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Disclaimer / Credits:

(R.S., 1985, c. B-3) The Act is current to February 10, 2010

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PART I: Administrative Officials


















































PART II: Bankruptcy Orders and Assignments















































 

 

 

 

 

PART III: Proposals










































 

 

 

 

 

 

























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      PART V: Administration of Estates




     

     

















































    PART VI: Bankrupts



























































     

     



    PART VII: Courts and Procedures



     

     

     

     

    PART XII: Securities Firm Bankruptcies

















































     




    Part XIII: Cross-Border Bankruptcies

     


    An Act respecting bankruptcy and insolvency

    This Act may be cited as the Bankruptcy and Insolvency Act. R.S., 1985, c. B-3, s. 1; 1992, c. 27, s. 2.

    INTERPRETATION - Definitions:

    “affidavit” includes statutory declaration and solemn affirmation;

    “aircraft objects” has the same meaning as in subsection 2(1) of the International Interests in Mobile Equipment (aircraft equipment) Act;

    “application”, with respect to a bankruptcy application filed in a court in the Province of Quebec, means a motion;

    “assignment” means an assignment filed with the official receiver;

    “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;

    "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;

    “bankruptcy” means the state of being bankrupt or the fact of becoming bankrupt;

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

    “child” [Repealed, 2000, c. 12, s. 8]

    “claim provable in bankruptcy”, “provable claim” or “claim provable” includes any claim or liability provable in proceedings under this Act by a creditor;

    “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;

    “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;

    “common-law partnership” means the relationship between two persons who are common-law partners of each other;

    “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, loan companies or railway companies;

    “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;

    “creditor” means a person having a claim provable as a claim under this Act;

    “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;

    “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 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;

    “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;

    “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;

    “eligible financial contract” means an agreement of a prescribed kind;

    “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);

    “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;

    “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;

    “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;

    “General Rules” means the General Rules referred to in section 209;

    “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;

    “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;

    “legal counsel” means any person qualified, in accordance with the laws of a province, to give legal advice;

    “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;

    “Minister” means the Minister of Industry;

    “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;

    “official receiver” means an officer appointed under subsection 12(2);

    “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;

    “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;

    “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;

    “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;

    “public utility” includes a person or body who supplies fuel, water or electricity, or supplies telecommunications, garbage collection, pollution control or postal services;

    “resolution” or “ordinary resolution” means a resolution carried in the manner provided by section 115;

    “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;

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

    “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;

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

    “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;

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

    “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;

    “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;

    “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;

    “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;

    “trustee” or “licensed trustee” means a person who is licensed or appointed under this Act.

    R.S., 1985, c. B-3, s. 2; R.S., 1985, c. 31 (1st Supp.), s. 69; 1992, c. 1, s. 145(F), c. 27, s. 3; 1995, c. 1, s. 62; 1997, c. 12, s. 1; 1999, c. 28, s. 146, c. 31, s. 17; 2000, c. 12, s. 8; 2001, c. 4, s. 25, c. 9, s. 572; 2004, c. 25, s. 7; 2005, c. 3, s. 11, c. 47, s. 2; 2007, c. 29, s. 91, c. 36, s. 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.

    1997, c. 12, s. 2; 2004, c. 25, s. 8; 2005, c. 47, s. 3.

    .

    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.

    1997, c. 12, s. 2.

    Definations:

    4. (1) In this section,

    “entity” means a person other than an individual;

    “related group” means a group of persons each member of which is related to every other member of the group;

    “unrelated group” means a group of persons that is not a related group.

    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.R.S., 1985, c. B-3, s. 4; 2000, c. 12, s. 9; 2004, c. 25, s. 9(F); 2005, c. 47, s. 5; 2007, c. 36, s. 2.

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

    1992, c. 27, s. 4.

    PART I: ADMINISTRATIVE OFFICIAL

    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.

    R.S., 1985, c. B-3, s. 5; 1992, c. 27, s. 5; 1997, c. 12, s. 4; 2001, c. 4, s. 26(E); 2005, c. 47, s. 6.

    Outside investigations

    (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.

    R.S., 1985, c. B-3, s. 6; 1997, c. 12, s. 5; 2005, c. 47, s. 7(E).

    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.

    R.S., c. B-3, s. 5.

    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.

    R.S., 1985, c. B-3, s. 10; 1992, c. 27, s. 7; 2004, c. 25, s. 10; 2005, c. 47, s. 8.

    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.

    R.S., 1985, c. B-3, s. 11; 1992, c. 27, s. 8; 2004, c. 25, s. 11(F).


    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.

    1992, c. 27, s. 8; 2007, c. 36, s. 3.


    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.

    R.S., c. B-3, s. 8.


    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.

    R.S., 1985, c. B-3, s. 13; 1992, c. 27, s. 9; 1997, c. 12, s. 6; 2005, c. 47, s. 9.

    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.

    1992, c. 27, s. 9; 1997, c. 12, s. 7.

    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).1992, c. 27, s. 9; 1997, c. 12, s. 8; 2004, c. 25, s. 12; 2005, c. 47, s. 10.

  • DIVISION II


    CONSUMER PROPOSALS

    Definitions

    66.11 In this Division,


    “administrator” means

    (a) a trustee, or

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


    “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;


    “consumer proposal” means a proposal made under this Division.

    1992, c. 27, s. 32; 1997, c. 12, s. 45; 2005, c. 47, s. 46.

    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.

    1992, c. 27, s. 32; 1997, c. 12, s. 46; 2005, c. 47, s. 47(E).

    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.

    1992, c. 27, s. 32; 1999, c. 31, s. 21(E); 2005, c. 47, s. 48.

    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).

    1992, c. 27, s. 32; 1997, c. 12, s. 47; 2005, c. 47, s. 49.

    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.

    1992, c. 27, s. 32; 1997, c. 12, s. 48.

    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.

    1992, c. 27, s. 32; 2005, c. 47, s. 123(E).

    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.

    1992, c. 27, s. 32; 1997, c. 12, s. 49; 2005, c. 47, s. 50.

    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.

    1992, c. 27, s. 32; 1997, c. 12, s. 50.

    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.

    1992, c. 27, s. 32.

    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.

    1992, c. 27, s. 32.

    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.

    1992, c. 27, s. 32.

    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.

    1992, c. 27, s. 32; 1997, c. 12, s. 51.

    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.

    1992, c. 27, s. 32; 1997, c. 12, s. 52.

    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.

    1992, c. 27, s. 32.

    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.

    1992, c. 27, s. 32.

    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.

    1997, c. 12, s. 53.

    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).

    1992, c. 27, s. 32; 1997, c. 12, s. 54.

    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.

    1992, c. 27, s. 32; 1997, c. 12, s. 55.

    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.

    1992, c. 27, s. 32; 2005, c. 47, s. 51; 2007, c. 36, s. 29.

    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.

    1992, c. 27, s. 32; 2004, c. 25, s. 40.

    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.

    1992, c. 27, s. 32; 1997, c. 12, s. 56.

    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).

    1992, c. 27, s. 32; 2005, c. 47, s. 52; 2007, c. 36, s. 30.

    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.

    1992, c. 27, s. 32; 2005, c. 47, s. 53(F).

    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.

    1992, c. 27, s. 32; 2004, c. 25, s. 42(E); 2005, c. 47, s. 55; 2007, c. 29, s. 94.

    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.

    1992, c. 27, s. 32; 1997, c. 12, s. 57.

    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.

    1992, c. 27, s. 32.

    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” means an individual who is insolvent;

    1992, c. 27, s. 32; 2005, c. 47, s. 56.

    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).

    1992, c. 27, s. 32; 2005, c. 47, s. 56.

    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.

    1992, c. 27, s. 32.

    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.

    1992, c. 27, s. 32; 1997, c. 12, s. 58. 


    PART IV

    PROPERTY 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.

    R.S., 1985, c. B-3, s. 67; 1992, c. 27, s. 33; 1996, c. 23, s. 168; 1997, c. 12, s. 59; 1998, c. 19, s. 250; 2005, c. 47, s. 57; 2007, c. 36, s. 32.

    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” 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).


    “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.

    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.

    R.S., 1985, c. B-3, s. 68; 1992, c. 27, s. 34; 1997, c. 12, s. 60; 2005, c. 47, s. 58; 2007, c. 36, s. 33.

    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.

    1992, c. 27, s. 35; 1997, c. 12, s. 61; 2005, c. 47, s. 59.


    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) to prevent a creditor who holds security on aircraft objects under an agreement with the insolvent person from taking possession of the aircraft objects

    (i) if, after the commencement of proceedings under this Act, the insolvent person defaults in protecting or maintaining the aircraft objects in accordance with the agreement,

    (ii) sixty days after the commencement of proceedings under this Act unless, during that period, the insolvent person

    (A) remedied the default of every other obligation under the agreement, other than a default constituted by the commencement of proceedings under this Act or the breach of a provision in the agreement relating to the insolvent person’s financial condition,

    (B) agreed to perform the obligations under the agreement, other than an obligation not to become insolvent or an obligation relating to the insolvent person’s financial condition, until the day on which proceedings under this Act end, and

    (C) agreed to perform all the obligations arising under the agreement after the proceedings under this Act end, or

    (iii) if, during the period that begins on the expiry of the sixty-day period and ends on the day on which proceedings under this Act end, the insolvent person defaults in performing an obligation under the agreement, other than an obligation not to become insolvent or an obligation relating to the insolvent person’s financial condition.

    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.

    R.S., 1985, c. B-3, s. 69; 1992, c. 27, s. 36; 1997, c. 12, s. 62; 2000, c. 30, s. 145; 2005, c. 3, s. 12, c. 47, s. 60; 2007, c. 36, s. 34; 2009, c. 33, s. 23.

    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) to prevent a creditor who holds security on aircraft objects under an agreement with the insolvent person from taking possession of the aircraft objects

    (i) if, after the commencement of proceedings under this Act, the insolvent person defaults in protecting or maintaining the aircraft objects in accordance with the agreement,

    (ii) sixty days after the commencement of proceedings under this Act unless, during that period, the insolvent person

    (A) remedied the default of every other obligation under the agreement, other than a default constituted by the commencement of proceedings under this Act or the breach of a provision in the agreement relating to the insolvent person’s financial condition,

    (B) agreed to perform the obligations under the agreement, other than an obligation not to become insolvent or an obligation relating to the insolvent person’s financial condition, until the day on which proceedings under this Act end, and

    (C) agreed to perform all the obligations arising under the agreement after the proceedings under this Act end, or

    (iii) if, during the period that begins on the expiry of the sixty-day period and ends on the day on which proceedings under this Act end, the insolvent person defaults in performing an obligation under the agreement, other than an obligation not to become insolvent or an obligation relating to the insolvent person’s financial condition.

    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.

    1992, c. 27, s. 36; 1994, c. 26, s. 8(E); 1997, c. 12, s. 63; 2000, c. 30, s. 146; 2005, c. 3, s. 13, c. 47, s. 61; 2007, c. 36, s. 35; 2009, c. 33, s. 24.

    Stay of proceedings — consumer proposals

    69.2 (1) Subject to subsections (2) to (4) and sections 69.4 and 69.5, on the filing of a consumer proposal under subsection 66.13(2) or of an amendment to a consumer proposal under subsection 66.37(1) in respect of a consumer debtor, no creditor has any remedy against the debtor or the debtor’s property, or shall commence or continue any action, execution or other proceedings, for the recovery of a claim provable in bankruptcy until

    (a) the consumer proposal or the amended consumer proposal, as the case may be, has been withdrawn, refused, annulled or deemed annulled; or

    (b) the administrator has been discharged.

    Exception

    (2) Subsection (1) does not apply where the consumer proposal, other than an amendment to a consumer proposal referred to in section 66.37, is filed within six months after the filing of a previous consumer proposal in respect of the same debtor.

    Idem

    (3) Subsection (1) does not apply where an amendment to a consumer proposal is filed within six months after the filing of a previous amendment to the same consumer proposal.

    Secured creditors

    (4) Subject to sections 79 and 127 to 135 and subsection 248(1), the filing of a consumer proposal under subsection 66.13(2) does not prevent a secured creditor from realizing or otherwise dealing 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, unless the court otherwise orders, but in so ordering the court shall not postpone the right of the secured creditor to realize or otherwise deal with his security, except as follows:

    (a) in the case of a security for a debt that is due at the date of the approval or deemed approval of the consumer proposal or that becomes due not later than six months thereafter, that right shall not be postponed for more than six months from that date; and

    (b) in the case of a security for a debt that does not become due until more than six months after the date of the approval or deemed approval of the consumer proposal, that right shall not be postponed for more than six months from that date, unless all instalments of interest that are more than six months in arrears are paid and all other defaults of more than six months standing are cured, and then only so long as no instalment of interest remains in arrears or defaults remain uncured for more than six months, but, in any event, not beyond the date at which the debt secured by the security becomes payable under the instrument or act, or law, creating the security.

    Exception

    (5) No order may be made under subsection (4) if the order would have the effect of preventing a secured creditor from realizing or otherwise dealing with financial collateral.

    1992, c. 27, s. 36; 1997, c. 12, s. 64; 2004, c. 25, s. 43(E); 2007, c. 29, s. 95.

    Stays of proceedings — bankruptcies

    69.3 (1) Subject to subsections (1.1) and (2) and sections 69.4 and 69.5, on the bankruptcy of any debtor, no creditor has any remedy against the debtor or the debtor’s property, or shall commence or continue any action, execution or other proceedings, for the recovery of a claim provable in bankruptcy.

    End of stay

    (1.1) Subsection (1) ceases to apply in respect of a creditor on the day on which the trustee is discharged.

    Secured creditors

    (2) Subject to subsection (3), sections 79 and 127 to 135 and subsection 248(1), the bankruptcy of a debtor does not prevent a secured creditor from realizing or otherwise dealing with his or her security in the same manner as he or she would have been entitled to realize or deal with it if this section had not been passed, unless the court otherwise orders, but in so ordering the court shall not postpone the right of the secured creditor to realize or otherwise deal with his or her security, except as follows:

    (a) in the case of a security for a debt that is due at the date the bankrupt became bankrupt or that becomes due not later than six months thereafter, that right shall not be postponed for more than six months from that date; and

    (b) in the case of a security for a debt that does not become due until more than six months after the date the bankrupt became bankrupt, that right shall not be postponed for more than six months from that date, unless all instalments of interest that are more than six months in arrears are paid and all other defaults of more than six months standing are cured, and then only so long as no instalment of interest remains in arrears or defaults remain uncured for more than six months, but, in any event, not beyond the date at which the debt secured by the security becomes payable under the instrument or law creating the security.

    Exception

    (2.1) No order may be made under subsection (2) if the order would have the effect of preventing a secured creditor from realizing or otherwise dealing with financial collateral.

    Secured creditors — aircraft objects

    (3) If a secured creditor who holds security on aircraft objects under an agreement with the bankrupt is postponed from realizing or otherwise dealing with that security, the order under which the postponement is made is terminated

    (a) if, after the order is made, the trustee defaults in protecting or maintaining the aircraft objects in accordance with the agreement;

    (b) 60 days after the day on which the order is made unless, during that period, the trustee

    (i) remedied the default of every other obligation under the agreement, other than a default constituted by the commencement of proceedings under this Act or the breach of a provision in the agreement relating to the bankrupt’s financial condition, and

    (ii) agreed to perform the obligations under the agreement, other than the bankrupt’s obligation not to become insolvent or an obligation relating to the bankrupt’s financial condition, until the day on which the secured creditor is able to realize or otherwise deal with his or her security; or

    (c) if, during the period that begins 60 days after the day on which the order is made and ends on the day on which the secured creditor is able to realize or otherwise deal with his or her security, the trustee defaults in performing an obligation under the agreement, other than the bankrupt’s obligation not to become insolvent or an obligation relating to the bankrupt’s financial condition.

    1992, c. 27, s. 36; 2005, c. 3, s. 14, c. 47, s. 62; 2007, c. 29, s. 96, c. 36, s. 36.

    Stay of proceedings — directors

    69.31 (1) Where a notice of intention under subsection 50.4(1) has been filed or a proposal has been made by an insolvent corporation, no person may commence or continue any action against a director of the corporation on any claim against directors that arose before the commencement of proceedings under this Act and that relates to obligations of the corporation where directors are under any law liable in their capacity as directors for the payment of such obligations, until the proposal, if one has been filed, is approved by the court or the corporation becomes bankrupt.

    Exception

    (2) Subsection (1) does not apply in respect of an action against a director on a guarantee given by the director relating to the corporation’s obligations or an action seeking injunctive relief against a director in relation to the corporation.

    Resignation or removal of directors

    (3) 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.

    1997, c. 12, s. 65.

    Court may declare that stays, etc., cease

    69.4 A creditor who is affected by the operation of sections 69 to 69.31 or any other person affected by the operation of section 69.31 may apply to the court for a declaration that those sections no longer operate in respect of that creditor or person, and the court may make such a declaration, subject to any qualifications that the court considers proper, if it is satisfied

    (a) that the creditor or person is likely to be materially prejudiced by the continued operation of those sections; or

    (b) that it is equitable on other grounds to make such a declaration.

    1992, c. 27, s. 36; 1997, c. 12, s. 65.

    Non-application of certain provisions

    69.41 (1) Sections 69 to 69.31 do not apply in respect of a claim referred to in subsection 121(4).

    No remedy, etc.

    (2) Notwithstanding subsection (1), no creditor with a claim referred to in subsection 121(4) has any remedy, or shall commence or continue any action, execution or other proceeding, against

    (a) property of a bankrupt that has vested in the trustee; or

    (b) amounts that are payable to the estate of the bankrupt under section 68.

    1997, c. 12, s. 65.

    No stay, etc., in certain cases

    69.42 Despite anything in this Act, no provision of this Act shall have the effect of staying or restraining, and no order may be made under this Act staying or restraining,

    (a) the exercise by the Minister of Finance or the Superintendent of Financial Institutions of any power, duty or function assigned to them by the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act or the Trust and Loan Companies Act;

    (b) the exercise by the Governor in Council, the Minister of Finance or the Canada Deposit Insurance Corporation of any power, duty or function assigned to them by the Canada Deposit Insurance Corporation Act; or

    (c) the exercise by the Attorney General of Canada of any power, assigned to him or her by the Winding-up and Restructuring Act.

    2001, c. 9, s. 574.

    Provincial legislation

    69.5 Except for paragraphs 69(1)(c) and (d) and 69.1(1)(c) and (d), sections 69 to 69.3 do not affect the operation of 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,

    and for the purpose of this section, the provision is, despite 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 subsection 224(1.2) of the Income Tax Act in respect of a sum referred to in paragraph (a), or as subsection 23(2) of the Canada Pension Plan in respect of a sum referred to in paragraph (b), and in respect of any related interest, penalties or other amounts.

    1992, c. 27, s. 36; 2000, c. 30, s. 147.

    Meaning of “regulatory body”

    69.6 (1) In this section, “regulatory body” means a person or body that has powers, duties or functions relating to the enforcement or administration of an Act of Parliament or of the legislature of a province and includes a person or body that is prescribed to be a regulatory body for the purpose of this Act.

    Regulatory bodies — sections 69 and 69.1

    (2) Subject to subsection (3), no stay provided by section 69 or 69.1 affects a regulatory body’s investigation in respect of an insolvent person or an action, suit or proceeding that is taken in respect of the insolvent person by or before the regulatory body, other than the enforcement of a payment ordered by the regulatory body or the court.

    Exception

    (3) On application by the insolvent person and on notice to the regulatory body and to the persons who are likely to be affected by the order, the court may order that subsection (2) not apply in respect of one or more of the actions, suits or proceedings taken by or before the regulatory body if in the court’s opinion

    (a) a viable proposal could not be made in respect of the insolvent person if that subsection were to apply; and

    (b) it is not contrary to the public interest that the regulatory body be affected by the stay provided by section 69 or 69.1.

    Declaration — enforcement of a payment

    (4) If there is a dispute as to whether a regulatory body is seeking to enforce its rights as a creditor, the court may, on application by the insolvent person and on notice to the regulatory body, make an order declaring both that the regulatory body is seeking to enforce its rights as a creditor and that the enforcement of those rights is stayed.

    2007, c. 36, s. 37.



    PART IV: PROPERTY OF THE BANKRUPT

    General Provisions

    Precedence of bankruptcy orders and assignments

    70. (1) Every bankruptcy order and every assignment made under this Act takes precedence over all judicial or other attachments, garnishments, certificates having the effect of judgments, judgments, certificates of judgment, legal hypothecs of judgment creditors, executions or other process against the property of a bankrupt, except those that have been completely executed by payment to the creditor or the creditor’s representative, and except the rights of a secured creditor.

    Costs

    (2) Despite subsection (1), one bill of costs of a barrister or solicitor or, in the Province of Quebec, an advocate, including the executing officer’s fees and land registration fees, shall be payable to the creditor who has first attached by way of garnishment or filed with the executing officer an attachment, execution or other process against the property of the bankrupt.

    R.S., 1985, c. B-3, s. 70; 1992, c. 27, s. 37; 1997, c. 12, s. 66(F); 2004, c. 25, s. 44; 2005, c. 47, s. 63(E).

    Vesting of property in trustee

    71. On a bankruptcy order being made or an assignment being filed with an official receiver, a bankrupt ceases to have any capacity to dispose of or otherwise deal with their property, which shall, subject to this Act and to the rights of secured creditors, immediately pass to and vest in the trustee named in the bankruptcy order or assignment, and in any case of change of trustee the property shall pass from trustee to trustee without any assignment or transfer.

    R.S., 1985, c. B-3, s. 71; 1997, c. 12, s. 67; 2004, c. 25, s. 44.

    Application of other substantive law

    72. (1) The provisions of this Act shall not be deemed to abrogate or supersede the substantive provisions of any other law or statute relating to property and civil rights that are not in conflict with this Act, and the trustee is entitled to avail himself of all rights and remedies provided by that law or statute as supplementary to and in addition to the rights and remedies provided by this Act.

    Operation of provincial law re documents executed under Act

    (2) No bankruptcy order, assignment or other document made or executed under the authority of this Act shall, except as otherwise provided in this Act, be within the operation of any legislative enactment in force at any time in any province relating to deeds, mortgages, hypothecs, judgments, bills of sale, chattel mortgages, property or registration of documents affecting title to or liens or charges on real or personal property or immovables or movables.

    R.S., 1985, c. B-3, s. 72; 1997, c. 12, s. 68(F); 2004, c. 25, s. 45.

    Purchaser in good faith at sale protected

    73. (1) An execution levied by seizure and sale of the property of a bankrupt is not invalid by reason only of its being an act of bankruptcy, and a person who purchases the property in good faith under a sale by the executing officer acquires a good title to the property against the trustee.

    Executing officer to deliver property of bankrupt to trustee

    (2) If an assignment or a bankruptcy order has been made, the executing officer or other officer of any court or any other person having seized property of the bankrupt under execution or attachment or any other process shall, on receiving a copy of the assignment or the bankruptcy order certified by the trustee as a true copy, immediately deliver to the trustee all the property of the bankrupt in their hands.

    In case of executing officer’s sale

    (3) If the executing officer has sold the property or any part of the property of a bankrupt, the executing officer shall deliver to the trustee the money so realized less the executing officer’s fees and the costs referred to in subsection 70(2).

    Effect of bankruptcy on seizure of property for rent or taxes

    (4) Any property of a bankrupt under seizure for rent or taxes shall on production of a copy of the bankruptcy order or the assignment certified by the trustee as a true copy be delivered without delay to the trustee, but the costs of distress or, in the Province of Quebec, the costs of seizure are a security on the property ranking ahead of any other security on it, and, if the property or any part of it has been sold, the money realized from the sale less the costs of distress, or seizure, and sale shall be paid to the trustee.

    R.S., 1985, c. B-3, s. 73; 1997, c. 12, s. 69(F); 2004, c. 25, s. 46.

    Registration of bankruptcy order or assignment

    74. (1) Every bankruptcy order, or a true copy certified by the registrar or other officer of the court that made it, and every assignment, or a true copy certified by the official receiver, may be registered by or on behalf of the trustee in respect of the whole or any part of any real property in which the bankrupt has any interest or estate, or in respect of the whole or any part of any immovable in which the bankrupt has any right, in the registry office in which, according to the law of the province in which the real property or immovable is situated, deeds or transfers of title and other documents relating to real property, an immovable or any interest or estate in real property or any right in an immovable may be registered.

    Effect of registration

    (2) If a bankrupt is the registered owner of any real property or immovable or the registered holder of any charge, the trustee, on registration of the documents referred to in subsection (1), is entitled to be registered as owner of the real property or immovable or holder of the charge free of all encumbrances or charges mentioned in subsection 70(1).

    Caveat may be filed

    (3) If a bankrupt owns any real property or immovable or holds any charge registered in a land registry office or has or is believed to have any interest, estate or right in any of them, and for any reason a copy of the bankruptcy order or assignment has not been registered as provided in subsection (1), a caveat or caution may be filed with the official in charge of the land registry by the trustee, and any registration made after the filing of the caveat or caution in respect of the real property, immovable or charge is subject to the caveat or caution unless it has been removed or cancelled under the provisions of the Act under which the real property, immovable, charge, interest, estate or right is registered.

    Duty of official

    (4) Every official to whom a trustee tenders or causes to be tendered for registration any bankruptcy order, assignment or other document shall register it according to the ordinary procedure for registering within the official’s office documents relating to real property or immovables.

    R.S., 1985, c. B-3, s. 74; 1997, c. 12, s. 70; 2004, c. 25, s. 47; 2005, c. 47, s. 64(E).

    Law of province to apply in favour of purchaser for value

    75. Despite anything in this Act, a deed, transfer, agreement for sale, mortgage, charge or hypothec made to or in favour of a bona fide purchaser, mortgagee or hypothecary creditor for adequate valuable consideration and covering any real property or immovable affected by a bankruptcy order or an assignment under this Act is valid and effectual according to the tenor of the deed, transfer, agreement for sale, mortgage, charge or hypothec and according to the laws of the province in which the property is situated as fully and effectually and to all intents and purposes as if no bankruptcy order or assignment had been made under this Act, unless the bankruptcy order or assignment, or notice of the order or assignment, or caution, has been registered against the property in the proper office prior to the registration of the deed, transfer, agreement for sale, mortgage, charge or hypothec in accordance with the laws of the province in which the property is situated.

    R.S., 1985, c. B-3, s. 75; 2001, c. 4, s. 28(F); 2004, c. 25, s. 47.

    Property not to be removed from province

    76. No property of a bankrupt shall be removed out of the province in which the property was at the date when the bankruptcy order or assignment was made, without the permission of the inspectors or an order of the court in which proceedings under this Act are being carried on or within the jurisdiction in which the property is situated.

    R.S., 1985, c. B-3, s. 76; 2004, c. 25, s. 47.

    Contributory shareholders

    77. (1) Every shareholder or member of a bankrupt corporation is liable to contribute the amount unpaid on his shares of the capital or on his liability to the corporation, its members or creditors, as the case may be, under the Act, charter or instrument of incorporation of the company or otherwise.

    Liability of contributory an asset

    (2) The amount that the contributory is liable to contribute under subsection (1) shall be deemed an asset of the corporation and a debt payable to the trustee forthwith on the bankruptcy of the corporation.

    R.S., 1985, c. B-3, s. 77; 1999, c. 31, s. 22(F).

    Bank must notify trustee

    78. Where a banker has ascertained that a person having an account with the banker is an undischarged bankrupt, it is his duty forthwith to inform the trustee of the existence of the account, and thereafter the banker shall not make any payments out of the account, except under an order of the court or in accordance with instructions from the trustee, unless on the expiration of one month from the date of giving the information no instructions have been received from the trustee.

    R.S., c. B-3, s. 56.

    Inspection of property held in pledge

    79. Where property of a bankrupt is held as a pledge, hypothec, pawn or other security, the trustee may give notice in writing of the trustee’s intention to inspect the property, and the person so notified is not thereafter entitled to realize the security until the person has given the trustee a reasonable opportunity of inspecting the property and of exercising the trustee’s right of redemption.

    R.S., 1985, c. B-3, s. 79; 1997, c. 12, s. 71.

    Protection of trustee

    80. If the trustee has seized or disposed of property in the possession or on the premises of a bankrupt without notice of any claim in respect of the property and after the seizure or disposal it is made to appear that the property, at the date of the bankruptcy, was not the property of the bankrupt or was subject to an unregistered security or charge, the trustee is not personally liable for any loss or damage arising from the seizure or disposal sustained by any person claiming the property, interest in property or, in the Province of Quebec, a right in property, or for the costs of proceedings taken to establish a claim to that property, interest or right, unless the court is of opinion that the trustee has been negligent with respect to the trustee’s duties in relation to the property.

    R.S., 1985, c. B-3, s. 80; 1997, c. 12, s. 71; 2004, c. 25, s. 48.

    Persons claiming property in possession of bankrupt

    81. (1) Where a person claims any property, or interest therein, in the possession of a bankrupt at the time of the bankruptcy, he shall file with the trustee a proof of claim verified by affidavit giving the grounds on which the claim is based and sufficient particulars to enable the property to be identified.

    How claim disposed of

    (2) The trustee with whom a proof of claim is filed under subsection (1) shall within 15 days after the filing of the claim or within 15 days after the first meeting of creditors, whichever is the later, either admit the claim and deliver possession of the property to the claimant or send notice in the prescribed manner to the claimant that the claim is disputed, with the trustee’s reasons for disputing it, and, unless the claimant appeals the trustee’ decision to the court within 15 days after the sending of the notice of dispute, the claimant is deemed to have abandoned or relinquished all his or her right to or interest in the property to the trustee who may then sell or dispose of the property free of any right, title or interest of the claimant.

    Onus on claimant

    (3) The onus of establishing a claim to or in property under this section is on the claimant.

    Require proof of claim

    (4) The trustee may send notice in the prescribed manner to any person to prove his or her claim to or in property under this section, and, unless that person files with the trustee a proof of claim, in the prescribed form, within 15 days after the sending of the notice, the trustee may then, with the leave of the court, sell or dispose of the property free of any right, title or interest of that person.

    No other proceeding to be instituted

    (5) No proceedings shall be instituted to establish a claim to, or to recover any right or interest in, any property in the possession of a bankrupt at the time of the bankruptcy, except as provided in this section.

    Rights of others not extended

    (6) Nothing in this section shall be construed as extending the rights of any person other than the trustee.

    R.S., 1985, c. B-3, s. 81; 2005, c. 47, s. 65.

    Right of unpaid supplier to repossess goods

    81.1 (1) Subject to this section, if a person (in this section referred to as the “supplier”) has sold to another person (in this section referred to as the “purchaser”) goods for use in relation to the purchaser’s business and delivered the goods to the purchaser or to the purchaser’s agent or mandatary, and the purchaser has not fully paid for the goods, the supplier may have access to and repossess the goods at the supplier’s own expense, and the purchaser, trustee or receiver, or the purchaser’s agent or mandatary, as the case may be, shall release the goods, if

    (a) the supplier presents a written demand for repossession to the purchaser, trustee or receiver, in the prescribed form and containing the details of the transaction, within a period of 15 days after the day on which the purchaser became bankrupt or became a person who is subject to a receivership;

    (b) the goods were delivered within 30 days before the day on which the purchaser became bankrupt or became a person who is subject to a receivership;

    (c) at the time when the demand referred to in paragraph (a) is presented, the goods

    (i) are in the possession of the purchaser, trustee or receiver,

    (ii) are identifiable as the goods delivered by the supplier and not fully paid for,

    (iii) are in the same state as they were on delivery,

    (iv) have not been resold at arms' length, and

    (v) are not subject to any agreement for sale at arms' length; and

    (d) the purchaser, trustee or receiver does not, forthwith after the demand referred to in paragraph (a) is presented, pay to the supplier the entire balance owing.

    Where goods have been partly paid for

    (2) Where, at the time when the demand referred to in paragraph (1)(a) is presented, the goods have been partly paid for, the supplier’s right to repossess under subsection (1) shall be read as a right

    (a) to repossess a portion of the goods proportional to the unpaid amount; or

    (b) to repossess all of the goods on paying to the purchaser, trustee or receiver an amount equal to the partial payment previously made to the supplier.

    (3) [Repealed, 1999, c. 31, s. 23]

    If notice of intention or proposal was filed

    (4) If a notice of intention under section 50.4 or a proposal was filed in respect of the purchaser after the delivery of the goods to the purchaser and before the purchaser became bankrupt or became a person who is subject to a receivership, the 30-day period referred to in paragraph (1)(b) is the 30-day period before the filing of the notice of intention or, if there was no notice of intention, the filing of the proposal.

    Expiry of supplier’s right

    (5) A supplier’s right to repossess goods under this section expires if not exercised within the 15-day period referred to in paragraph (1)(a), unless the period is extended before its expiry by the trustee or receiver, or by the court.

    Ranks above other claims

    (6) Notwithstanding any other federal or provincial Act or law, a supplier’s right to repossess goods pursuant to this section ranks above every other claim or right against the purchaser in respect of those goods, other than the right of a bona fide subsequent purchaser of the goods for value without notice that the supplier had demanded repossession of the goods.

    Application to court for directions

    (7) The purchaser, trustee or receiver may apply to the court for directions in relation to any matter relating to this section, and the court shall give, in writing, such directions, if any, as it considers proper in the circumstances.

    Supplier may appeal to court

    (8) Where a supplier is aggrieved by any act, omission or decision of the purchaser, trustee or receiver, the supplier may apply to the court and the court may make such order as it considers proper in the circumstances.

    Other rights saved

    (9) Nothing in subsection (7) or (8) precludes a person from exercising any right that the person may have under subsection 34(1) or section 37.

    No payment

    (10) A supplier who repossesses goods pursuant to this section is not entitled to be paid for those goods.

    Provincial rights saved

    (11) Nothing in this section precludes a supplier from exercising any right that the supplier may have under the law of a province.

    Definitions

    (12) The following definitions apply in this section.

    “person who is subject to a receivership” means a person in respect of whom any property is under the possession or control of a receiver.

    “receiver” means a receiver within the meaning of subsection 243(2).

    1992, c. 27, s. 38; 1999, c. 31, s. 23; 2005, c. 47, s. 66.

    Special right for farmers, fishermen and aquaculturists

    81.2 (1) Where

    (a) a farmer has sold and delivered products of agriculture, a fisherman has sold and delivered products of the sea, lakes and rivers, or an aquaculturist has sold and delivered products of aquaculture, to another person (in this section referred to as the "purchaser") for use in relation to the purchaser’s business,

    (b) the products were delivered to the purchaser within the fifteen day period preceding

    (i) the day on which the purchaser became bankrupt, or

    (ii) the first day on which there was a receiver, within the meaning of subsection 243(2), in relation to the purchaser,

    (c) as of the day referred to in subparagraph (b)(i) or (ii), the farmer, fisherman or aquaculturist has not been fully paid for the products, and

    (d) the farmer, fisherman or aquaculturist files a proof of claim in the prescribed form in respect of the unpaid amount with the trustee or receiver, as the case may be, within thirty days after the day referred to in subparagraph (b)(i) or (ii),

    the claim of the farmer, fisherman or aquaculturist for the unpaid amount in respect of the products is secured by security on all the inventory of or held by the purchaser as of the day referred to in subparagraph (b)(i) or (ii), and the security ranks above every other claim, right, charge or security against that inventory, regardless of when that other claim, right, charge or security arose, except a supplier’s right, under section 81.1, to repossess goods, despite any other federal or provincial Act or law; and if the trustee or receiver, as the case may be, takes possession or in any way disposes of inventory covered by the security, the trustee or receiver is liable for the claim of the farmer, fisherman or aquaculturist to the extent of the net amount realized on the disposition of that inventory, after deducting the cost of realization, and is subrogated in and to all rights of the farmer, fisherman or aquaculturist to the extent of the amounts paid to them by the trustee or receiver.

    Definitions

    (2) In this section,

    “aquaculture” means the cultivation of aquatic plants and animals;

    “aquaculture operation” means any premises or site where aquaculture is carried out;

    “aquaculturist” includes the owner, occupier, lessor and lessee of an aquaculture operation;

    “aquatic plants and animals” means plants and animals that, at most stages of their development or life cycles, live in an aquatic environment;

    “farm” means land in Canada used for the purpose of farming, which term includes livestock raising, dairying, bee-keeping, fruit growing, the growing of trees and all tillage of the soil;

    “farmer” includes the owner, occupier, lessor and lessee of a farm;

    “fish” includes shellfish, crustaceans and marine animals;

    “fisherman” means a person whose business consists in whole or in part of fishing;

    “fishing” means fishing for or catching fish by any method;

    “products of agriculture” includes

    (a) grain, hay, roots, vegetables, fruits, other crops and all other direct products of the soil, and

    (b) honey, livestock (whether alive or dead), dairy products, eggs and all other indirect products of the soil;

    “products of aquaculture” includes all cultivated aquatic plants and animals;

    “products of the sea, lakes and rivers” includes fish of all kinds, marine and freshwater organic and inorganic life and any substances extracted or derived from any water, but does not include products of aquaculture.

    Interpretation—products and by-products

    (3) For the purposes of this section, each thing included in the following terms as defined in subsection (2), namely,

    (a) "products of agriculture",

    (b) "products of aquaculture", and

    (c) "products of the sea, lakes and rivers",

    comprises that thing in any form or state and any part thereof and any product or by-product thereof or derived therefrom.

    Section 81.1 applies

    (4) For greater certainty, "goods" in section 81.1 includes products of agriculture, products of the sea, lakes and rivers, and products of aquaculture.

    Other rights saved

    (5) Nothing in this section precludes a farmer, fisherman or aquaculturist from exercising

    (a) the right that that person may have under section 81.1 to repossess products of agriculture, products of the sea, lakes and rivers, or products of aquaculture; or

    (b) any right that that person may have under the law of a province.

    1992, c. 27, s. 38; 1997, c. 12, s. 72(F); 2004, c. 25, s. 49.

    Security for unpaid wages, etc. — bankruptcy

    81.3 (1) The claim of a clerk, servant, travelling salesperson, labourer or worker who is owed wages, salaries, commissions or compensation by a bankrupt for services rendered during the period beginning on the day that is six months before the date of the initial bankruptcy event and ending on the date of the bankruptcy is secured, as of the date of the bankruptcy, to the extent of $2,000 — less any amount paid for those services by the trustee or by a receiver — by security on the bankrupt’s current assets on the date of the bankruptcy.

    Commissions

    (2) For the purposes of subsection (1), commissions payable when goods are shipped, delivered or paid for, if shipped, delivered or paid for during the period referred to in that subsection, are deemed to have been earned in that period.

    Security for disbursements

    (3) The claim of a travelling salesperson who is owed money by a bankrupt for disbursements properly incurred in and about the bankrupt’s business during the period referred to in subsection (1) is secured, as of the date of the bankruptcy, to the extent of $1,000 — less any amount paid for those disbursements by the trustee or by a receiver — by security on the bankrupt’s current assets on that date.

    Rank of security

    (4) A security under this section ranks above every other claim, right, charge or security against the bankrupt’s current assets — regardless of when that other claim, right, charge or security arose — except rights under sections 81.1 and 81.2 and amounts referred to in subsection 67(3) that have been deemed to be held in trust.

    Liability of trustee

    (5) If the trustee disposes of current assets covered by the security, the trustee is liable for the claim of the clerk, servant, travelling salesperson, labourer or worker to the extent of the amount realized on the disposition of the current assets and is subrogated in and to all rights of the clerk, servant, travelling salesperson, labourer or worker in respect of the amounts paid to that person by the trustee.

    Claims of officers and directors

    (6) No officer or director of the bankrupt is entitled to have a claim secured under this section.

    Non-arm’s length

    (7) A person who, in respect of a transaction, was not dealing at arm’s length with the bankrupt is not entitled to have a claim arising from that transaction secured by this section unless, in the opinion of the trustee, having regard to the circumstances — including the remuneration for, the terms and conditions of and the duration, nature and importance of the services rendered — it is reasonable to conclude that they would have entered into a substantially similar transaction if they had been dealing with each other at arm’s length.

    Proof by delivery

    (8) A claim referred to in this section is proved by delivering to the trustee a proof of claim in the prescribed form.

    Definitions

    (9) The following definitions apply in this section.

    “compensation” includes vacation pay but does not include termination or severance pay.

    “receiver” means a receiver within the meaning of subsection 243(2) or an interim receiver appointed under subsection 46(1), 47(1) or 47.1(1).

    2005, c. 47, s. 67; 2007, c. 36, s. 38; 2009, c. 2, s. 355(F).

    Security for unpaid wages, etc. — receivership

    81.4 (1) The claim of a clerk, servant, travelling salesperson, labourer or worker who is owed wages, salaries, commissions or compensation by a person who is subject to a receivership for services rendered during the six months before the first day on which there was a receiver in relation to the person is secured, as of that day, to the extent of $2,000 — less any amount paid for those services by a receiver or trustee — by security on the person’s current assets that are in the possession or under the control of the receiver.

    Commissions

    (2) For the purposes of subsection (1), commissions payable when goods are shipped, delivered or paid for, if shipped, delivered or paid for during the six-month period referred to in that subsection, are deemed to have been earned in those six months.

    Security for disbursements

    (3) The claim of a travelling salesperson who is owed money by a person who is subject to a receivership for disbursements properly incurred in and about the person’s business during the six months before the first day on which there was a receiver in relation to the person is secured, as of that day, to the extent of $1,000 — less any amount paid for those disbursements by a receiver or trustee — by security on the person’s current assets that are in the possession or under the control of the receiver.

    Rank of security

    (4) A security under this section ranks above every other claim, right, charge or security against the person’s current assets — regardless of when that other claim, right, charge or security arose — except rights under sections 81.1 and 81.2.

    Liability of receiver

    (5) If the receiver takes possession or in any way disposes of current assets covered by the security, the receiver is liable for the claim of the clerk, servant, travelling salesperson, labourer or worker to the extent of the amount realized on the disposition of the current assets and is subrogated in and to all rights of the clerk, servant, travelling salesperson, labourer or worker in respect of the amounts paid to that person by the receiver.

    Claims of officers and directors

    (6) No officer or director of the person who is subject to a receivership is entitled to have a claim secured under this section.

    Non-arm’s length

    (7) A person who, in respect of a transaction, was not dealing at arm’s length with a person who is subject to a receivership is not entitled to have a claim arising from that transaction secured by this section unless, in the opinion of the receiver, having regard to the circumstances — including the remuneration for, the terms and conditions of and the duration, nature and importance of the services rendered — it is reasonable to conclude that they would have entered into a substantially similar transaction if they had been dealing with each other at arm’s length.

    Proof by delivery

    (8) A claim referred to in this section is proved by delivering to the receiver a proof of claim in the prescribed form.

    Definitions

    (9) The following definitions apply in this section.

    “compensation” includes vacation pay but does not include termination or severance pay.

    “person who is subject to a receivership” means a person any of whose property is in the possession or under the control of a receiver.

    “receiver” means a receiver within the meaning of subsection 243(2) or an interim receiver appointed under subsection 46(1), 47(1) or 47.1(1).

    2005, c. 47, s. 67; 2007, c. 36, s. 38; 2009, c. 2, s. 356(F).

    Security for unpaid amounts re prescribed pensions plan — bankruptcy

    81.5 (1) If the bankrupt is an employer who participated or participates in a prescribed pension plan for the benefit of the bankrupt’s employees, the following amounts that are unpaid on the date of bankruptcy to the fund established for the purpose of the pension plan are secured by security on all the assets of the bankrupt:

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

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

    (i) 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

    (ii) 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; and

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

    (i) 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

    (ii) 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.

    Rank of security

    (2) A security under this section ranks above every other claim, right, charge or security against the bankrupt’s assets, regardless of when that other claim, right, charge or security arose, except

    (a) rights under sections 81.1 and 81.2;

    (b) amounts referred to in subsection 67(3) that have been deemed to be held in trust; and

    (c) securities under sections 81.3 and 81.4.

    Liability of trustee

    (3) If the trustee disposes of assets covered by the security, the trustee is liable for the amounts referred to in subsection (1) to the extent of the amount realized on the disposition of the assets, and is subrogated in and to all rights of the fund established for the purpose of the pension plan in respect of those amounts.

    2005, c. 47, s. 67.

    Security for unpaid amounts re prescribed pensions plan — receivership

    81.6 (1) If a person who is subject to a receivership is an employer who participated or participates in a prescribed pension plan for the benefit of the person’s employees, the following amounts that are unpaid immediately before the first day on which there was a receiver in relation to the person are secured by security on all the person’s assets:

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

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

    (i) 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

    (ii) 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; and

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

    (i) 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

    (ii) 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.

    Rank of security

    (2) A security under this section ranks above every other claim, right, charge or security against the person’s assets, regardless of when that other claim, right, charge or security arose, except rights under sections 81.1 and 81.2 and securities under sections 81.3 and 81.4.

    Liability of receiver

    (3) If the receiver disposes of assets covered by the security, the receiver is liable for the amounts referred to in subsection (1) to the extent of the amount realized on the disposition of the assets, and is subrogated in and to all rights of the fund established for the purpose of the pension plan in respect of those amounts.

    Definitions

    (4) The following definitions apply in this section.

    “person who is subject to a receivership” means a person any of whose property is in the possession or under the control of a receiver.

    “receiver” means a receiver within the meaning of subsection 243(2) or an interim receiver appointed under subsection 46(1), 47(1) or 47.1(1).

    2005, c. 47, s. 67; 2007, c. 36, s. 39.

    Trustee to have right to sell patented articles

    82. (1) Where any property of a bankrupt vesting in a trustee consists of patented articles that were sold to the bankrupt subject to any restrictions or limitations, the trustee is not bound by the restrictions or limitations but may sell and dispose of the patented articles free and clear of the restrictions or limitations.

    Right of manufacturer

    (2) Where the manufacturer or vendor of the patented articles referred to in subsection (1) objects to the disposition of them by the trustee as provided by this section and gives to the trustee notice in writing of the objection before the sale or disposition thereof, that manufacturer or vendor has the right to purchase the patented articles at the invoice prices thereof, subject to any reasonable deduction for depreciation or deterioration.

    R.S., 1985, c. B-3, s. 82; 1993, c. 34, s. 10(E).

    Copyright and manuscript to revert to author

    83. (1) Notwithstanding anything in this Act or in any other statute, the author’s manuscripts and any copyright or any interest in a copyright in whole or in part assigned to a publisher, printer, firm or person becoming bankrupt shall,

    (a) if the work covered by the copyright has not been published and put on the market at the time of the bankruptcy and no expense has been incurred in connection with that work, revert and be delivered to the author or their heirs, and any contract or agreement between the author or their heirs and the bankrupt shall then terminate and be void or, in the Province of Quebec, null;

    (b) if the work covered by the copyright has in whole or in part been put into type and expenses have been incurred by the bankrupt, revert and be delivered to the author on payment of the expenses so incurred and the product of those expenses shall also be delivered to the author or their heirs and any contract or agreement between the author or their heirs and the bankrupt shall then terminate and be void or, in the Province of Quebec, null, but if the author does not exercise their rights under this paragraph within six months after the date of the bankruptcy, the trustee may carry out the original contract; or

    (c) if the trustee at the end of the six-month period from the date of the bankruptcy decides not to carry out the contract, revert without expense to the author and any contract or agreement between the author or their heirs and the bankrupt shall then terminate and be void or, in the Province of Quebec, null.

    If copies of the work are on the market

    (2) Where, at the time of the bankruptcy referred to in subsection (1), the work was published and put on the market, the trustee is entitled to sell, or authorize the sale or reproduction of, any copies of the published work, or to perform or authorize the performance of the work, but

    (a) there shall be paid to the author or his heirs such sums by way of royalties or share of the profits as would have been payable by the bankrupt;

    (b) the trustee is not, without the written consent of the author or his heirs, entitled to assign the copyright or transfer the interest or to grant any interest therein by licence or otherwise, except on terms that will guarantee to the author or his heirs payment by way of royalties or share of the profits at a rate not less than the rate the bankrupt was liable to pay; and

    (c) any contract or agreement between the author or their heirs and the bankrupt shall then terminate and be void or, in the Province of Quebec, null, except with respect to the disposal, under this subsection, of copies of the work published and put on the market before the bankruptcy.

    Marketable copies to be first offered for sale to the author

    (3) The trustee shall offer in writing to the author or his heirs the right to purchase the manufactured or marketable copies of the copyright work comprised in the estate of the bankrupt at such price and on such terms and conditions as the trustee may deem fair and proper before disposing of the manufactured and marketable copies in the manner prescribed in this section.

    R.S., 1985, c. B-3, s. 83; 2004, c. 25, s. 50.

    Effect of sales by trustee

    84. All sales of property made by a trustee vest in the purchaser all the legal and equitable estate of the bankrupt therein.

    R.S., 1985, c. B-3, s. 84; 2004, c. 25, s. 51(F).

    Assignment of agreements

    84.1 (1) On application by a trustee and on notice to every party to an agreement, a court may make an order assigning the rights and obligations of a bankrupt under the agreement to any person who is specified by the court and agrees to the assignment.

    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 rights and obligations in relation to the business may be assigned.

    Exceptions

    (3) Subsection (1) does not apply in respect of rights and obligations that are not assignable by reason of their nature or that arise under

    (a) an agreement entered into on or after the date of the bankruptcy;

    (b) an eligible financial contract; or

    (c) a collective agreement.

    Factors to be considered

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

    (a) whether the person to whom the rights and obligations are to be assigned is able to perform the obligations; and

    (b) whether it is appropriate to assign the rights and obligations to that person.

    Restriction

    (5) The court may not make the order unless it is satisfied that all monetary defaults in relation to the agreement — other than those arising by reason only of the person’s bankruptcy, insolvency or failure to perform a non-monetary obligation — will be remedied on or before the day fixed by the court.

    Copy of order

    (6) The applicant is to send a copy of the order to every party to the agreement.

    2005, c. 47, s. 68; 2007, c. 29, s. 97; 2009, c. 31, s. 64.

    Certain rights limited

    84.2 (1) No person may terminate or amend — or claim an accelerated payment or forfeiture of the term under — any agreement, including a security agreement, with a bankrupt individual by reason only of the individual’s bankruptcy or insolvency.

    Lease

    (2) If the agreement referred to in subsection (1) is a lease, the lessor may not terminate or amend, or claim an accelerated payment or forfeiture of the term under, the lease by reason only of the bankruptcy or insolvency or of the fact that the bankrupt has not paid rent in respect of any period before the time of the bankruptcy.

    Public utilities

    (3) No public utility may discontinue service to a bankrupt individual by reason only of the individual’s bankruptcy or insolvency or of the fact that the bankrupt individual has not paid for services rendered or material provided before the time of the bankruptcy.

    Certain acts not prevented

    (4) Nothing in this section is to be construed as

    (a) prohibiting a person from requiring payments to be made in cash for goods, services, use of leased property or other valuable consideration provided after the time of the bankruptcy; or

    (b) 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 this section is of no force or effect.

    Powers of court

    (6) On application by a party to an agreement or by a public utility, the court may declare that this section does not apply — or applies only to the extent declared by the court — if the applicant satisfies the court that the operation of this section would likely cause the applicant significant financial hardship.

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

    Permitted actions

    (8) Despite section 69.3, the following actions are permitted in respect of an eligible financial contract that is entered into before the time of the bankruptcy, and is terminated on or after that time, but only in accordance with the provisions of that contract:

     

     

    (a) the netting or setting off or compensation of obligations between the individual bankrupt 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 individual bankrupt 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 individual bankrupt with a claim provable in bankruptcy in respect of those net termination values.2005, c. 47, s. 68; 2007, c. 29, s. 98; 2009, c. 31, s. 64.


    Partnership Property

    Application to limited partnerships

    85. (1) This Act applies to limited partnerships in like manner as if limited partnerships were ordinary partnerships, and, on all the general partners of a limited partnership becoming bankrupt, the property of the limited partnership vests in the trustee.

    Actions by trustee and bankrupt’s partner

    (2) If a member of a partnership becomes bankrupt, the court may authorize the trustee to commence and prosecute any action in the names of the trustee and of the bankrupt’s partner, and any release by the partner of the debt or demand to which the action relates is void or, in the Province of Quebec, null.

    Notice to partner

    (3) Notice of the application for authority to commence an action under subsection (2) shall be given to the bankrupt’s partner, who may show cause against it, and on his application the court may, if it thinks fit, direct that he shall receive his proper share of the proceeds of the action, and, if he does not claim any benefit therefrom, he shall be indemnified against costs in respect thereof as the court directs.

    R.S., 1985, c. B-3, s. 85; 2004, c. 25, s. 52.


    Crown Interests   

    Status of Crown claims

    86. (1) In relation to a bankruptcy or proposal, all provable claims, including secured claims, of Her Majesty in right of Canada or a province or of any body under an Act respecting workers' compensation, in this section and in section 87 called a "workers' compensation body", rank as unsecured claims.

    Exceptions

    (2) Subsection (1) does not apply

    (a) to claims that are secured by a security or charge of a kind that can be obtained by persons other than Her Majesty or a workers’ compensation body

    (i) pursuant to any law, or

    (ii) pursuant to provisions of federal or provincial legislation, where those provisions do not have as their sole or principal purpose the establishment of a means of securing claims of Her Majesty or of a workers' compensation body; and

    (b) to the extent provided in subsection 87(2), to claims that are secured by a security referred to in subsection 87(1), if the security is registered in accordance with that subsection.

    Exceptions

    (3) Subsection (1) does not affect the operation of

    (a) subsections 224(1.2) and (1.3) 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,

    and for the purpose of paragraph (c), the provision of provincial legislation is, despite 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 subsection 224(1.2) of the Income Tax Act in respect of a sum referred to in subparagraph (c)(i), or as subsection 23(2) of the Canada Pension Plan in respect of a sum referred to in subparagraph (c)(ii), and in respect of any related interest, penalties or other amounts.

    R.S., 1985, c. B-3, s. 86; 1992, c. 27, s. 39; 1997, c. 12, s. 73; 2000, c. 30, s. 148; 2005, c. 47, s. 69; 2009, c. 33, s. 25.

    Statutory Crown securities

    87. (1) A security provided for in federal or provincial legislation for the sole or principal purpose of securing a claim of Her Majesty in right of Canada or of a province or of a workers’ compensation body is valid in relation to a bankruptcy or proposal only if the security is registered under a prescribed system of registration before the date of the initial bankruptcy event.

    Idem

    (2) In relation to a bankruptcy or proposal, a security referred to in subsection (1) that is registered in accordance with that subsection

    (a) is subordinate to securities in respect of which all steps necessary to make them effective against other creditors were taken before that registration; and

    (b) is valid only in respect of amounts owing to Her Majesty or a workers' compensation body at the time of that registration, plus any interest subsequently accruing on those amounts.

    R.S., 1985, c. B-3, s. 87; 1992, c. 27, s. 39; 1997, c. 12, s. 74; 2004, c. 25, s. 53; 2005, c. 47, s. 70.


    Priority of Financial Collateral   

    Priority

    88. In relation to a bankruptcy or proposal, no order may be made under this Act if the order would have the effect of subordinating financial collateral.

    R.S., 1985, c. B-3, s. 88; 1992, c. 27, s. 39; 1994, c. 26, s. 6; 2007, c. 29, s. 99, c. 36, s. 112; 2009, c. 31, s. 65.

    89. and 90. [Repealed, 1992, c. 27, s. 39]


    Preferences and Transfers at Undervalue

    91. [Repealed, 2005, c. 47, s. 71]

    92. and 93. [Repealed, 2000, c. 12, s. 12]

    94. [Repealed, 2005, c. 47, s. 72]

    Preferences

    95. (1) A transfer of property made, a provision of services made, a charge on property made, a payment made, an obligation incurred or a judicial proceeding taken or suffered by an insolvent person

    (a) in favour of a creditor who is dealing at arm’s length with the insolvent person, or a person in trust for that creditor, with a view to giving that creditor a preference over another creditor is void as against — or, in Quebec, may not be set up against — the trustee if it is made, incurred, taken or suffered, as the case may be, during the period beginning on the day that is three months before the date of the initial bankruptcy event and ending on the date of the bankruptcy; and

    (b) in favour of a creditor who is not dealing at arm’s length with the insolvent person, or a person in trust for that creditor, that has the effect of giving that creditor a preference over another creditor is void as against — or, in Quebec, may not be set up against — the trustee if it is made, incurred, taken or suffered, as the case may be, during the period beginning on the day that is 12 months before the date of the initial bankruptcy event and ending on the date of the bankruptcy.

    Preference presumed

    (2) If the transfer, charge, payment, obligation or judicial proceeding referred to in paragraph (1)(a) has the effect of giving the creditor a preference, it is, in the absence of evidence to the contrary, presumed to have been made, incurred, taken or suffered with a view to giving the creditor the preference — even if it was made, incurred, taken or suffered, as the case may be, under pressure — and evidence of pressure is not admissible to support the transaction.

    Exception

    (2.1) Subsection (2) does not apply, and the parties are deemed to be dealing with each other at arm’s length, in respect of the following:

    (a) a margin deposit made by a clearing member with a clearing house; or

    (b) a transfer, charge or payment made in connection with financial collateral and in accordance with the provisions of an eligible financial contract.

    Definitions

    (3) In this section,


    “clearing house” means a body that acts as an intermediary for its clearing members in effecting securities transactions;

    “clearing member” means a person engaged in the business of effecting securities transactions who uses a clearing house as intermediary;

    “creditor” includes a surety or guarantor for the debt due to the creditor;


    “margin deposit” means a payment, deposit or transfer to a clearing house under the rules of the clearing house to assure the performance of the obligations of a clearing member in connection with security transactions, including, without limiting the generality of the foregoing, transactions respecting futures, options or other derivatives or to fulfil any of those obligations.

    R.S., 1985, c. B-3, s. 95; 1997, c. 12, s. 78; 2004, c. 25, s. 56; 2007, c. 29, s. 100, c. 36, ss. 42, 112.

    Transfer at undervalue

    96. (1) On application by the trustee, a court may declare that a transfer at undervalue is void as against, or, in Quebec, may not be set up against, the trustee — or order that a party to the transfer or any other person who is privy to the transfer, or all of those persons, pay to the estate the difference between the value of the consideration received by the debtor and the value of the consideration given by the debtor — if

    (a) the party was dealing at arm’s length with the debtor and

    (i) the transfer occurred during the period that begins on the day that is one year before the date of the initial bankruptcy event and that ends on the date of the bankruptcy,

    (ii) the debtor was insolvent at the time of the transfer or was rendered insolvent by it, and

    (iii) the debtor intended to defraud, defeat or delay a creditor; or

    (b) the party was not dealing at arm’s length with the debtor and

    (i) the transfer occurred during the period that begins on the day that is one year before the date of the initial bankruptcy event and ends on the date of the bankruptcy, or

    (ii) the transfer occurred during the period that begins on the day that is five years before the date of the initial bankruptcy event and ends on the day before the day on which the period referred to in subparagraph (i) begins and

    (A) the debtor was insolvent at the time of the transfer or was rendered insolvent by it, or

    (B) the debtor intended to defraud, defeat or delay a creditor.

    Establishing values

    (2) In making the application referred to in this section, the trustee shall state what, in the trustee’s opinion, was the fair market value of the property or services and what, in the trustee’s opinion, was the value of the actual consideration given or received by the debtor, and the values on which the court makes any finding under this section are, in the absence of evidence to the contrary, the values stated by the trustee.

    Meaning of “person who is privy”

    (3) In this section, a “person who is privy” means a person who is not dealing at arm’s length with a party to a transfer and, by reason of the transfer, directly or indirectly, receives a benefit or causes a benefit to be received by another person.

    R.S., 1985, c. B-3, s. 96; 1997, c. 12, s. 79; 2004, c. 25, s. 57; 2005, c. 47, s. 73; 2007, c. 36, s. 43.

    Protected transactions

    97. (1) No payment, contract, dealing or transaction to, by or with a bankrupt made between the date of the initial bankruptcy event and the date of the bankruptcy is valid, except the following, which are valid if made in good faith, subject to the provisions of this Act with respect to the effect of bankruptcy on an execution, attachment or other process against property, and subject to the provisions of this Act respecting preferences and transfers at undervalue:

    (a) a payment by the bankrupt to any of the bankrupt’s creditors;

    (b) a payment or delivery to the bankrupt;

    (c) a transfer by the bankrupt for adequate valuable consideration; and

    (d) a contract, dealing or transaction, including any giving of security, by or with the bankrupt for adequate valuable consideration.

    Definition of “adequate valuable consideration”

    (2) The expression “adequate valuable consideration” in paragraph (1)(c) means a consideration of fair and reasonable money value with relation to that of the property assigned or transferred, and in paragraph (1)(d) means a consideration of fair and reasonable money value with relation to the known or reasonably to be anticipated benefits of the contract, dealing or transaction.

    Law of set-off or compensation

    (3) The law of set-off or compensation applies to all claims made against the estate of the bankrupt and also to all actions instituted by the trustee for the recovery of debts due to the bankrupt in the same manner and to the same extent as if the bankrupt were plaintiff or defendant, as the case may be, except in so far as any claim for set-off or compensation is affected by the provisions of this Act respecting frauds or fraudulent preferences.

    R.S., 1985, c. B-3, s. 97; 1992, c. 27, s. 41; 1997, c. 12, s. 80; 2004, c. 25, s. 58; 2005, c. 47, s. 74.

    Recovering proceeds if transferred

    98. (1) If a person has acquired property of a bankrupt under a transaction that is void or voidable and set aside or, in the Province of Quebec, null or annullable and set aside, and has sold, disposed of, realized or collected the property or any part of it, the money or other proceeds, whether further disposed of or not, shall be deemed the property of the trustee.

    Trustee may recover

    (2) The trustee may recover the property or the value thereof or the money or proceeds therefrom from the person who acquired it from the bankrupt or from any other person to whom he may have resold, transferred or paid over the proceeds of the property as fully and effectually as the trustee could have recovered the property if it had not been so sold, disposed of, realized or collected.

    Operation of section

    (3) Notwithstanding subsection (1), where any person to whom the property has been sold or disposed of has paid or given therefor in good faith adequate valuable consideration, he is not subject to the operation of this section but the trustee’s recourse shall be solely against the person entering into the transaction with the bankrupt for recovery of the consideration so paid or given or the value thereof.

    Trustee subrogated

    (4) Where the consideration payable for or on any sale or resale of the property or any part thereof remains unsatisfied, the trustee is subrogated to the rights of the vendor to compel payment or satisfaction.

    R.S., 1985, c. B-3, s. 98; 2004, c. 25, s. 59(E).

    General assignments of book debts ineffective

    98.1 (1) If a person engaged in any trade or business makes an assignment of their existing or future book debts, or any class or part of those debts, and subsequently becomes bankrupt, the assignment of book debts is void as against, or, in the Province of Quebec, may not be set up against, the trustee with respect to any book debts that have not been paid at the date of the bankruptcy.

    Foregoing provisions not to apply in some cases

    (2) Subsection (1) does not apply to an assignment of book debts that is registered under any statute of any province providing for the registration of assignments of book debts if the assignment is valid in accordance with the laws of the province.

    Other cases

    (3) Nothing in subsection (1) renders void or, in the Province of Quebec, null any assignment of book debts due at the date of the assignment from specified debtors, or of debts growing due under specified contracts, or any assignment of book debts included in a transfer of a business made in good faith and for adequate valuable consideration.

    Definition of “assignment”

    (4) For the purposes of this section, “assignment” includes assignment by way of security, hypothec and other charges on book debts.

    2005, c. 47, s. 75.

    Dealings with undischarged bankrupt

    99. (1) All transactions by a bankrupt with any person dealing with the bankrupt in good faith and for value in respect of property acquired by the bankrupt after the bankruptcy, if completed before any intervention by the trustee, are valid against the trustee, and any estate, or interest or right, in the property that by virtue of this Act is vested in the trustee shall determine and pass in any manner and to any extent that may be required for giving effect to any such transaction.

    Receipt of money by banker

    (2) For the purposes of this section, the receipt of any money, security or negotiable instrument from or by the order or direction of a bankrupt by his banker and any payment and any delivery of any security or negotiable instrument made to or by the order or direction of a bankrupt by his banker shall be deemed to be a transaction by the bankrupt with his banker dealing with him for value.

    R.S., 1985, c. B-3, s. 99; 2004, c. 25, s. 60.

    100. [Repealed, 2005, c. 47, s. 76]

    Inquiry into dividends and redemptions of shares

    101. (1) Where a corporation that is bankrupt has paid a dividend, other than a stock dividend, or redeemed or purchased for cancellation any of the shares of the capital stock of the corporation within the period beginning on the day that is one year before the date of the initial bankruptcy event and ending on the date of the bankruptcy, both dates included, the court may, on the application of the trustee, inquire into the transaction to ascertain whether it occurred at a time when the corporation was insolvent or whether it rendered the corporation insolvent.

    Judgment against directors

    (2) If a transaction referred to in subsection (1) has occurred, the court may give judgment to the trustee against the directors of the corporation, jointly and severally, or solidarily, in the amount of the dividend or redemption or purchase price, with interest on the amount, that has not been paid to the corporation if the court finds that

    (a) the transaction occurred at a time when the corporation was insolvent or the transaction rendered the corporation insolvent; and

    (b) the directors did not have reasonable grounds to believe that the transaction was occurring at a time when the corporation was not insolvent or the transaction would not render the corporation insolvent.

    Criteria

    (2.1) In making a determination under paragraph (2)(b), the court shall consider whether the directors acted as prudent and diligent persons would have acted in the same circumstances and whether the directors in good faith relied on

    (a) financial or other statements of the corporation represented to them by officers of the corporation or the auditor of the corporation, as the case may be, or by written reports of the auditor to fairly reflect the financial condition of the corporation; or

    (b) a report relating to the corporation’s affairs prepared pursuant to a contract with the corporation by a lawyer, notary, accountant, engineer, appraiser or other person whose profession gave credibility to the statements made in the report.

    Judgment against shareholders

    (2.2) Where a transaction referred to in subsection (1) has occurred and the court makes a finding referred to in paragraph (2)(a), the court may give judgment to the trustee against a shareholder who is related to one or more directors or to the corporation or who is a director not liable by reason of paragraph (2)(b) or subsection (3), in the amount of the dividend or redemption or purchase price referred to in subsection (1) and the interest thereon, that was received by the shareholder and not repaid to the corporation.

    Directors exonerated by law

    (3) A judgment pursuant to subsection (2) shall not be entered against or be binding on a director who had, in accordance with any applicable law governing the operation of the corporation, protested against the payment of the dividend or the redemption or purchase for cancellation of the shares of the capital stock of the corporation and had thereby exonerated himself or herself under that law from any liability therefor.

    Directors' right to recover

    (4) Nothing in this section shall be construed to affect any right, under any applicable law governing the operation of the corporation, of the directors to recover from a shareholder the whole or any part of any dividend, or any redemption or purchase price, made or paid to the shareholder when the corporation was insolvent or that rendered the corporation insolvent.

    Onus of proof — directors

    (5) For the purposes of subsection (2), the onus of proving

    (a) that the corporation was not insolvent at the time the transaction occurred and that the transaction did not render the corporation insolvent, or

    (b) that the directors had reasonable grounds to believe that the transaction was occurring at a time when the corporation was not insolvent or that the transaction would not render the corporation insolvent

    lies on the directors.

    Onus of proof — shareholder

    (6) For the purposes of subsection (2.2), the onus of proving that the corporation was not insolvent at the time the transaction occurred and that the transaction did not render the corporation insolvent lies on the shareholder.

    R.S., 1985, c. B-3, s. 101; 1997, c. 12, s. 82; 2004, c. 25, s. 61(E).

    Application of sections 95 to 101

    101.1 (1) Sections 95 to 101 apply, with any modifications that the circumstances require, to a proposal made under Division I of Part III unless the proposal provides otherwise.

    Interpretation

    (2) For the purposes of subsection (1), a reference in sections 95 to 101

    (a) to “date of the bankruptcy” is to be read as a reference to “day on which a notice of intention is filed” or, if a notice of intention is not filed, as a reference to “day on which a proposal is filed”; and

    (b) to “bankrupt”, “insolvent person” or “debtor” is to be read as a reference to “debtor in respect of whom the proposal is filed”.

    Application of sections 95 to 101 if proposal annulled

    (3) If the proposal is annulled by the court under subsection 63(1) or as a result of a bankruptcy order or assignment, sections 95 to 101 apply as though the debtor became bankrupt on the date of the initial bankruptcy event.

    1992, c. 27, s. 42; 2007, c. 36, s. 44.

    101.2 [Repealed, 2007, c. 36, s. 44]

     

     

    PART V

    ADMINISTRATION OF ESTATES

    Meetings of Creditors

    First meeting of creditors

    102. (1) Subject to subsection (1.1), it is the duty of the trustee to inquire as to the names and addresses of the creditors of a bankrupt and, within five days after the date of the trustee’s appointment, to send in the prescribed manner to the bankrupt, to every known creditor and to the Superintendent a notice in the prescribed form of the bankruptcy and of the first meeting of creditors, to be held within the twenty-one day period following the day of the trustee’s appointment, at the office of the official receiver in the locality of the bankrupt, but the official receiver may, when the official receiver deems it expedient, authorize the meeting to be held at the office of any other official receiver or at such other place as the official receiver may fix.

    Extension of days

    (1.1) The official receiver in the locality of the bankrupt may extend the period during which the first meeting of creditors must be held

    (a) by ten days, or

    (b) where the official receiver is satisfied that special circumstances exist, by up to thirty days,

    where the official receiver is satisfied that the extension will not be detrimental to the creditors and is in the general interests of the administration of the estate.

    Documents to accompany notice

    (2) The trustee shall include with the notice referred to in subsection (1) a list of the creditors with claims amounting to twenty-five dollars or more and the amounts of their claims together with a proof of claim and proxy in the prescribed form but no name shall be inserted in the proxy before it is so sent.

    Information and notice

    (3) In the case of the bankruptcy of an individual, the trustee shall set out in the notice, in the prescribed form, information concerning the financial situation of the bankrupt and the obligation of the bankrupt, if any, to make payments required under section 68 to the estate of the bankrupt.

    Publication in local paper by trustee

    (4) A notice in the prescribed form shall, as soon as possible after the bankruptcy and not later than five days before the first meeting of creditors, be published in a local newspaper by the trustee.

    Purpose of meeting

    (5) The purpose of the first meeting of creditors shall be to consider the affairs of the bankrupt, to affirm the appointment of the trustee or substitute another in place thereof, to appoint inspectors and to give such directions to the trustee as the creditors may see fit with reference to the administration of the estate.

    R.S., 1985, c. B-3, s. 102; 1992, c. 1, s. 20, c. 27, s. 43; 1997, c. 12, s. 84; 2005, c. 47, s. 77.

    Meetings during administration

    103. (1) The trustee may at any time call a meeting of creditors and he shall do so when directed by the court and whenever requested in writing by a majority of the inspectors or by twenty-five per cent in number of the creditors holding twenty-five per cent in value of the proved claims.

    Meetings convened by inspectors

    (2) A meeting of the creditors may be convened by a majority of the inspectors at any time when a trustee is not available to call a meeting or has neglected or failed to do so when so directed by the inspectors.

    R.S., c. B-3, s. 81.

    Notice of subsequent meetings

    104. (1) Meetings of creditors other than the first shall be called by sending a notice of the time and place of the meeting together with an agenda outlining the items for discussion with a reasonable explanation of what is expected to be discussed for each item, not less than five days before the time of each meeting to each creditor at the address given in the creditor’s proof of claim.

    Notice to creditors with proved claims

    (2) After the first meeting of creditors, notice of any meeting or of any proceeding need not be given to any creditors other than those who have proved their claims.

    R.S., 1985, c. B-3, s. 104; 1997, c. 12, s. 85; 2005, c. 47, s. 78.

    Procedure at Meetings

    Chair of first meeting

    105. (1) The official receiver or his nominee shall be the chair at the first meeting of creditors and shall decide any questions or disputes arising at the meeting and from any such decision any creditor may appeal to the court.

    Chair of subsequent meetings

    (2) At all meetings of creditors other than the first, the trustee shall be the chair unless by resolution at the meeting some other person is appointed.

    Casting vote

    (3) The chair of any meeting of creditors shall, in the case of a tie, have a second or casting vote.

    Minutes of meeting

    (4) The chair of any meeting of creditors shall, within a reasonable time after each meeting, cause minutes of the proceedings at the meeting to be prepared. The minutes shall be signed by the chair or by the chair of the next meeting and shall be retained as part of the books, records and documents referred to in section 26 relating to the administration of the estate.

    Non-receipt of notice by creditor

    (5) Where a meeting of creditors is called, the proceedings had and resolutions passed at the meeting, unless the court otherwise orders, are valid, notwithstanding that some creditors had not received notice.

    R.S., 1985, c. B-3, s. 105; 2005, c. 47, ss. 79, 123(E).

    Quorum

    106. (1) One creditor entitled to vote, or the representative of such a creditor, constitutes a quorum for a meeting of creditors.

    Where no quorum

    (2) Where there is no quorum at the first meeting of creditors,

    (a) the appointment of the trustee shall be deemed to be confirmed; and

    (b) the chair shall adjourn the meeting

    (i) to such time and place as the chair fixes, or

    (ii) without fixing a time or place for a future meeting.

    Idem

    (2.1) Where there is no quorum at any meeting of creditors other than the first meeting, the chair shall adjourn the meeting to such time and place as the chair fixes.

    Adjournment with consent of meeting

    (3) The chair of any meeting of creditors may with the consent of the meeting adjourn the meeting from time to time.

    R.S., 1985, c. B-3, s. 106; 1992, c. 27, s. 44; 2005, c. 47, s. 123(E).

    How creditors shall vote

    107. Every class of creditors may express its views and wishes separately from every other class and the effect to be given to those views and wishes shall, in case of any dispute and subject to this Act, be in the discretion of the court.

    R.S., c. B-3, s. 85.

    Chair may admit or reject proof

    108. (1) The chair of any meeting of creditors has power to admit or reject a proof of claim for the purpose of voting but his decision is subject to appeal to the court.

    Accept as proof

    (2) Notwithstanding anything in this Act, the chair may, for the purpose of voting, accept any letter or printed matter transmitted by any form or mode of telecommunication as proof of the claim of a creditor.

    In case of doubt

    (3) Where the chair is in doubt as to whether a proof of claim should be admitted or rejected, he shall mark the proof as objected to and allow the creditor to vote subject to the vote being declared invalid in the event of the objection being sustained.

    R.S., 1985, c. B-3, s. 108; 1992, c. 27, s. 45; 2005, c. 47, s. 123(E).

    Right of creditor to vote

    109. (1) A person is not entitled to vote as a creditor at any meeting of creditors unless the person has duly proved a claim provable in bankruptcy and the proof of claim has been duly filed with the trustee before the time appointed for the meeting.

    Voting by proxy

    (2) A creditor may vote either in person or by proxy.

    Form of proxy

    (3) A proxy is not invalid merely because it is in the form of a letter or printed matter transmitted by any form or mode of telecommunication.

    Debtor may not be proxyholder

    (4) A debtor may not be appointed a proxyholder to vote at any meeting of the debtor’s creditors.

    Corporation

    (5) A corporation may vote by an authorized proxyholder at meetings of creditors.

    Vote of creditors not dealing at arm’s length

    (6) If the chair is of the opinion that the outcome of a vote was determined by the vote of a creditor who did not deal with the debtor at arm’s length at any time during the period that begins on the day that is one year before the date of the initial bankruptcy event and that ends on the date of the bankruptcy, the chair shall redetermine the outcome by excluding the creditor’s vote. The redetermined outcome is the outcome of the vote unless a court, on application within 10 days after the day on which the chair redetermined the outcome of the vote, considers it appropriate to include the creditor’s vote and determines another outcome.

    (7) [Repealed, 2005, c. 47, s. 80]

    R.S., 1985, c. B-3, s. 109; 1992, c. 27, s. 46; 1997, c. 12, s. 86; 1999, c. 31, s. 24(F); 2004, c. 25, s. 63; 2005, c. 47, s. 80; 2007, c. 36, s. 45.

    Claims acquired after date of bankruptcy

    110. (1) No person is entitled to vote on a claim acquired after the date of bankruptcy in respect of a debtor unless the entire claim is acquired.

    Exception

    (2) Subsection (1) does not apply to persons acquiring notes, bills or other securities on which they are liable.

    R.S., 1985, c. B-3, s. 110; 2005, c. 47, s. 81.

    Creditor secured by bill or note

    111. A creditor shall not vote in respect of any claim on or secured by a current bill of exchange or promissory note held by him, unless he is willing to treat the liability to him thereon of every person who is liable thereon antecedently to the debtor, and who is not a bankrupt, as a security in his hands and to estimate the value thereof and for the purposes of voting, but not for the purposes of dividend, to deduct it from his claim.

    R.S., c. B-3, s. 89.

    Voting by secured creditor

    112. For the purpose of voting, a secured creditor shall, unless he surrenders his security, state in his proof the particulars of his security, the date when it was given and the value at which he assesses it, and he is entitled to vote only in respect of the balance, if any, due to him, after deducting the value of his security.

    R.S., c. B-3, s. 90.

    Trustee may vote

    113. (1) If the trustee is a proxyholder for a creditor, the trustee may vote as a creditor at any meeting of creditors.

    Trustee’s vote not to count in respect of certain resolutions

    (2) The vote of the trustee — or of the partner, clerk or legal counsel of the trustee, or of the clerk of the legal counsel of the trustee — as proxyholder for a creditor, shall not be counted in respect of any resolution affecting the remuneration or conduct of the trustee.

    Persons not entitled to vote

    (3) The following persons are not entitled to vote on the appointment of a trustee — and except with the permission of the court and on any condition that the court may impose, the following persons are not entitled to vote on the appointment of inspectors:

    (a) the father, mother, child, sister, brother, uncle or aunt, by blood, adoption, marriage or common-law partnership, or the spouse or common-law partner, of the bankrupt;

    (b) where the bankrupt is a corporation, any officer, director or employee thereof; and

    (c) where the bankrupt is a corporation, any wholly owned subsidiary corporation or any officer, director or employee thereof.

    R.S., 1985, c. B-3, s. 113; R.S., 1985, c. 31 (1st Supp.), s. 73; 2000, c. 12, s. 13; 2004, c. 25, s. 64; 2005, c. 47, s. 82.

    Evidence of proceedings at meetings of creditors

    114. (1) A minute of proceedings at a meeting of creditors under this Act signed at the same or the next ensuing meeting by a person describing himself as or appearing to be chair of the meeting at which the minute is signed shall be admitted in evidence without further proof.

    Evidence of regularity

    (2) Until the contrary is proved, every meeting of creditors in respect of the proceedings whereof a minute has been signed by the chair shall be deemed to have been duly convened and held and all resolutions passed or proceedings thereat to have been duly convened and held and to have been duly passed or had.

    R.S., 1985, c. B-3, s. 114; 2005, c. 47, s. 123(E).

    Votes

    115. Subject to this Act, all questions at meetings of creditors shall be decided by resolution carried by the majority of votes, and for that purpose the votes of a creditor shall be calculated by counting one vote for each dollar of every claim of the creditor that is not disallowed.

    R.S., 1985, c. B-3, s. 115; 1992, c. 27, s. 47.

    Court order — interlocutory or permanent

    115.1 In an application to revoke or vary a decision that affects or could affect the outcome of a vote, the court may make any order that it considers appropriate, including one that suspends the effect of the vote until the application is determined and one that redetermines the outcome of the vote.

    2007, c. 36, s. 46.

    Inspectors    

    Resolution respecting inspectors

    116. (1) At the first or a subsequent meeting of creditors, the creditors shall, by resolution, appoint up to five inspectors of the estate of the bankrupt or agree not to appoint any inspectors.

    Persons not eligible

    (2) No person is eligible to be appointed or to act as an inspector who is a party to any contested action or proceedings by or against the estate of the bankrupt.

    Powers

    (3) The powers of the inspectors may be exercised by a majority of them.

    Filling vacancy

    (4) The creditors or inspectors at any meeting may fill any vacancy on the board of inspectors.

    Revocation and replacement

    (5) The creditors may at any meeting and the court may on the application of the trustee or any creditor revoke the appointment of any inspector and appoint another in his stead.

    R.S., 1985, c. B-3, s. 116; 2005, c. 47, s. 83.

    Meetings

    117. (1) The trustee may call a meeting of inspectors when he deems it advisable and he shall do so when requested in writing by a majority of the inspectors.

    Participation by telephone, etc.

    (1.1) An inspector may, if all the other inspectors consent, participate in a meeting of inspectors by means of such telephone or other communication facilities as permit all persons participating in the meeting to communicate with each other, and an inspector participating in such a meeting by such means is deemed for the purpose of this Act to be present at that meeting.

    Trustee votes in case of tie

    (2) In the event of an equal division of opinion at a meeting of inspectors, the opinion of any absent inspector shall be sought in order to resolve the difference, and in the case of a difference that cannot be so resolved, it shall be resolved by the trustee, unless it concerns his personal conduct or interest in which case it shall be resolved by the creditors or the court.

    R.S., 1985, c. B-3, s. 117; 1992, c. 27, s. 48.

    Obligation of trustee when inspectors fail to exercise their powers

    118. If the inspectors fail to exercise the powers conferred on them, the trustee shall call a meeting of the creditors for the purpose of substituting other inspectors and for the purpose of taking any action or giving any directions that may be necessary.

    R.S., 1985, c. B-3, s. 118; 2005, c. 47, s. 84.

    Creditors may override directions of inspectors

    119. (1) Subject to this Act, the trustee shall in the administration of the property of the bankrupt and in the distribution thereof among his creditors have regard to any directions that may be given by resolution of the creditors at any general meeting or by the inspectors, and any directions so given by the creditors shall in case of conflict be deemed to override any directions given by the inspectors.

    Decisions of inspectors subject to review by court

    (2) The decisions and actions of the inspectors are subject to review by the court at the instance of the trustee or any interested person and the court may revoke or vary any act or decision of the inspectors and it may give such directions, permission or authority as it deems proper in substitution thereof or may refer any matter back to the inspectors for reconsideration.

    R.S., c. B-3, s. 94.

    Inspector may not acquire property

    120. (1) No inspector is, directly or indirectly, capable of purchasing or acquiring for himself or for another any of the property of the estate for which he is an inspector, except with the prior approval of the court.

    Formal defects

    (2) No defect or irregularity in the appointment of an inspector vitiates any act done by him in good faith.

    Duty of inspectors

    (3) In addition to the other duties that are attributed to them under this Act, the inspectors shall from time to time verify the bank balance of the estate, examine the trustee’s accounts and inquire into the adequacy of the security filed by the trustee and, subject to subsection (4), shall approve the trustee’s final statement of receipts and disbursements, dividend sheet and disposition of unrealized property.

    Approval of trustee’s final statement by inspectors

    (4) Before approving the final statement of receipts and disbursements of the trustee, the inspectors shall satisfy themselves that all the property has been accounted for and that the administration of the estate has been completed as far as can reasonably be done and shall determine whether or not the disbursements and expenses incurred are proper and have been duly authorized, and the fees and remuneration just and reasonable in the circumstances.

    Inspectors' expenses and fees

    (5) Each inspector

    (a) may be repaid actual and necessary travel expenses incurred in relation to the performance of the inspector’s duties; and

    (b) may be paid such fees per meeting as are prescribed.

    Special services

    (6) An inspector duly authorized by the creditors or by the other inspectors to perform special services for the estate may be allowed a special fee for those services, subject to approval of the court, which may vary that fee as it deems proper having regard to the nature of the services rendered in relation to the obligations of the inspector to the estate to act in good faith for the general interests of the administration of the estate.

    R.S., 1985, c. B-3, s. 120; 1992, c. 27, s. 49; 2001, c. 4, s. 30; 2004, c. 25, s. 65(F); 2005, c. 47, s. 85.

    Claims Provable   

    Claims provable

    121. (1) All debts and liabilities, present or future, to which the bankrupt is subject on the day on which the bankrupt becomes bankrupt or to which the bankrupt may become subject before the bankrupt’s discharge by reason of any obligation incurred before the day on which the bankrupt becomes bankrupt shall be deemed to be claims provable in proceedings under this Act.

    Contingent and unliquidated claims

    (2) The determination whether a contingent or unliquidated claim is a provable claim and the valuation of such a claim shall be made in accordance with section 135.

    Debts payable at a future time

    (3) A creditor may prove a debt not payable at the date of the bankruptcy and may receive dividends equally with the other creditors, deducting only thereout a rebate of interest at the rate of five per cent per annum computed from the declaration of a dividend to the time when the debt would have become payable according to the terms on which it was contracted.

    Family support claims

    (4) A claim in respect of a debt or liability referred to in paragraph 178(1)(b) or (c) payable under an order or agreement made before the date of the initial bankruptcy event in respect of the bankrupt and at a time when the spouse, former spouse, former common-law partner or child was living apart from the bankrupt, whether the order or agreement provides for periodic amounts or lump sum amounts, is a claim provable under this Act.

    R.S., 1985, c. B-3, s. 121; 1992, c. 27, s. 50; 1997, c. 12, s. 87; 2000, c. 12, s. 14.

    Claims provable in bankruptcy following proposal

    122. (1) The claims of creditors under a proposal are, in the event of the debtor subsequently becoming bankrupt, provable in the bankruptcy for the full amount of the claims less any dividends paid thereon pursuant to the proposal.

    Interest

    (2) If interest on any debt or sum certain is provable under this Act but the rate of interest has not been agreed on, the creditor may prove interest at a rate not exceeding five per cent per annum to the date of the bankruptcy from the time the debt or sum was payable, if evidenced by a written document, or, if not so evidenced, from the time notice has been given the debtor of the interest claimed.

    R.S., 1985, c. B-3, s. 122; 2004, c. 25, s. 66(E).

    Proof in respect of distinct contracts

    123. Where a bankrupt was, at the date of the bankruptcy, liable in respect of distinct contracts as a member of two or more distinct firms, or as a sole contractor and also as member of a firm, the circumstance that the firms are in whole or in part composed of the same individuals, or that the sole contractor is also one of the joint contractors, shall not prevent proof, in respect of the contracts, against the properties respectively liable on the contracts.

    R.S., c. B-3, s. 96.

    Proof by delivery

    (2) A claim shall be proved by delivering to the trustee a proof of claim in the prescribed form.

    Who may make proof of claims

    (3) The proof of claim may be made by the creditor himself or by a person authorized by him on behalf of the creditor, and, if made by a person so authorized, it shall state his authority and means of knowledge.

    Shall refer to account

    (4) The proof of claim shall contain or refer to a statement of account showing the particulars of the claim and any counter-claim that the bankrupt may have to the knowledge of the creditor and shall specify the vouchers or other evidence, if any, by which it can be substantiated.

    (5) [Repealed, 2005, c. 47, s. 86]

    R.S., 1985, c. B-3, s. 124; 2005, c. 47, s. 86.

    Penalty for filing false claim

    125. Where a creditor or other person in any proceedings under this Act files with the trustee a proof of claim containing any wilfully false statement or wilful misrepresentation, the court may, in addition to any other penalty provided in this Act, disallow the claim in whole or in part as the court in its discretion may see fit.

    R.S., c. B-3, s. 97.

    Who may examine proofs

    126. (1) Every creditor who has filed a proof of claim is entitled to see and examine the proofs of other creditors.

    Worker’s wage claims

    (2) Proofs of claims for wages of workers and others employed by the bankrupt may be made in one proof by the bankrupt, by someone on the bankrupt’s behalf, by a representative of a federal or provincial ministry responsible for labour matters, by a representative of a union representing workers and others employed by the bankrupt or by a court-appointed represent­ative, and that proof is to be made by attaching to it a schedule setting out the names and addresses of the workers and others and the amounts severally due to them, but that proof does not disentitle any worker or other wage earner to file a separate proof on his or her own behalf.

    R.S., 1985, c. B-3, s. 126; 1997, c. 12, s. 88; 2005, c. 47, s. 87.


    Proof by Secured Creditors    

    Proof by secured creditor

    127. (1) Where a secured creditor realizes his security, he may prove the balance due to him after deducting the net amount realized.

    May prove whole claim on surrender

    (2) Where a secured creditor surrenders his security to the trustee for the general benefit of the creditors, he may prove his whole claim.

    R.S., 1985, c. B-3, s. 127; 2004, c. 25, s. 67(F).

    Proof may be requested

    128. (1) Where the trustee has knowledge of property that may be subject to a security, the trustee may, by serving notice in the prescribed form and manner, require any person to file, in the prescribed form and manner, a proof of the security that gives full particulars of the security, including the date on which the security was given and the value at which that person assesses it.

    Where reply not received

    (1.1) Where the trustee serves a notice pursuant to subsection (1), and the person on whom the notice is served does not file a proof of security within thirty days after the day of service of the notice, the trustee may thereupon, with leave of the court, sell or dispose of any property that was subject to the security, free of that security.

    Dividend on balance

    (2) A creditor is entitled to receive a dividend in respect only of the balance due to him after deducting the assessed value of his security.

    Trustee may redeem security

    (3) The trustee may redeem a security on payment to the secured creditor of the debt or the value of the security as assessed, in the proof of security, by the secured creditor.

    R.S., 1985, c. B-3, s. 128; 1992, c. 27, s. 51; 1999, c. 31, s. 25; 2004, c. 25, s. 68(F).

    May order security to be sold

    129. (1) Where the trustee is dissatisfied with the value at which a security is assessed, the trustee may require that the property the security comprises be offered for sale at such time and on such terms and conditions as may be agreed on between the creditor and the trustee or, in default of such an agreement, as the court may direct.

    Sale by public auction

    (2) Where a sale under subsection (1) is by public auction the creditor or the trustee on behalf of the estate may bid or purchase.

    (3) [Repealed, 1992, c. 27, s. 52]

    Costs of sale

    (4) The costs and expenses of a sale made under this section are in the discretion of the court.

    R.S., 1985, c. B-3, s. 129; 1992, c. 27, s. 52; 2004, c. 25, s. 69(F).

    Creditor may require trustee to elect to exercise power

    130. Notwithstanding subsection 128(3) and section 129, the creditor may, by notice in writing, require the trustee to elect whether he will exercise the power of redeeming the security or requiring it to be realized, and if the trustee does not, within one month after receiving the notice or such further time or times as the court may allow, signify in writing to the creditor his election to exercise the power, he is not entitled to exercise it, and the equity of redemption or any other interest in the property comprised in the security that is vested in the trustee shall vest in the creditor, and the amount of his claim shall be reduced by the amount at which the security has been valued.

    R.S., c. B-3, s. 101.

    Amended valuation by creditor

    131. Where a creditor after having valued his security subsequently realizes it, or it is realized under section 129, the net amount realized shall be substituted for the amount of any valuation previously made by the creditor and shall be treated in all respects as an amended valuation made by the creditor.

    R.S., c. B-3, s. 102.

    Secured creditor may amend

    132. (1) Where the trustee has not elected to acquire the security as provided in this Act, a creditor may at any time amend the valuation and proof on showing to the satisfaction of the trustee or the court that the valuation and proof were made in good faith on a mistaken estimate or that the security has diminished or increased in value since its previous valuation.

    Amendment at cost of creditor

    (2) An amendment pursuant to subsection (1) shall be made at the cost of the creditor and on such terms as the court orders, unless the trustee allows the amendment without application to the court.

    Rights and liabilities of creditor where valuation amended

    (3) Where a valuation has been amended pursuant to this section, the creditor

    (a) shall forthwith repay any surplus dividend that he may have received in excess of that to which he would have been entitled on the amended valuation; or

    (b) is entitled to be paid out of any money for the time being available for dividend any dividend or share of dividend that he may have failed to receive by reason of the amount of the original valuation before that money is made applicable to the payment of any future dividend, but he is not entitled to disturb the distribution of any dividend declared before the amendment is filed with the trustee.

    R.S., c. B-3, s. 103.

    Exclusion for non-compliance

    133. Where a secured creditor does not comply with sections 127 to 132, he shall be excluded from any dividend.

    R.S., c. B-3, s. 104.

    No creditor to receive more than 100 cents in dollar

    134. Subject to section 130, a creditor shall in no case receive more than one hundred cents on the dollar and interest as provided by this Act.

    R.S., c. B-3, s. 105.

    Admission and Disallowance of Proofs of Claim and Proofs of Security   

    Trustee shall examine proof

    135. (1) The trustee shall examine every proof of claim or proof of security and the grounds therefor and may require further evidence in support of the claim or security.

    Determination of provable claims

    (1.1) The trustee shall determine whether any contingent claim or unliquidated claim is a provable claim, and, if a provable claim, the trustee shall value it, and the claim is thereafter, subject to this section, deemed a proved claim to the amount of its valuation.

    Disallowance by trustee

    (2) The trustee may disallow, in whole or in part,

    (a) any claim;

    (b) any right to a priority under the applicable order of priority set out in this Act; or

    (c) any security.

    Notice of determination or disallowance

    (3) Where the trustee makes a determination under subsection (1.1) or, pursuant to subsection (2), disallows, in whole or in part, any claim, any right to a priority or any security, the trustee shall forthwith provide, in the prescribed manner, to the person whose claim was subject to a determination under subsection (1.1) or whose claim, right to a priority or security was disallowed under subsection (2), a notice in the prescribed form setting out the reasons for the determination or disallowance.

    Determination or disallowance final and conclusive

    (4) A determination under subsection (1.1) or a disallowance referred to in subsection (2) is final and conclusive unless, within a thirty day period after the service of the notice referred to in subsection (3) or such further time as the court may on application made within that period allow, the person to whom the notice was provided appeals from the trustee’s decision to the court in accordance with the General Rules.

    Expunge or reduce a proof

    (5) The court may expunge or reduce a proof of claim or a proof of security on the application of a creditor or of the debtor if the trustee declines to interfere in the matter.

    R.S., 1985, c. B-3, s. 135; 1992, c. 1, s. 20, c. 27, s. 53; 1997, c. 12, s. 89.

    Scheme of Distribution     

    Priority of claims

    136. (1) Subject to the rights of secured creditors, the proceeds realized from the property of a bankrupt shall be applied in priority of payment as follows:

    (a) in the case of a deceased bankrupt, the reasonable funeral and testamentary expenses incurred by the legal representative or, in the Province of Quebec, the successors or heirs of the deceased bankrupt;

    (b) the costs of administration, in the following order,

    (i) the expenses and fees of any person acting under a direction made under paragraph 14.03(1)(a),

    (ii) the expenses and fees of the trustee, and

    (iii) legal costs;

    (c) the levy payable under section 147;

    (d) the amount of any wages, salaries, commissions, compensation or disbursements referred to in sections 81.3 and 81.4 that was not paid;

    (d.01) the amount equal to the difference a secured creditor would have received but for the operation of sections 81.3 and 81.4 and the amount actually received by the secured creditor;

    (d.02) the amount equal to the difference a secured creditor would have received but for the operation of sections 81.5 and 81.6 and the amount actually received by the secured creditor;

    (d.1) claims in respect of debts or liabilities referred to in paragraph 178(1)(b) or (c), if provable by virtue of subsection 121(4), for periodic amounts accrued in the year before the date of the bankruptcy that are payable, plus any lump sum amount that is payable;

    (e) municipal taxes assessed or levied against the bankrupt, within the two years immediately preceding the bankruptcy, that do not constitute a secured claim against the real property or immovables of the bankrupt, but not exceeding the value of the interest or, in the Province of Quebec, the value of the right of the bankrupt in the property in respect of which the taxes were imposed as declared by the trustee;

    (f) the lessor for arrears of rent for a period of three months immediately preceding the bankruptcy and accelerated rent for a period not exceeding three months following the bankruptcy if entitled to accelerated rent under the lease, but the total amount so payable shall not exceed the realization from the property on the premises under lease, and any payment made on account of accelerated rent shall be credited against the amount payable by the trustee for occupation rent;

    (g) the fees and costs referred to in subsection 70(2) but only to the extent of the realization from the property exigible thereunder;

    (h) in the case of a bankrupt who became bankrupt before the prescribed date, all indebtedness of the bankrupt under any Act respecting workers' compensation, under any Act respecting unemployment insurance or under any provision of the Income Tax Act creating an obligation to pay to Her Majesty amounts that have been deducted or withheld, rateably;

    (i) claims resulting from injuries to employees of the bankrupt in respect of which the provisions of any Act respecting workers' compensation do not apply, but only to the extent of moneys received from persons guaranteeing the bankrupt against damages resulting from those injuries; and

    (j) in the case of a bankrupt who became bankrupt before the prescribed date, claims of the Crown not mentioned in paragraphs (a) to (i), in right of Canada or any province, rateably notwithstanding any statutory preference to the contrary.

    Payment as funds available

    (2) Subject to the retention of such sums as may be necessary for the costs of administration or otherwise, payment in accordance with subsection (1) shall be made as soon as funds are available for the purpose.

    Balance of claim

    (3) A creditor whose rights are restricted by this section is entitled to rank as an unsecured creditor for any balance of claim due him.

    R.S., 1985, c. B-3, s. 136; 1992, c. 1, s. 143(E), c. 27, s. 54; 1997, c. 12, s. 90; 2001, c. 4, s. 31; 2004, c. 25, s. 70; 2005, c. 47, s. 88.

    Postponement of claims — creditor not at arm’s length

    137. (1) A creditor who, at any time before the bankruptcy of a debtor, entered into a transaction with the debtor and who was not at arm’s length with the debtor at that time is not entitled to claim a dividend in respect of a claim arising out of that transaction until all claims of the other creditors have been satisfied, unless the transaction was in the opinion of the trustee or of the court a proper transaction.

    (2) [Repealed, 2007, c. 36, s. 47]

    R.S., 1985, c. B-3, s. 137; 2000, c. 12, s. 15; 2005, c. 47, s. 89; 2007, c. 36, s. 47.

    138. [Repealed, 2007, c. 36, s. 48]

    Postponement of claims of silent partners

    139. Where a lender advances money to a borrower engaged or about to engage in trade or business under a contract with the borrower that the lender shall receive a rate of interest varying with the profits or shall receive a share of the profits arising from carrying on the trade or business, and the borrower subsequently becomes bankrupt, the lender of the money is not entitled to recover anything in respect of the loan until the claims of all other creditors of the borrower have been satisfied.

    R.S., c. B-3, s. 110.

    Postponement of wage claims of officers and directors

    140. Where a corporation becomes bankrupt, no officer or director thereof is entitled to have his claim preferred as provided by section 136 in respect of wages, salary, commission or compensation for work done or services rendered to the corporation in any capacity.

    R.S., c. B-3, s. 111.

    Postponement of equity claims

    140.1 A creditor is not entitled to a dividend in respect of an equity claim until all claims that are not equity claims have been satisfied.

    2005, c. 47, s. 90; 2007, c. 36, s. 49.

    Claims generally payable rateably

    141. Subject to this Act, all claims proved in a bankruptcy shall be paid rateably.

    R.S., c. B-3, s. 112.

    Partners and separate properties

    142. (1) Where partners become bankrupt, their joint property shall be applicable in the first instance in payment of their joint debts, and the separate property of each partner shall be applicable in the first instance in payment of his separate debts.

    Surplus of separate properties

    (2) Where there is a surplus of the separate properties of the partners, it shall be dealt with as part of the joint property.

    Surplus of joint properties

    (3) Where there is a surplus of the joint property of the partners, it shall be dealt with as part of the respective separate properties in proportion to the right and interest of each partner in the joint property.

    Different properties

    (4) Where a bankrupt owes or owed debts both individually and as a member of one or more partnerships, the claims shall rank first on the property of the individual or partnership by which the debts they represent were contracted and shall only rank on the other estate or estates after all the creditors of the other estate or estates have been paid in full.

    Costs out of joint and separate properties

    (5) Where the joint property of any bankrupt partnership is insufficient to defray any costs properly incurred, the trustee may pay such costs as cannot be paid out of the joint property out of the separate property of the bankrupts or one or more of them in such proportion as he may determine, with the consent of the inspectors of the estates out of which the payment is intended to be made, or, if the inspectors withhold or refuse their consent, with the approval of the court.

    R.S., c. B-3, s. 113.

    Interest from date of bankruptcy

    143. Where there is a surplus after payment of the claims as provided in sections 136 to 142, it shall be applied in payment of interest from the date of the bankruptcy at the rate of five per cent per annum on all claims proved in the bankruptcy and according to their priority.

    R.S., c. B-3, s. 114.

    Right of bankrupt to surplus

    144. The bankrupt, or the legal personal representative or heirs of a deceased bankrupt, is entitled to any surplus remaining after payment in full of the bankrupt’s creditors with interest as provided by this Act and of the costs, charges and expenses of the bankruptcy proceedings.

    R.S., 1985, c. B-3, s. 144; 2004, c. 25, s. 71.

    Proceeds of liability insurance policy on motor vehicles

    145. Nothing in this Act affects the right afforded by provincial statute of any person who has a claim against the bankrupt for damages on account of injury to or death of any person, or injury to property, occasioned by a motor vehicle, or on account of injury to property being carried in or on a motor vehicle, to have the proceeds of any liability insurance policy applied in or toward the satisfaction of the claim.

    R.S., c. B-3, s. 116.

    Application of provincial law to lessors’ rights

    146. Subject to priority of ranking as provided by section 136 and subject to subsection 73(4) and section 84.1, the rights of lessors are to be determined according to the law of the province in which the leased premises are situated.

    R.S., 1985, c. B-3, s. 146; 2004, c. 25, s. 72(E); 2007, c. 36, s. 50.

    Levy payable out of dividends for supervision

    147. (1) For the purpose of defraying the expenses of the supervision by the Superintendent, there shall be payable to the Superintendent for deposit with the Receiver General a levy on all payments, except the costs referred to in subsection 70(2), made by the trustee by way of dividend or otherwise on account of the creditor’s claims, including Her Majesty in right of Canada or of a province claiming in respect of taxes or otherwise.

    Rate of levy

    (2) The levy referred to in subsection (1) shall be at a rate to be fixed by the Governor in Council and shall be charged proportionately against all payments and deducted therefrom by the trustee before payment is made.

    R.S., 1985, c. B-3, s. 147; 2005, c. 47, s. 91.

     

    Dividends     

    Trustee to pay dividends as required

    148. (1) Subject to the retention of such sums as may be necessary for the costs of administration or otherwise, the trustee shall, from time to time as required by the inspectors, declare and distribute dividends among the unsecured creditors entitled thereto.

    Disputed claims

    (2) Where the validity of any claim has not been determined, the trustee shall retain sufficient funds to provide for payment thereof in the event that the claim is admitted.

    No action for dividend

    (3) No action for a dividend lies against the trustee, but, if the trustee refuses or fails to pay any dividend after having been directed to do so by the inspectors, the court may, on the application of any creditor, order him to pay it, and also to pay personally interest thereon for the time that it is withheld and the costs of the application.

    R.S., c. B-3, s. 119.

    Notice that final dividend will be made

    149. (1) The trustee may, after the first meeting of the creditors, send a notice, in the prescribed manner, to every person with a claim of which the trustee has notice or knowledge but whose claim has not been proved. The notice must inform the person that, if that person does not prove the claim within a period of 30 days after the sending of the notice, the trustee will proceed to declare a dividend or final dividend without regard to that person’s claim.

    Court may extend time

    (2) Where a person notified under subsection (1) does not prove the claim within the time limit or within such further time as the court, on proof of merits and satisfactory explanation of the delay in making proof, may allow, the claim of that person shall, notwithstanding anything in this Act, be excluded from all share in any dividend, but a taxing authority may notify the trustee within the period referred to in subsection (1) that it proposes to file a claim as soon as the amount has been ascertained, and the time for filing the claim shall thereupon be extended to three months or such further time as the court may allow.

    Certain federal claims

    (3) Despite subsection (2), a claim may be filed for an amount payable under the following Acts or provisions within the time limit referred to in subsection (2) — or within three months after the return of income or other evidence of the facts on which the claim is based is filed or comes to the attention of the Minister of National Revenue or, in the case of an amount payable under legislation referred to in paragraph (c), the minister in that province responsible for the legislation:

    (a) the Income Tax Act;

    (b) any provision of the Canada Pension Plan or Employment Insurance Act that refers to 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;

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

    (d) the Excise Tax Act;

    (e) the Excise Act, 2001;

    (f) the Customs Act; and

    (g) the Air Travellers Security Charge Act.

    No dividend allowed

    (4) Unless the trustee retains sufficient funds to provide for payment of any claims that may be filed under legislation referred to in subsection (3), no dividend is to be declared until the expiry of three months after the trustee has filed all returns that the trustee is required to file.

    R.S., 1985, c. B-3, s. 149; 1992, c. 1, s. 20; 1997, c. 12, s. 91; 2005, c. 47, s. 92; 2007, c. 36, s. 51; 2009, c. 33, s. 26.

    Right of creditor who has not proved claim before declaration of dividend

    150. A creditor who has not proved his claim before the declaration of any dividend is entitled on proof of his claim to be paid, out of any money for the time being in the hands of the trustee, any dividend or dividends he may have failed to receive before that money is applied to the payment of any future dividend, but he is not entitled to disturb the distribution of any dividend declared before his claim was proved for the reason that he has not participated therein, except on such terms and conditions as may be ordered by the court.

    R.S., c. B-3, s. 121.

    Final dividend and division of estate

    151 When the trustee has realized all the property of the bankrupt or all thereof that can, in the joint opinion of himself and of the inspectors, be realized without needlessly protracting the administration, and settled or determined or caused to be settled or determined the claims of all creditors to rank against the estate of the bankrupt, he shall prepare a final statement of receipts and disbursements and dividend sheet and, subject to this Act, divide the property of the bankrupt among the creditors who have proved their claims.

    R.S., c. B-3, s. 122.

    Statement of receipts and disbursements

    152. (1) The trustee’s final statement of receipts and disbursements shall contain

    (a) a complete account of

    (i) all moneys received by the trustee out of the bankrupt’s property or otherwise,

    (ii) the amount of interest received by the trustee,

    (iii) all moneys disbursed and expenses incurred by the trustee,

    (iv) all moneys disbursed by the trustee for services provided by persons related to the trustee, and

    (v) the remuneration claimed by the trustee; and

    (b) full particulars of, and a description and value of, all the bankrupt’s property that has not been sold or realized together with the reason why it has not been sold or realized and the disposition made of that property.

    Prescribed form

    (2) The statement referred to in subsection (1) shall be prepared in the prescribed form or as near thereto as the circumstances of the case will permit and together with the dividend sheet shall be submitted to the inspectors for their approval.

    Copy to Superintendent

    (3) The trustee shall forward a copy of the statement and dividend sheet to the Superintendent after they have been approved by the inspectors.

    Superintendent may comment

    (4) The Superintendent may comment as he sees fit and his comments shall be placed by the trustee before the taxing officer for his consideration on the taxation of the trustee’s accounts.

    Notice of final dividend, etc.

    (5) After the Superintendent has commented on the taxation of the trustee’s accounts or advised the trustee that the Superintendent has no comments to make and the trustee’s accounts have been taxed, the trustee shall send, in the prescribed manner, to every creditor whose claim has been proved, to the registrar, to the Superintendent and to the bankrupt

    (a) a copy of the final statement of receipts and disbursements;

    (b) a copy of the dividend sheet; and

    (c) a notice, in the prescribed form, of the trustee’s intention to pay a final dividend after the expiry of 15 days from the sending of the notice, statement and dividend sheet and to apply to the court for his or her discharge on a subsequent date that is not less than 30 days after the payment of the dividend.

    Objections

    (6) No interested person is entitled to object to the final statement and the dividend sheet unless, prior to the expiration of the fifteen days referred to in paragraph (5)(c), that person files notice of his objection with the registrar setting out his reasons therefor and serves a copy of the notice on the trustee.

    R.S., 1985, c. B-3, s. 152; 1992, c. 1, s. 20, c. 27, s. 55; 2005, c. 47, s. 93.

    Dividends on joint and separate properties

    153. Where joint and separate properties are being administered, the dividends may be declared together, and the expenses thereof shall be apportioned by the trustee.

    R.S., c. B-3, s. 124.

    Unclaimed dividends and undistributed funds

    154. (1) Before proceeding to discharge, the trustee shall forward to the Superintendent for deposit, according to the directives of the Superintendent, with the Receiver General the unclaimed dividends and undistributed funds that the trustee possesses, other than those exempted by the General Rules, and shall provide a list of the names and the post office addresses, in so far as known, of the creditors entitled to the unclaimed dividends, showing the amount payable to each creditor.

    Receiver General to pay claims

    (2) The Receiver General shall, after receiving the dividends and funds and the list referred to in subsection (1), on application, pay to any creditor his proper dividend as shown on that list, and such payment has effect as if made by the trustee.

    R.S., 1985, c. B-3, s. 154; 1992, c. 27, s. 56.

    Summary Administration     

    155. The following provisions apply to the summary administration of estates under this Act:

    (a) all proceedings under this section shall be entitled "Summary Administration";

    (b) the security to be deposited by a trustee under section 16 shall not be required unless directed by the official receiver;

    (b.1) [Repealed, 1992, c. 1, s. 161]

    (c) a notice of the bankruptcy shall not be published in a local newspaper unless such publication is deemed expedient by the trustee or ordered by the court;

    (d) all notices, statements and other documents shall be sent in the prescribed manner;

    (d.1) if a first meeting of the creditors is requested by the official receiver or by creditors who have in the aggregate at least 25% in value of the proven claims, the trustee shall call the meeting, in the prescribed form and manner, and it must be held within 21 days after being called;

    (e) there shall be no inspectors unless the creditors decide to appoint them, and if no inspectors are appointed, the trustee, in the absence of directions from the creditors, may do all things that may ordinarily be done by the trustee with the permission of the inspectors;

    (f) in such circumstances as are specified in directives of the Superintendent, the estates of individuals who, because of their relationship, could reasonably be dealt with as one estate may be dealt with as one estate;

    (g) in such circumstances as are specified in directives of the Superintendent and with the approval of the Superintendent, the trustee may deposit all moneys relating to the summary administration of estates in a single trust account;

    (h) a notice of bankruptcy and

    (i) a notice of impending automatic discharge of the bankrupt, or

    (ii) an application for discharge of the bankrupt

    may be given in a single notice in the prescribed form;

    (i) notwithstanding section 152, the procedure respecting the trustee’s accounts, including the taxation thereof shall be as prescribed;

    (j) notwithstanding subsections 41(1), (5) and (6), the procedure for the trustee’s discharge shall be as prescribed; and

    (k) the court’s authorization referred to in subsection 30(4) for a sale or disposal of any of the bankrupt’s property to a person who is related to the bankrupt is required only if the creditors decide that the authorization is required.

    R.S., 1985, c. B-3, s. 155; 1992, c. 1, ss. 16, 161, c. 27, s. 57; 1997, c. 12, s. 92; 1999, c. 31, s. 26; 2005, c. 47, s. 94.

    Fees and disbursements of trustee

    156. The trustee shall receive such fees and disbursements as may be prescribed.

    R.S., c. B-3, s. 127.

    Agreement to pay fees and disbursements

    156.1 An individual bankrupt who has never before been bankrupt under the laws of Canada or of any prescribed jurisdiction and who is not required to make payments under section 68 to the estate of the bankrupt may enter into an agreement with the trustee to pay the trustee’s fees and disbursements if the total amount required to be paid under the agreement is not more than the prescribed amount and that total amount is to be paid before the expiry of the 12-month period after the bankrupt’s discharge. The agreement may be enforced after the bankrupt’s discharge.

    2005, c. 47, s. 95.

    All other provisions of Act to apply

    157. Except as provided in section 155, all the provisions of this Act, in so far as they are applicable, apply with such modifications as the circumstances require to summary administration.

    R.S., c. B-3, s. 128.