 66.4 (1) All the provisions of this Act, except Division I of this Part, in so far as they are applicable, apply, with such modifications as the circumstances require, to consumer proposals.

• Where consumer debtor is bankrupt

  (2) Where a consumer proposal is made by a consumer debtor who is a bankrupt,

  • (a) the consumer proposal must be approved by the inspectors, if any, before any further action is taken thereon;

  • (b) the consumer debtor must have obtained the assistance of a trustee who shall act as administrator of the proposal in the preparation and execution thereof;

  • (c) the time with respect to which the claims of creditors shall be determined is the time at which the consumer debtor became bankrupt; and

  • (d) the approval or deemed approval by the court of the consumer proposal operates to annul the bankruptcy and to revest in the consumer debtor, or in such other person as the court may approve, all the right, title and interest of the trustee in the property of the consumer debtor, unless the terms of the consumer proposal otherwise provide.

PART IVProperty of the Bankrupt

Property of bankrupt

• 67 (1) The property of a bankrupt divisible among his creditors shall not comprise

  • (a) property held by the bankrupt in trust for any other person;

  • (b) any property that as against the bankrupt is exempt from execution or seizure under any laws applicable in the province within which the property is situated and within which the bankrupt resides;

  • (b.1) goods and services tax credit payments that are made in prescribed circumstances to the bankrupt and that are not property referred to in paragraph (a) or (b);

  • (b.2) prescribed payments relating to the essential needs of an individual that are made in prescribed circumstances to the bankrupt and that are not property referred to in paragraph (a) or (b); or

  • (b.3) without restricting the generality of paragraph (b), property in a registered retirement savings plan or a registered retirement income fund, as those expressions are defined in the Income Tax Act, or in any prescribed plan, other than property contributed to any such plan or fund in the 12 months before the date of bankruptcy,

  but it shall comprise

  • (c) all property wherever situated of the bankrupt at the date of the bankruptcy or that may be acquired by or devolve on the bankrupt before their discharge, including any refund owing to the bankrupt under the Income Tax Act in respect of the calendar year — or the fiscal year of the bankrupt if it is different from the calendar year — in which the bankrupt became a bankrupt, except the portion that

    • (i) is not subject to the operation of this Act, or

    • (ii) in the case of a bankrupt who is the judgment debtor named in a garnishee summons served on Her Majesty under the Family Orders and Agreements Enforcement Assistance Act, is garnishable money that is payable to the bankrupt and is to be paid under the garnishee summons, and

  • (d) such powers in or over or in respect of the property as might have been exercised by the bankrupt for his own benefit.

• Deemed trusts

  (2) Subject to subsection (3), notwithstanding any provision in federal or provincial legislation that has the effect of deeming property to be held in trust for Her Majesty, property of a bankrupt shall not be regarded as held in trust for Her Majesty for the purpose of paragraph (1)(a) unless it would be so regarded in the absence of that statutory provision.

• Exceptions

  (3) Subsection (2) does not apply in respect of amounts deemed to be held in trust under subsection 227(4) or (4.1) of the Income Tax Act, subsection 23(3) or (4) of the Canada Pension Plan or subsection 86(2) or (2.1) of the Employment Insurance Act (each of which is in this subsection referred to as a “federal provision”) nor in respect of amounts deemed to be held in trust under any law of a province that creates a deemed trust the sole purpose of which is to ensure remittance to Her Majesty in right of the province of amounts deducted or withheld under a law of the province where

  • (a) that law of the province imposes a tax similar in nature to the tax imposed under the Income Tax Act and the amounts deducted or withheld under that law of the province are of the same nature as the amounts referred to in subsection 227(4) or (4.1) of the Income Tax Act, or

  • (b) the province is a province providing a comprehensive pension plan as defined in subsection 3(1) of the Canada Pension Plan, that law of the province establishes a provincial pension plan as defined in that subsection and the amounts deducted or withheld under that law of the province are of the same nature as amounts referred to in subsection 23(3) or (4) of the Canada Pension Plan,

  and for the purpose of this subsection, any provision of a law of a province that creates a deemed trust is, notwithstanding any Act of Canada or of a province or any other law, deemed to have the same effect and scope against any creditor, however secured, as the corresponding federal provision.

Directives re surplus income

• 68 (1) The Superintendent shall, by directive, establish in respect of the provinces or one or more bankruptcy districts or parts of bankruptcy districts, the standards for determining the surplus income of an individual bankrupt and the amount that a bankrupt who has surplus income is required to pay to the estate of the bankrupt.

• Definitions

  (2) The following definitions apply in this section.

  surplus income

  surplus income means the portion of a bankrupt individual’s total income that exceeds that which is necessary to enable the bankrupt individual to maintain a reasonable standard of living, having regard to the applicable standards established under subsection (1). (revenu excédentaire)

  total income

  total income

  • (a) includes, despite paragraphs 67(1)(b) and (b.3), a bankrupt’s revenues of whatever nature or from whatever source that are earned or received by the bankrupt between the date of the bankruptcy and the date of the bankrupt’s discharge, including those received as damages for wrongful dismissal, received as a pay equity settlement or received under an Act of Parliament, or of the legislature of a province, that relates to workers’ compensation; but

  • (b) does not include any amounts received by the bankrupt between the date of the bankruptcy and the date of the bankrupt’s discharge, as a gift, a legacy or an inheritance or as any other windfall. (revenu total)

• Determination of trustee re surplus income

  (3) The trustee shall, having regard to the applicable standards and to the personal and family situation of the bankrupt, determine whether the bankrupt has surplus income. The determination must also be made

  • (a) whenever the trustee becomes aware of a material change in the bankrupt’s financial situation; and

  • (b) whenever the trustee is required to prepare a report referred to in subsection 170(1).

• Duties of trustee relating to determination

  (4) Whenever the trustee is required to determine whether the bankrupt has surplus income, the trustee shall

  • (a) if the trustee determines that there is surplus income,

    • (i) fix, having regard to the applicable standards, the amount that the bankrupt is required to pay to the estate of the bankrupt,

    • (ii) inform, in the prescribed manner, the official receiver, and every creditor who has requested such information, of the amount fixed under subparagraph (i), and

    • (iii) take reasonable measures to ensure that the bankrupt complies with the requirement to pay; and

  • (b) if the trustee determines that there is no surplus income, inform, in the prescribed manner, the official receiver, and every creditor who has requested such information, of that determination.

• Official receiver recommendation

  (5) If the official receiver determines that the amount required to be paid by the bankrupt is substantially not in accordance with the applicable standards, the official receiver shall recommend to the trustee and to the bankrupt an amount required to be paid that the official receiver determines is in accordance with the applicable standards.

• Trustee may fix another amount

  (5.1) On receipt of the official receiver’s recommendation, the trustee may fix, having regard to the applicable standards, another amount as the amount that the bankrupt is required to pay to the estate of the bankrupt, and if the trustee does so, the trustee shall

  • (a) inform the official receiver and every creditor, in the prescribed manner, of the amount fixed under this subsection; and

  • (b) take reasonable measures to ensure that the bankrupt complies with the requirement to pay.

• Trustee may request mediation

  (6) If the trustee and the bankrupt are not in agreement with the amount that the bankrupt is required to pay under subsection (4) or (5.1), the trustee shall, without delay, in the prescribed form, send to the official receiver a request that the matter be determined by mediation and send a copy of the request to the bankrupt.

• Creditor may request mediation

  (7) On a creditor’s request made within 30 days after the day on which the trustee informed the creditor of the amount fixed under subsection (4) or (5.1), the trustee shall, within five days after the day on which the 30-day period ends, send to the official receiver a request, in the prescribed form, that the matter of the amount that the bankrupt is required to pay be determined by mediation and send a copy of the request to the bankrupt and the creditor.

• Mediation procedure

  (8) A mediation shall be in accordance with prescribed procedures.

• File

  (9) Documents contained in a file on the mediation of a matter under this section form part of the records referred to in subsection 11.1(2).

• Application to court to fix amount

  (10) The trustee may, in any of the following circumstances — and shall apply if requested to do so by the official receiver in the circumstances referred to in paragraph (a) — apply to the court to fix, by order, in accordance with the applicable standards, and having regard to the personal and family situation of the bankrupt, the amount that the bankrupt is required to pay to the estate of the bankrupt:

  • (a) if the trustee has not implemented a recommendation made by the official receiver under subsection (5);

  • (b) if the matter submitted to mediation has not been resolved by the mediation; or

  • (c) if the bankrupt has failed to comply with the requirement to pay as determined under this section.

• Fixing fair and reasonable remuneration in the case of related persons

  (11) The court may fix an amount that is fair and reasonable

  • (a) as salary, wages or other remuneration for the services being performed by a bankrupt for a person employing the bankrupt, or

  • (b) as payment for or commission in respect of any services being performed by a bankrupt for a person,

  where the person is related to the bankrupt, and the court may, by order, determine the part of the salary, wages or other remuneration, or the part of the payment or commission, that shall be paid to the trustee on the basis of the amount so fixed by the court, unless it appears to the court that the services have been performed for the benefit of the bankrupt and are not of any substantial benefit to the person for whom they were performed.

• Modification of order

  (12) On the application of any interested person, the court may, at any time, amend an order made under this section to take into account material changes that have occurred in the financial situation of the bankrupt.

• Default by other person

  (13) An order of the court made under this section may be served on a person from whom the bankrupt is entitled to receive money and, in such case,

  • (a) the order binds the person to pay to the estate of the bankrupt the amount fixed by the order; and

  • (b) if the person fails to comply with the terms of the order, the court may, on the application of the trustee, order the person to pay the trustee the amount of money that the estate of the bankrupt would have received had the person complied with the terms of the order.

• Application is a proceeding

  (14) For the purposes of section 38, an application referred to in subsection (10) is deemed to be a proceeding for the benefit of the estate.

• Property included for enforcement purposes

  (15) For the purpose of this section, a requirement that a bankrupt pay an amount to the estate is enforceable against the bankrupt’s total income.

• When obligation to pay ceases

  (16) If an opposition to the automatic discharge of a bankrupt individual who is required to pay an amount to the estate is filed, the bankrupt’s obligation under this section ceases on the day on which the bankrupt would have been automatically discharged had the opposition not been filed, but nothing in this subsection precludes the court from determining that the bankrupt is required to pay to the estate an amount that the court considers appropriate.

Assignment of wages

• 68.1 (1) An assignment of existing or future wages made by a debtor before the debtor became bankrupt is of no effect in respect of wages earned after the bankruptcy.

• Assignment of book debts

  (2) An assignment of existing or future amounts receivable as payment for or commission or professional fees in respect of services rendered by a debtor who is an individual before the debtor became bankrupt is of no effect in respect of such amounts earned or generated after the bankruptcy.

Stay of Proceedings

Stay of proceedings — notice of intention

• 69 (1) Subject to subsections (2) and (3) and sections 69.4, 69.5 and 69.6, on the filing of a notice of intention under section 50.4 by an insolvent person,

  • (a) no creditor has any remedy against the insolvent person or the insolvent person’s property, or shall commence or continue any action, execution or other proceedings, for the recovery of a claim provable in bankruptcy,

  • (b) no provision of a security agreement between the insolvent person and a secured creditor that provides, in substance, that on

    • (i) the insolvent person’s insolvency,

    • (ii) the default by the insolvent person of an obligation under the security agreement, or

    • (iii) the filing by the insolvent person of a notice of intention under section 50.4,

    the insolvent person ceases to have such rights to use or deal with assets secured under the agreement as he would otherwise have, has any force or effect,

  • (c) Her Majesty in right of Canada may not exercise Her rights under

    • (i) subsection 224(1.2) of the Income Tax Act, or

    • (ii) any provision of the Canada Pension Plan or of the Employment Insurance Act that

      • (A) refers to subsection 224(1.2) of the Income Tax Act, and

      • (B) provides for the collection of a contribution, as defined in the Canada Pension Plan, an employee’s premium or employer’s premium, as defined in the Employment Insurance Act, or a premium under Part VII.1 of that Act, and of any related interest, penalties or other amounts,

    in respect of the insolvent person where the insolvent person is a tax debtor under that subsection or provision, and

  • (d) Her Majesty in right of a province may not exercise her rights under any provision of provincial legislation in respect of the insolvent person where the insolvent person is a debtor under the provincial legislation and the provision has a similar purpose to subsection 224(1.2) of the Income Tax Act, or refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, where the sum

    • (i) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or

    • (ii) is of the same nature as a contribution under the Canada Pension Plan if the province is a province providing a comprehensive pension plan as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a provincial pension plan as defined in that subsection,

  until the filing of a proposal under subsection 62(1) in respect of the insolvent person or the bankruptcy of the insolvent person.

• Limitation

  (2) The stays provided by subsection (1) do not apply

  • (a) to prevent a secured creditor who took possession of secured assets of the insolvent person for the purpose of realization before the notice of intention under section 50.4 was filed from dealing with those assets;

  • (b) to prevent a secured creditor who gave notice of intention under subsection 244(1) to enforce that creditor’s security against the insolvent person more than ten days before the notice of intention under section 50.4 was filed, from enforcing that security, unless the secured creditor consents to the stay;

  • (c) to prevent a secured creditor who gave notice of intention under subsection 244(1) to enforce that creditor’s security from enforcing the security if the insolvent person has, under subsection 244(2), consented to the enforcement action; or

  • (d) [Repealed, 2012, c. 31, s. 416]

• Limitation

  (3) A stay provided by paragraph (1)(c) or (d) does not apply, or terminates, in respect of Her Majesty in right of Canada and every province if

  • (a) the insolvent person defaults on payment of any amount that becomes due to Her Majesty after the filing of the notice of intention and could be subject to a demand under

    • (i) subsection 224(1.2) of the Income Tax Act,

    • (ii) any provision of the Canada Pension Plan or of the Employment Insurance Act that refers to subsection 224(1.2) of the Income Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, or a premium under Part VII.1 of that Act, and of any related interest, penalties or other amounts, or

    • (iii) any provision of provincial legislation that has a similar purpose to subsection 224(1.2) of the Income Tax Act, or that refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, where the sum

      • (A) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or

      • (B) is of the same nature as a contribution under the Canada Pension Plan if the province is a province providing a comprehensive pension plan as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a provincial pension plan as defined in that subsection; or

  • (b) any other creditor is or becomes entitled to realize a security on any property that could be claimed by Her Majesty in exercising Her rights under

    • (i) subsection 224(1.2) of the Income Tax Act,

    • (ii) any provision of the Canada Pension Plan or of the Employment Insurance Act that refers to subsection 224(1.2) of the Income Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, or a premium under Part VII.1 of that Act, and of any related interest, penalties or other amounts, or

    • (iii) any provision of provincial legislation that has a similar purpose to subsection 224(1.2) of the Income Tax Act, or that refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, where the sum

      • (A) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or

      • (B) is of the same nature as a contribution under the Canada Pension Plan if the province is a province providing a comprehensive pension plan as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a provincial pension plan as defined in that subsection.

Stay of proceedings — Division I proposals

• 69.1 (1) Subject to subsections (2) to (6) and sections 69.4, 69.5 and 69.6, on the filing of a proposal under subsection 62(1) in respect of an insolvent person,

  • (a) no creditor has any remedy against the insolvent person or the insolvent person’s property, or shall commence or continue any action, execution or other proceedings, for the recovery of a claim provable in bankruptcy, until the trustee has been discharged or the insolvent person becomes bankrupt;

  • (b) no provision of a security agreement between the insolvent person and a secured creditor that provides, in substance, that on

    • (i) the insolvent person’s insolvency,

    • (ii) the default by the insolvent person of an obligation under the security agreement, or

    • (iii) the filing of a notice of intention under section 50.4 or of a proposal under subsection 62(1) in respect of the insolvent person,

    the insolvent person ceases to have such rights to use or deal with assets secured under the agreement as the insolvent person would otherwise have, has any force or effect until the trustee has been discharged or the insolvent person becomes bankrupt;

  • (c) Her Majesty in right of Canada may not exercise Her rights under subsection 224(1.2) of the Income Tax Act or any provision of the Canada Pension Plan or of the Employment Insurance Act that refers to subsection 224(1.2) of the Income Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, or a premium under Part VII.1 of that Act, and of any related interest, penalties or other amounts, in respect of the insolvent person where the insolvent person is a tax debtor under that subsection or provision, until

    • (i) the trustee has been discharged,

    • (ii) six months have elapsed following court approval of the proposal, or

    • (iii) the insolvent person becomes bankrupt; and

  • (d) Her Majesty in right of a province may not exercise Her rights under any provision of provincial legislation that has a similar purpose to subsection 224(1.2) of the Income Tax Act, or that refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, where the sum

    • (i) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or

    • (ii) is of the same nature as a contribution under the Canada Pension Plan if the province is a province providing a comprehensive pension plan as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a provincial pension plan as defined in that subsection,

    in respect of the insolvent person where the insolvent person is a debtor under the provincial legislation, until

    • (iii) the trustee has been discharged,

    • (iv) six months have elapsed following court approval of the proposal, or

    • (v) the insolvent person becomes bankrupt.

• Limitation

  (2) The stays provided by subsection (1) do not apply

  • (a) to prevent a secured creditor who took possession of secured assets of the insolvent person for the purpose of realization before the proposal was filed from dealing with those assets;

  • (b) unless the secured creditor otherwise agrees, to prevent a secured creditor who gave notice of intention under subsection 244(1) to enforce that creditor’s security against the insolvent person more than ten days before

    • (i) a notice of intention was filed in respect of the insolvent person under section 50.4, or

    • (ii) the proposal was filed, if no notice of intention under section 50.4 was filed

    from enforcing that security;

  • (c) to prevent a secured creditor who gave notice of intention under subsection 244(1) to enforce that creditor’s security from enforcing the security if the insolvent person has, under subsection 244(2), consented to the enforcement action; or

  • (d) [Repealed, 2012, c. 31, s. 417]

• Limitation

  (3) A stay provided by paragraph (1)(c) or (d) does not apply, or terminates, in respect of Her Majesty in right of Canada and every province if

  • (a) the insolvent person defaults on payment of any amount that becomes due to Her Majesty after the filing of the proposal and could be subject to a demand under

    • (i) subsection 224(1.2) of the Income Tax Act,

    • (ii) any provision of the Canada Pension Plan or of the Employment Insurance Act that refers to subsection 224(1.2) of the Income Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, or a premium under Part VII.1 of that Act, and of any related interest, penalties or other amounts, or

    • (iii) any provision of provincial legislation that has a similar purpose to subsection 224(1.2) of the Income Tax Act, or that refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, where the sum

      • (A) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or

      • (B) is of the same nature as a contribution under the Canada Pension Plan if the province is a province providing a comprehensive pension plan as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a provincial pension plan as defined in that subsection; or

  • (b) any other creditor is or becomes entitled to realize a security on any property that could be claimed by Her Majesty in exercising Her rights under

    • (i) subsection 224(1.2) of the Income Tax Act,

    • (ii) any provision of the Canada Pension Plan or of the Employment Insurance Act that refers to subsection 224(1.2) of the Income Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, or a premium under Part VII.1 of that Act, and of any related interest, penalties or other amounts, or

    • (iii) any provision of provincial legislation that has a similar purpose to subsection 224(1.2) of the Income Tax Act, or that refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, where the sum

      • (A) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or

      • (B) is of the same nature as a contribution under the Canada Pension Plan if the province is a province providing a comprehensive pension plan as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a provincial pension plan as defined in that subsection.

• Limitation

  (4) If, by virtue of subsection 69(3), the stay provided by paragraph 69(1)(c) or (d) does not apply or terminates, the stay provided by paragraph (1)(c) or (d) of this section does not apply.

• Secured creditors to whom proposal not made

  (5) Subject to sections 79 and 127 to 135 and subsection 248(1), the filing of a proposal under subsection 62(1) does not prevent a secured creditor to whom the proposal has not been made in respect of a particular security from realizing or otherwise dealing with that security in the same manner as he would have been entitled to realize or deal with it if this section had not been passed.

• Where secured creditors vote against proposal

  (6) Subject to sections 79 and 127 to 135 and subsection 248(1), where secured creditors holding a particular class of secured claim vote for the refusal of a proposal, a secured creditor holding a secured claim of that class may henceforth realize or otherwise deal with his security in the same manner as he would have been entitled to realize or deal with it if this section had not been passed.