Marginal note:Designation of beneficiary

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

Marginal note:Outside investigations

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

• Marginal note: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.

• (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;

Marginal note:Trustee may act for secured creditor on certain conditions

• 13.4 (1) No trustee shall, while acting as the trustee of an estate, act for or assist a secured creditor of the estate to assert any claim against the estate or to realize or otherwise deal with the security that the secured creditor holds, unless the trustee has obtained a written opinion of legal counsel who has not acted for the secured creditor in the previous two years and is not related to the trustee that the security is valid and enforceable as against the estate.

Marginal note:Code of Ethics

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

Marginal note:Persons disqualified from working for trustee

13.6 A trustee shall not engage the services of a person

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

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

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

Marginal note:Notice to trustee

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

• Marginal note:Subpoena or summons

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

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

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

  • (c) to bring and produce any books, records, data, including data in electronic form, documents or papers in the person’s possession or under the person’s control relative to the subject-matter of the investigation.

• Marginal note:Effect throughout Canada

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

• Marginal note:Fees and allowances

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

• Marginal note:Application

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

  • (a) an interim receiver;

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

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

• Marginal note:Non-liability in respect of certain matters

  (1.2) Despite anything in any federal or provincial law, if a trustee carries on in that position the business of the debtor or continues the employment of the debtor’s employees, the trustee is not by reason of that fact personally liable in respect of any claim against the debtor or related to a requirement imposed on the debtor to pay an amount if the claim is in relation to a debt or liability, present or future, to which the debtor is subject on the day on which the trustee is appointed.

Marginal note:Verifying bankrupt’s statement of affairs

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

Marginal note:Documents to be forwarded to Superintendent

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

• Marginal note:If no inspectors

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

• Marginal note:Sale or disposal to related persons

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

• Marginal note:Related persons

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

• Marginal note:Factors to be considered

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

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

  • (b) the extent to which the creditors were consulted in respect of the proposed sale or disposal;

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

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

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

  • (f) whether the consideration to be received is superior to the consideration that would be received under all other offers actually received in respect of the property.

Marginal note:Borrowing powers with permission of court

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

• Marginal note:Security under Bank Act

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

Marginal note:Reimbursement only of trustee’s disbursement advances

33. The court may make an order providing for the sale of any or all of the assets of the estate of the bankrupt, either by tender, private sale or public auction, setting out the terms and conditions of the sale and directing that the proceeds from the sale are to be used for the purpose of reimbursing the trustee in respect of any costs that may be owing to the trustee or of any moneys the trustee may have advanced as disbursements for the benefit of the estate.

• Marginal note:Notice to Superintendent’s division office

  (3) The trustee must send notice to the Superintendent’s division office of the day and time when any application for directions made under subsection (1) is to be heard and of the day and time when the trustee intends to report to the court as required by the Superintendent under subsection (2).

• Marginal note:Time limitation

  (3) If a bankrupt is an individual, a notice referred to in subsection (1) is operative only during the three-month period immediately after the date of the bankruptcy unless the court, on application, extends that period on any terms that it considers fit.

Marginal note:Duty of former trustee on substitution

• 36. (1) On the appointment of a substituted trustee, the former trustee shall without delay pass his or her accounts before the court and deliver to the substituted trustee all the property of the estate, together with all books, records and documents of the bankrupt and of the administration of the estate, as well as a statement of receipts and disbursements that contains a complete account of all moneys received by the trustee out of the property of the bankrupt or otherwise, the amount of interest received by the trustee, all moneys disbursed and expenses incurred and the remuneration claimed by the trustee, together with full particulars, description and value of all the bankrupt’s property that has not been sold or realized, setting out the reason why the property has not been sold or realized and the disposition made of the property.

Marginal note:Disposal of unrealizable property

• 40. (1) Any property of a bankrupt that is listed in the statement of affairs referred to in paragraph 158(d) or otherwise disclosed to the trustee before the bankrupt’s discharge and that is found incapable of realization must be returned to the bankrupt before the trustee’s application for discharge, but if inspectors have been appointed, the trustee may do so only with their permission.

• (a) the form and content of their accounts, including their final statement of receipts and disbursements,

• Marginal note:Sworn statement

  (2) The assignment must be accompanied by a sworn statement in the prescribed form showing the debtor’s property that is divisible among his or her creditors, the names and addresses of all his or her creditors and the amounts of their respective claims.

Marginal note:Interim financing

• 50.6 (1) A court may, on the application of a debtor, other than an individual, in respect of whom a notice of intention has been filed under section 50.4 or a proposal has been filed under subsection 62(1), make an order, on any conditions that the court considers appropriate, declaring that the debtor’s property is subject to a security or charge in favour of any person specified in the order who agrees to lend to the debtor an amount that is approved by the court as being required by the debtor, having regard to the debtor’s cash-flow statement referred to in paragraph 50(6)(a) or 50.4(2)(a), as the case may be,

  • (a) for the period of 30 days after the filing of the notice of intention;

  • (b) for the period of 30 days after the filing of the proposal, if no notice of intention has been filed under section 50.4 in respect of the debtor; or

  • (c) for any period specified in the order, if notice of the application has been given to the secured creditors likely to be affected by the security or charge.

• Marginal note:Rank

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

• Marginal note:Other orders

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

• Marginal note:Factors to be considered

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

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

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

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

  • (d) whether the loan agreement will enhance the debtor’s prospects as a going concern if the proposal is approved;

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

  • (f) whether any creditor will be materially prejudiced as a result of the debtor’s continued operations; and

  • (g) if notice of the application was given to the secured creditors, whether the debtor has provided a cash-flow statement for the period ending 120 days after the making of the application for the order.

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

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

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

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

Marginal note:Removal of directors

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

• Marginal note:Filling vacancy

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

Marginal note:Security or charge relating to director’s indemnification

• 64.1 (1) The court may, on the application of a person in respect of whom a notice of intention has been filed under section 50.4 or a proposal has been filed under subsection 62(1), make an order declaring that the assets of the person are subject to a security or charge, in an amount that the court considers appropriate, in favour of any director or officer of the person to indemnify the director or officer against obligations and liabilities that he or she may incur as a director or an officer of the person after the filing of the notice of intention or the proposal, as the case may be.

• Marginal note:Rank

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

• Marginal note:Restriction — indemnification insurance

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

• Marginal note:Declaration in cases of gross negligence, etc.

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

Marginal note:Court may order security or charge to cover certain costs

• 64.2 (1) The court may make an order declaring that property of a person, other than an individual, in respect of whom a notice of intention has been filed under section 50.4 or a proposal has been filed under subsection 62(1) is subject to a security or charge, in an amount that the court considers appropriate, in respect of

  • (a) the costs of the interim receiver, the receiver-manager and the trustee, including their legal costs;

  • (b) the person’s costs incurred in relation to the remuneration and expenses of any financial, legal or other experts engaged by the person for the purpose of any proceedings under this Division; and

  • (c) the costs of any interested party incurred in relation to the remuneration and expenses of any financial, legal or other experts engaged by the party, if the court is satisfied that the incurring of those costs is necessary for the effective participation of the interested party in the proceedings under this Division in relation to the person.

• Marginal note:Rank

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

Marginal note:Disclaimer or resiliation of agreements

• 65.11 (1) A debtor, other than an individual, in respect of whom a notice of intention has been filed under section 50.4 or a proposal has been filed under subsection 62(1) may, subject to subsection (3), disclaim or resiliate any agreement to which the debtor is a party on the date the notice of intention or the proposal was filed by giving 30 days notice to the other parties to the agreement in the prescribed manner.

• Marginal note:Exceptions

  (2) Subsection (1) does not apply in respect of

  • (a) an eligible financial contract within the meaning of subsection 65.1(8);

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

  • (c) a collective agreement;

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

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

• Marginal note:Party may challenge

  (3) Within 15 days after being given notice of the disclaimer or resiliation, a party to the agreement may apply to the court for a declaration that subsection (1) does not apply in respect of the agreement, and the court, on notice to any parties that it may direct, shall, subject to subsection (4), make that declaration.

• Marginal note:Circumstances for not making declaration

  (4) No declaration under subsection (3) shall be made if the court is satisfied that a viable proposal could not be made in respect of the debtor without the disclaimer or resiliation of the agreement and all other agreements that the debtor has disclaimed or resiliated under subsection (1) or 65.2(1).

• Marginal note:Intellectual property

  (5) If the debtor has, in any agreement, granted the use of any intellectual property to a party to the agreement, the disclaimer or resiliation of the agreement does not affect the party’s right to use the intellectual property so long as that party continues to perform its obligations in relation to the use of the intellectual property.

• Marginal note:Deemed claim of other party

  (6) If an agreement is disclaimed or resil­iated, every other party to the agreement is deemed to have a claim for damages as an unsecured creditor.

Marginal note:Application for authorization to serve a notice to bargain

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

• Marginal note:Conditions for issuance of order

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

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

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

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

• Marginal note:No delay on vote on proposal

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

• Marginal note:Claims arising from revision of collective agreement

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

• Marginal note:Order to disclose information

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

• Marginal note:Unrevised collective agreements remain in force

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

• Marginal note:Parties

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

Marginal note:Restriction on disposal of certain assets

• 65.13 (1) An insolvent person, other than an individual, in respect of whom a notice of intention is filed under section 50.4 or a proposal is filed under subsection 62(1) may not sell or otherwise dispose of assets outside the ordinary course of business unless authorized to do so by a court.

• Marginal note:Notice to secured creditors

  (2) An insolvent person who applies to the court for the authorization must give notice of the application to all secured creditors who are likely to be affected by the proposed sale or disposal of the assets to which the application relates.

• Marginal note:Factors to be considered

  (3) In deciding whether to grant the authorization, the court must consider, among other things,

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

  • (b) whether the trustee approved the process leading to the proposed sale or disposal of the assets;

  • (c) whether the trustee has filed with the court a report stating that in his or her opinion the sale or disposal of the assets is necessary for a viable proposal that will provide a better result for creditors than if the assets were sold or disposed of under a bankruptcy;

  • (d) the extent to which the creditors were consulted in respect of the proposed sale or disposal;

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

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

• Marginal note:Additional factors

  (4) In addition to taking the factors referred to in subsection (3) into account, if the proposed sale or disposal is to a person who is related to the insolvent person, the court may grant the authorization only if it is satisfied that

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

  • (b) the consideration to be received is supe­rior to the consideration that would be received under all other offers actually received in respect of the assets.

• Marginal note:Related persons

  (5) For the purpose of subsection (4), a person who is related to the insolvent person includes a person who controls the insolvent person, a director or an officer of the insolvent person and a person who is related to a director or an officer of the insolvent person.

• Marginal note:Direction that assets may be disposed of free of charges, etc.

  (6) In granting an authorization for the sale or disposal of assets, the court may order that the assets may be sold or disposed of free and clear of any security, charge or other restriction, but if it so orders, it shall also order that the proceeds realized from the sale or disposal of the assets are subject to a security, charge or other restriction in favour of the creditors whose security, charges or other restrictions are affected by the order.

• Marginal note:Assignments

  (1.1) For the purposes of subsection (1), in deciding whether to make an assignment under subsection 84.1(1), the court must, in addition to the factors referred to in subsection 84.1(4), also consider whether the insolvent person would not be able to make a viable proposal without the assignment.

• Marginal note:Final statement of receipts and disbursements

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

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

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

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

• Marginal note:Examination by official receiver

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

“consumer debtor”

« débiteur consommateur »

“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;

• Marginal note: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.

• (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.

• Marginal note: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.

• Marginal note: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.

• Marginal note: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 has assented to the consumer proposal.

Marginal note: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.

• Marginal note: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 on the day on which the amendment is withdrawn or refused.

• Marginal note: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, in the prescribed form, a report in relation to the deemed annulment; and

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

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

  (4) When 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 date of the deemed annulment;

  • (b) the trustee who is the administrator of the consumer proposal shall, within five days after the deemed annulment, 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.

• Marginal note:Validity of things done before deemed annulment

  (5) A deemed annulment of a consumer proposal does not prejudice 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 despite the deemed annulment, a guarantee given under the consumer proposal remains in full force and effect in accordance with its terms.

• Marginal note:Notice of possibility of consumer proposal being automatically revived

  (6) If the administrator, in the case of a deemed annulment of a consumer proposal made by a person other than a bankrupt, considers it appropriate to do so in the circumstances, he or she may, with notice to the official receiver, send to the creditors, within 10 days 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 45 days after the day on which it was deemed to be annulled unless one of them files with the administrator a notice of objection, in the prescribed manner, to the revival.

• Marginal note:Automatic revival

  (7) If the notice is sent by the administrator and no notice of objection is filed during the 45-day period, the consumer proposal is automat­ically revived on the expiry of those 45 days.

• Marginal note:Notice if no automatic revival

  (8) If a notice of objection is filed with the administrator during the 45-day period, the administrator must, without delay, send 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 the 45-day period.

• Marginal note: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 has been 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.

• Marginal note: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, in the prescribed form, a report in relation to the revival; and

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

• Marginal note: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).

• Marginal note:Rétablissement des droits

  (2) En cas d’annulation — effective ou présumée — de la proposition, les droits des créanciers sont rétablis jusqu’à concurrence du montant de leurs réclamations, déduction faite toutefois des dividendes reçus.

Marginal note: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

Marginal note:Amendment to consumer proposal

66.37 If an administrator files an amendment to a consumer proposal before the withdrawal, refusal, approval or deemed approval by the court of the consumer proposal, or after the approval or deemed approval by the court of the consumer proposal and before it has been fully performed or annulled or deemed annulled, the provisions of this Division apply to the consumer proposal and the amended consumer proposal, with any modifications that the circumstances require, and, for that purpose, the definition “consumer debtor” in section 66.11 is to be read as follows:

“consumer debtor”

“consumer debtor” means an individual who is insolvent;

Marginal note: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.

• Marginal note: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).

• Marginal note: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.

• Marginal note: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.

• Marginal note: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.

Marginal note: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 six months immediately before the date of bankruptcy is secured, as of that date, to the extent of $2,000, by security on all the current assets of the bankrupt on that date.

• Marginal note:Commissions

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

• Marginal note:Security for disbursements — bankruptcy

  (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 six months immediately before the date of bankruptcy is secured, as of that date, to the extent of $1,000, by security on all the bankrupt’s current assets on that date.

• Marginal note: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.

• Marginal note: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 of the amounts paid to that person by the trustee.

• Meaning of “compensation”

  (6) For the purpose of this section and section 81.4, “compensation” includes vacation pay but does not include termination or severance pay.

• Marginal note:Proof by delivery

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

Marginal note: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 immediately 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, by security on all the person’s current assets that are in the possession or under the control of the receiver.

• Marginal note:Commissions

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

• Marginal note:Security for disbursements — receivership

  (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 immediately 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, by security on all the person’s current assets that are in the possession or under the control of the receiver.

• Marginal note: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.

• Marginal note: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 of the amounts paid to that person by the receiver.

• Marginal note:Proof by delivery

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

• Marginal note:Definitions

  (7) The following definitions apply in this section.

  “person who is subject to a receivership”

  « personne faisant l’objet d’une mise sous séquestre »

  “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”

  « séquestre »

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

Marginal note: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.

• Marginal note: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.

• Marginal note: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.

Marginal note: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.

• Marginal note: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.

• Marginal note: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.

• Marginal note:Definitions

  (4) The following definitions apply in this section.

  “person who is subject to a receivership”

  « personne faisant l’objet d’une mise sous séquestre »

  “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”

  « séquestre »

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

Marginal note:Assignments

• 84.1 (1) The court may, on application by an insolvent person or a trustee, make an order assigning the rights and obligations of the insolvent person under any agreement to any person, specified by the court, who has agreed to the assignment.

• Marginal note:Notice

  (2) The applicant must give notice of the assignment, in the prescribed manner, to every party to the agreement.

• Marginal note:Exceptions

  (3) Subsection (1) does not apply in respect of rights and obligations

  • (a) under an eligible financial contract within the meaning of subsection 65.1(8);

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

  • (c) under a collective agreement; and

  • (d) that are not assignable by reason of their nature.

• Marginal note:Factors to be considered

  (4) In deciding whether to make an assignment, the court must consider, among other things,

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

  • (b) whether it would be appropriate to assign the rights and obligations to that person.

• Marginal note:Restriction

  (5) The court may not make the assignment if the court is satisfied that the insolvent person is in default under the agreement.

Marginal note:Certain rights limited

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

• Marginal note:Lease

  (2) If the agreement referred to in subsection (1) is a lease, the lessor may not terminate or amend the lease by reason only of the bankruptcy or that the bankrupt has not paid rent in respect of any period before the date of bankruptcy.

• Marginal note:Public utilities

  (3) No public utility may discontinue service to an individual bankrupt by reason only of the bankruptcy or that the bankrupt has not paid for services rendered, or material provided, before the date of bankruptcy.

• Marginal note:Certain acts not prevented

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

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

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

• Marginal note:Provisions of section override agreement

  (5) Any provision in an agreement that has the effect of providing for, or permitting, anything that, in substance, is contrary to this section is of no force or effect.

• Marginal note:Powers of court

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

• (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

Marginal note:Statutory Crown securities

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

Preferences

Marginal note:Creditor — not at arm’s length

96. If the transfer, charge, payment, obligation or judicial proceeding referred to in section 95 has the effect of giving a creditor who is not at arm’s length a preference over other creditors, the period referred to in subsection 95(1) is one year instead of three months.

Marginal note:Examination of consideration in a transfer

• 96.1 (1) If a debtor has entered into a transaction with another party, the court may, on the application of the trustee, inquire into whether the transaction was a transfer at undervalue and whether or not the other party was at arm’s length with the debtor.

• Marginal note:Judgment for difference — at arm’s length

  (2) If the court finds that the other party in the transaction was at arm’s length with the debtor and that the transaction was a transfer at undervalue, the court may give judgment to the trustee against the other party to the transaction, against any other person being privy to the transaction with the debtor or against all those persons for the difference between the actual consideration given or received by the debtor and the fair market value, as determined by the court, of the property or services concerned in the transaction, if

  • (a) the transaction occurred during the period that begins on the day that is one year before the date of the initial bankruptcy event and that ends on the date of the bankruptcy; and

  • (b) the debtor was insolvent at the time of, or was rendered insolvent by, the transaction, and the debtor intended to defeat the interests of creditors.

• Marginal note:Judgment for difference — not at arm’s length

  (3) If the court finds that the other party in the transaction was not at arm’s length with the debtor and that the transaction was a transfer at undervalue, the court may give judgment to the trustee against the other party to the transaction, against any other person being privy to the transaction with the debtor or against all those persons for the difference between the actual consideration given or received by the debtor and the fair market value, as determined by the court, of the property or services concerned in the transaction, if the transaction occurred during the period

  • (a) that begins on the day that is one year before the date of the initial bankruptcy event and ends on the date of the bankruptcy; or

  • (b) that begins five years before the date of the initial bankruptcy event and that ends one day before one year before the date of the initial bankruptcy event in the case where

    • (i) the debtor was insolvent at the time of, or was rendered insolvent by, the transaction, or

    • (ii) the debtor intended to defeat the interests of creditors.

• Marginal note:Establishing values

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

Marginal note:Protected transactions

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

Marginal note:General assignments of book debts ineffective

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

• Marginal note:Foregoing provisions not to apply in some cases

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

• Marginal note:Other cases

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

• Definition of “assignment”

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

• Marginal note:Information and notice

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

Marginal note:Notice of subsequent meetings

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

• Marginal note:Minutes of meeting

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

Marginal note:Claims acquired after date of bankruptcy

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

Marginal note:Resolution respecting inspectors

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

Marginal note:Obligation of trustee when inspectors fail to exercise their powers

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

• Marginal note:Duty of inspectors

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

• (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;

Marginal note: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.

Marginal note:Postponement of claims — purchase of shares etc.

140.1 A creditor is not entitled to claim a dividend in respect of a claim arising from the rescission of a purchase or sale of a share or unit of the bankrupt — or in respect of a claim for damages arising from the purchase or sale of a share or unit of the bankrupt — until all claims of the other creditors have been satisfied.

Marginal note: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.

Marginal note: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.

• Marginal note:Effect on automatic discharge

  (3) Subsection 168.1(1) does not apply to an individual bankrupt who has refused or neg­lected to receive counselling under subsection (1).

• Marginal note:Record of examination

  (2) The official receiver shall make a record of the examination and shall forward a copy of the record to the Superintendent and the trustee.

• Marginal note:Record of examination available to creditors on request

  (2.1) If the examination is held

  • (a) before the first meeting of creditors, the record of the examination shall be communicated to the creditors at the meeting; or

  • (b) after the first meeting of creditors, the record of examination shall be made available to any creditor who requests it.

Marginal note:Penalty for failure to attend for examination

166. If the bankrupt fails to present himself or herself for examination before the official receiver as required by paragraph 158(c) or if the bankrupt or any other person is served with an appointment or a summons to attend for examination and is paid or tendered the proper conduct money and witness fees as fixed by the General Rules but refuses or neglects to attend as required by the appointment or summons, the court may, on the application of the trustee or the official receiver, by warrant cause the bankrupt or other person so in default to be apprehended and brought up for examination.

Marginal note:Automatic discharge

• 168.1 (1) Subject to subsections (2) and 157.1(3), the following provisions apply in respect of an individual bankrupt other than a bankrupt referred to in subsection 172.1(1):

  • (a) in the case of a bankrupt who has never before been bankrupt under the laws of Canada or of any prescribed jurisdiction, the bankrupt is automatically discharged

    • (i) on the expiry of 9 months after the date of bankruptcy unless, in that 9-month period, an opposition to the discharge has been filed or the bankrupt has been required to make payments under section 68 to the estate of the bankrupt, or

    • (ii) on the expiry of 21 months after the date of bankruptcy unless an opposition to the discharge has been filed before the automatic discharge takes effect; and

  • (b) in the case of a bankrupt who has been a bankrupt one time before under the laws of Canada or of any prescribed jurisdiction, the bankrupt is automatically discharged

    • (i) on the expiry of 24 months after the date of bankruptcy unless, in that 24-month period, an opposition to the discharge has been filed or the bankrupt has been required to make payments under section 68 to the estate of the bankrupt, or

    • (ii) on the expiry of 36 months after the date of bankruptcy unless an opposition to the discharge has been filed before the automatic discharge takes effect.

• Marginal note:Application not precluded

  (2) Nothing in subsection (1) precludes a bankrupt from applying to the court for a discharge before the bankrupt would otherwise be automatically discharged, and that subsection ceases to apply to a bankrupt who makes such an application.

• Marginal note:Application of other provisions

  (3) The provisions of this Act concerning the discharge of bankrupts apply in respect of an individual bankrupt who has never before been bankrupt under the laws of Canada or of any prescribed jurisdiction, to the extent that those provisions are not inconsistent with this section, whether or not the bankrupt applies to the court for a discharge referred to in subsection (2).

• Marginal note:Notice of impending discharge

  (4) The trustee shall, not less than 15 days before the date of a bankrupt’s automatic discharge, give notice of the impending discharge, in the prescribed form, to the Superintendent, the bankrupt and every creditor who has proved a claim, at the creditor’s latest known address.

• Marginal note:Effect of automatic discharge

  (5) An automatic discharge is deemed, for all purposes, to be an absolute and immediate order of discharge.

• Marginal note:Certificate

  (6) Without delay after a bankrupt has been automatically discharged, the trustee shall issue a certificate to the discharged bankrupt, in the prescribed form, declaring that the bankrupt is discharged and is released from all debts except those matters referred to in subsection 178(1). The trustee shall send a copy of the certificate to the Superintendent.

Marginal note:Oppositions to automatic discharge

• 168.2 (1) The following provisions apply in respect of oppositions to the automatic discharge of an individual bankrupt:

  • (a) if the Superintendent opposes the discharge, the Superintendent must give notice of the opposition, together with the grounds for it, to the trustee and to the bankrupt before the automatic discharge would otherwise take effect;

  • (b) if a creditor opposes the discharge, the creditor must give notice of the opposition, together with the grounds for it, to the Superintendent, to the trustee and to the bankrupt before the automatic discharge would otherwise take effect; and

  • (c) if the trustee opposes the discharge, the trustee must give notice of the opposition in the prescribed form and manner, together with the grounds for the opposition, to the bankrupt and the Superintendent before the automatic discharge would otherwise take effect.

• Marginal note:Application for hearing

  (2) If the Superintendent, a creditor or the trustee opposes the automatic discharge of an individual bankrupt, the trustee shall, unless the matter is to be dealt with by mediation under section 170.1, apply without delay to the court for an appointment for the hearing of the opposition in the manner referred to in sections 169 to 176, and the hearing must be held

  • (a) within 30 days after the day on which the appointment is made; or

  • (b) at any later time that may be fixed by the court at the bankrupt’s or trustee’s request.

Marginal note:Trustee to prepare report

• 170. (1) The trustee shall, in the prescribed circumstances and at the prescribed times, prepare a report, in the prescribed form, with respect to

Marginal note:Exception — personal income tax debtors

• 172.1 (1) In the case of a bankrupt who has $200,000 or more of personal income tax debt and whose personal income tax debt represents 75% or more of the bankrupt’s total unsecured proven claims, the hearing of an application for a discharge may not be held before the expiry of

  • (a) if the bankrupt has never before been bankrupt under the laws of Canada or of any prescribed jurisdiction,

    • (i) 9 months after the date of bankruptcy if the bankrupt has not been required to make payments under section 68 to the estate of the bankrupt at any time during those 9 months, or

    • (ii) 21 months after the date of bankruptcy, in any other case;

  • (b) if the bankrupt has been a bankrupt one time before under the laws of Canada or of any prescribed jurisdiction,

    • (i) 24 months after the date of bankruptcy if the bankrupt has not been required to make payments under section 68 to the estate of the bankrupt at any time during those 24 months, or

    • (ii) 36 months after the date of bankruptcy, in any other case; and

  • (c) in the case of any other bankrupt, 36 months after the date of the bankruptcy.

• Marginal note:Appointment to be obtained by trustee

  (2) Before proceeding to the trustee’s discharge and before the first day that the hearing could be held in respect of a bankrupt referred to in subsection (1), the trustee must, on five days notice to the bankrupt, apply to the court for an appointment for a hearing of the application for the bankrupt’s discharge.

• Marginal note:Powers of court to refuse or suspend discharge or grant conditional discharge

  (3) On the hearing of an application for a discharge referred to in subsection (1), the court shall, subject to subsection (4),

  • (a) refuse the discharge;

  • (b) suspend the discharge for any period that the court thinks proper; or

  • (c) require the bankrupt, as a condition of his or her discharge, to perform any acts, pay any moneys, consent to any judgments or comply with any other terms that the court may direct.

• Marginal note:Factors to be considered

  (4) In making a decision in respect of the application, the court must take into account

  • (a) the circumstances of the bankrupt at the time the personal income tax debt was incurred;

  • (b) the efforts, if any, made by the bankrupt to pay the personal income tax debt;

  • (c) whether the bankrupt made payments in respect of other debts while failing to make reasonable efforts to pay the personal income tax debt; and

  • (d) the bankrupt’s financial prospects for the future.

• Marginal note:Requirements if discharge suspended

  (5) If the court makes an order suspending the discharge, the court shall, in the order, require the bankrupt to file income and expense statements with the trustee each month and to file all returns of income required by law to be filed.

• Marginal note:Court may modify after year

  (6) If, at any time after the expiry of one year after the day on which any order is made under this section, the bankrupt satisfies the court that there is no reasonable probability that he or she will be in a position to comply with the terms of the order, the court may modify the terms of the order or of any substituted order, in any manner and on any conditions that it thinks fit.

• Marginal note:Power to suspend

  (7) The powers of suspending and of attaching conditions to the discharge of a bankrupt may be exercised concurrently.

• Meaning of “personal income tax debt”

  (8) For the purpose of this section, “personal income tax debt” means the amount payable, within the meaning of subsection 223(1) of the Income Tax Act without reference to paragraphs (b) to (c), by an individual and the amount that is payable by an individual under any provincial legislation that imposes a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, including, for greater certainty, the amount of any interest, penalties or fines imposed under the Income Tax Act or the provincial legislation.

Marginal note:Partner or co-trustee not released

179. An order of discharge does not release a person who at the time of the bankruptcy was a partner or co-trustee with the bankrupt or was jointly bound or had made a joint contract with the bankrupt, or a person who was surety or in the nature of a surety for the bankrupt.

• Marginal note:Final statement of receipts and disbursements

  (3) If an order is made under subsection (1), the trustee shall, without delay, prepare the final statements of receipts and disbursements referred to in section 151.

• (b) obtains credit to a total of $1,000 or more from any person or persons without informing them that the undischarged bankrupt is an undischarged bankrupt,

Marginal note:Claims in foreign currency

215.1 A claim for a debt that is payable in a currency other than Canadian currency is to be converted to Canadian currency

• (a) in the case of a proposal in respect of an insolvent person and unless otherwise provided in the proposal, if a notice of intention was filed under subsection 50.4(1), as of the date the notice was filed or, if no notice was filed, as of the date the proposal was filed with the official receiver under subsection 62(1);

• (b) in the case of a proposal in respect of a bankrupt and unless otherwise provided in the proposal, as of the date of the bankruptcy; or

• (c) in the case of a bankruptcy, as of the date of the bankruptcy.

• Marginal note:Exception

  (4) This section does not apply with respect to the inventory, accounts receivable or other property of an insolvent person or of a bankrupt if there is a receiver.

• (d) a person who, in respect of property of a securities firm, is a receiver within the meaning of subsection 243(2), a receiver-man­ager, a liquidator or any other person with similar functions appointed under a federal or provincial enactment relating to securities that provides for the appointment of that other person, if the securities firm has committed an act of bankruptcy referred to in section 42 within the six months before the filing of the application.

Marginal note:Vesting of securities, etc., in trustee

• 261. (1) If a securities firm becomes bankrupt, the following securities and cash vest in the trustee:

  • (a) securities owned by the securities firm;

  • (b) securities and cash held by any person for the account of the securities firm; and

  • (c) securities and cash held by the securities firm for the account of a customer, other than customer name securities.

• Marginal note:Customer indebted to securities firm

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

PART XIIICROSS-BORDER INSOLVENCIES

Purpose

Marginal note:Purpose

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

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

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

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

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

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

Interpretation

Marginal note:Definitions

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

  “foreign court”

  « tribunal étranger »

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

  “foreign main proceeding”

  « principale »

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

  “foreign non-main proceeding”

  « secondaire »

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

  “foreign proceeding”

  « instances étrangères »

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

  “foreign representative”

  « représentant étranger »

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

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

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

• Marginal note:Centre of debtor’s main interests

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

Recognition of Foreign Proceeding

Marginal note:Application for recognition of a foreign proceeding

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

• Marginal note:Documents that must accompany application

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

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

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

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

• Marginal note:Documents may be considered as proof

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

• Marginal note:Other evidence

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

• Marginal note:Translation

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

Marginal note:Order recognizing foreign proceeding

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

• Marginal note:Nature of foreign proceeding to be specified

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

Marginal note:Effects of recognition of a foreign main proceeding

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

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

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

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

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

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

• Marginal note:Exceptions

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

• Marginal note:Application of this and other Acts

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

Marginal note:Orders

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

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

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

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

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

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

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

• Marginal note:Restriction

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

• Marginal note:Application of this and other Acts

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

Marginal note:Terms and conditions of orders

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

Marginal note:Commencement or continuation of proceedings

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

Obligations

Marginal note:Cooperation — court

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

• Marginal note:Cooperation — other authorities in Canada

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

Marginal note:Obligations of foreign representative

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

• (a) without delay, inform the court of

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

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

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

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

Multiple Proceedings

Marginal note:Concurrent proceedings

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

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

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

Marginal note:Multiple foreign proceedings

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

• Marginal note:Multiple foreign proceedings

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

Miscellaneous Provisions

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

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

Marginal note:Foreign representative status

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

Marginal note:Foreign proceeding appeal

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

Marginal note:Presumption of insolvency

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

Marginal note:Credit for recovery in other jurisdictions

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

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

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

• Marginal note:Restriction

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

Marginal note:Court not prevented from applying certain rules

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

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

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

PART XIVREVIEW OF ACT

Marginal note:Review of Act

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

• Marginal note:Reference to parliamentary committee

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

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

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

Marginal note:Application

• 3. (1) This Act applies in respect of a debtor company or affiliated debtor companies if the total of claims against the debtor company or affiliated debtor companies, determined in accordance with section 20, is more than $5,000,000 or any other amount that is prescribed.

• Marginal note:Restriction — certain Crown claims

  (2) Unless Her Majesty agrees otherwise, the court may sanction a compromise or an arrangement only if the compromise or arrangement provides for the payment in full to Her Majesty in right of Canada or a province, within six months after court sanction of the compromise or arrangement, of all amounts that were outstanding at the time of the application for an order under section 11 or 11.02 and that are of a kind that could be subject to a demand under

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

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

  • (c) any provision of provincial legislation that has a purpose similar 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, and 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.

• Marginal note:Restriction — default of remittance to Crown

  (3)  If an order contains a provision authorized by section 11.09, no compromise or arrangement shall be sanctioned by the court if, at the time the court hears the application for sanction, Her Majesty in right of Canada or a province satisfies the court that the company is in default on any remittance of an amount referred to in subsection (2) that became due after the time of the application for an order under section 11.02.

• Marginal note:Restriction — employees, etc.

  (4) The court may sanction a compromise or an arrangement only if

  • (a) the compromise or arrangement provides for payment to the employees and former employees of the company, immediately after the court’s sanction, of

    • (i) amounts at least equal to the amounts that they would have been qualified to receive under paragraph 136(1)(d) of the Bankruptcy and Insolvency Act if the company had become bankrupt on the date of the filing of initial application in respect of the company, and

    • (ii) wages, salaries, commissions or compensation for services rendered after that date and before the court’s sanction of the compromise or arrangement, together with, in the case of travelling salespersons, disbursements properly incurred by them in and about the company’s business during the same period; and

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

• Marginal note:Restriction — pensions plan

  (5) If the company participates in a prescribed pension plan for the benefit of its employees, the court may sanction a compromise or an arrangement in respect of the company only if

  • (a) the compromise or arrangement provides for payment, immediately after the court sanction, of the following amounts that are unpaid to the fund established for the purpose of the pension plan:

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

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

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

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

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

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

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

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

• Marginal note:Non-application of subsection (5)

  (6) Despite subsection (5), the court may sanction a compromise or arrangement that does not allow for the payment of the amounts referred to in that subsection if it is satisfied that the relevant parties have entered into an agreement, approved by the relevant pension regulator, respecting the payment of those amounts.

• Marginal note:Documents that must accompany initial application

  (2) An initial application must be accompanied by

  • (a) a statement indicating, on a weekly basis, the projected cash flow of the debtor company;

  • (b) a report containing the prescribed representations of the debtor company regarding the preparation of the cash-flow statement; and

  • (c) copies of all financial statements, audited or unaudited, prepared during the year before the application or, if no such statements were prepared in that year, a copy of the most recent such statement.

• Marginal note:Publication ban

  (3) The court may make an order prohibiting the release to the public of any cash-flow statement, or any part of a cash-flow statement, if it is satisfied that the release would unduly prejudice the debtor company and the making of the order would not unduly prejudice the company’s creditors, but the court may, in the order, direct that the cash-flow statement or any part of it be made available to any person specified in the order on any terms or conditions that the court considers appropriate.

Marginal note:General power of court

11. Despite anything in the Bankruptcy and Insolvency Act or the Winding-up and Restructuring Act, if an application is made under this Act in respect of a debtor company, the court, on the application of any person interested in the matter, may, subject to the restrictions set out in this Act, on notice to any other person or without notice as it may see fit, make any order that it considers appropriate in the circumstances.

Marginal note:Rights of suppliers

11.01 No order made under section 11 or 11.02 has the effect of

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

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

Marginal note:Stays, etc. — initial application

• 11.02 (1) A court may, on an initial application in respect of a debtor company, make an order on any terms that it may impose, effective for the period that the court considers necessary, which period may not be more than 30 days,

  • (a) staying, until otherwise ordered by the court, all proceedings taken or that might be taken in respect of the company under the Bankruptcy and Insolvency Act or the Winding-up and Restructuring Act;

  • (b) restraining, until otherwise ordered by the court, further proceedings in any action, suit or proceeding against the company; and

  • (c) prohibiting, until otherwise ordered by the court, the commencement of any action, suit or proceeding against the company.

• Marginal note:Stays, etc. — other than initial application

  (2) A court may, on an application in respect of a debtor company other than an initial application, make an order, on any terms that it may impose,

  • (a) staying, until otherwise ordered by the court, for any period that the court considers necessary, all proceedings taken or that might be taken in respect of the company under an Act referred to in paragraph (1)(a);

  • (b) restraining, until otherwise ordered by the court, further proceedings in any action, suit or proceeding against the company; and

  • (c) prohibiting, until otherwise ordered by the court, the commencement of any action, suit or proceeding against the company.

• Marginal note:Burden of proof on application

  (3) The court shall not make the order unless

  • (a) the applicant satisfies the court that circumstances exist that make the order appropriate; and

  • (b) in the case of an order under subsection (2), the applicant also satisfies the court that the applicant has acted, and is acting, in good faith and with due diligence.

• Marginal note:Restriction

  (4) Orders doing anything referred to in subsection (1) or (2) may only be made under this section.

Marginal note:Stays — directors

• 11.03 (1) An order made under section 11.02 may provide that no person may commence or continue any action against a director of the company on any claim against directors that arose before the commencement of proceedings under this Act and that relates to obligations of the company if directors are under any law liable in their capacity as directors for the payment of those obligations, until a compromise or an arrangement in respect of the company, if one is filed, is sanctioned by the court or is refused by the creditors or the court.

• Marginal note: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 company’s obligations or an action seeking injunctive relief against a director in relation to the company.

• Marginal note:Persons deemed to be directors

  (3) If 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 company is deemed to be a director for the purposes of this section.

Marginal note:Persons obligated under letter of credit or guarantee

11.04 No order made under section 11.02 has affect on any action, suit or proceeding against a person, other than the company in respect of whom the order is made, who is obligated under a letter of credit or guarantee in relation to the company.

Marginal note:Eligible financial contracts

• 11.05 (1) No order may be made under section 11.02 staying or restraining the exercise of any right to terminate, amend or claim any accelerated payment, or a forfeiture of the term, under an eligible financial contract.

• Marginal note:Existing eligible financial contracts

  (2) For greater certainty, if an eligible financial contract entered into before an order is made under section 11.02 is terminated on or after the date of the order, the setting off of obligations between the company and the other parties to the eligible financial contract, in accordance with its provisions, is permitted and, if net termination values determined in accord­ance with the eligible financial contract are owed by the company to another party to the eligible financial contract, that other party is deemed to be a creditor of the company with a claim against the company in respect of the net termination values.

• Marginal note:Definitions

  (3) The following definitions apply in this section.

  “eligible financial contract”

  « contrat financier admissible »

  “eligible financial contract” means

  • (a) a currency or interest rate swap agreement;

  • (b) a basis swap agreement;

  • (c) a spot, future, forward or other foreign exchange agreement;

  • (d) a cap, collar or floor transaction;

  • (e) a commodity swap;

  • (f) a forward rate agreement;

  • (g) a repurchase or reverse repurchase agreement;

  • (h) a spot, future, forward or other commodity contract;

  • (i) an agreement to buy, sell, borrow or lend securities, to clear or settle securities transactions or to act as a depository for securities;

  • (j) any derivative, combination or option in respect of, or agreement similar to, an agreement or contract referred to in paragraphs (a) to (i);

  • (k) any master agreement in respect of any agreement or contract referred to in paragraphs (a) to (j);

  • (l) any master agreement in respect of a master agreement referred to in paragraph (k);

  • (m) a guarantee of the liabilities under an agreement or contract referred to in paragraphs (a) to (l); or

  • (n) any agreement of a prescribed kind.

  “net termination value”

  « valeur nette due à la date de résiliation »

  “net termination value” means the net amount obtained after setting off the mutual obligations between the parties to an eligible financial contract in accordance with its provisions.

Marginal note:Member of the Canadian Payments Association

11.06 No order may be made under section 11.02 that has the effect of preventing a member of the Canadian Payments Association established by the Canadian Payments Act from ceasing to act as a clearing agent or group clearer for a company in accordance with that Act and the by-laws and rules of that Association.

Marginal note:Aircraft objects

11.07 No order may be made under section 11.02 that has the effect of preventing a creditor who holds security on aircraft objects — or a lessor of aircraft objects — under an agreement with a company from taking possession of the aircraft objects

• (a) if, after the commencement of proceedings under this Act, the company defaults in protecting or maintaining the aircraft objects in accordance with the agreement;

• (b) 60 days after the commencement of proceedings under this Act unless, during that period, the company

  • (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 company’s financial condition,

  • (ii) agreed to perform the obligations under the agreement, other than an obligation not to become insolvent or an obligation relating to the company’s financial condition, until proceedings under this Act end, and

  • (iii) agreed to perform all the obligations arising under the agreement after the proceedings under this Act end; or

• (c) if, during the period that begins 60 days after the commencement of the proceedings under this Act and ends on the day on which proceedings under this Act end, the company defaults in performing an obligation under the agreement, other than an obligation not to become insolvent or an obligation relating to the company’s financial condition.

Marginal note:Restriction — certain powers, duties and functions

11.08 No order may be made under section 11.02 that affects

• (a) the exercise or performance 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 or performance 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.

Marginal note:Stay — Her Majesty

• 11.09 (1) An order made under section 11.02 may provide that

  • (a) Her Majesty in right of Canada may not exercise 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, or an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, and of any related interest, penalties or other amounts, in respect of the company if the company is a tax debtor under that subsection or provision, for the period that the court considers appropriate but ending not later than

    • (i) the expiry of the order,

    • (ii) the refusal of a proposed compromise by the creditors or the court,

    • (iii) six months following the court sanction of a compromise or an arrangement,

    • (iv) the default by the company on any term of a compromise or an arrangement, or

    • (v) the performance of a compromise or an arrangement in respect of the company; and

  • (b) Her Majesty in right of a province may not exercise rights under any provision of provincial legislation in respect of the company if the company is a debtor under that legislation and the provision has a purpose similar 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, and 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,

    for the period that the court considers appropriate but ending not later than the occurrence or time referred to in whichever of subparagraphs (a)(i) to (v) that may apply.

• Marginal note:When order ceases to be in effect

  (2) The portions of an order made under section 11.02 that affect the exercise of rights of Her Majesty referred to in paragraph (1)(a) or (b) cease to be in effect if

  • (a) the company defaults on the payment of any amount that becomes due to Her Majesty after the order is made 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, or an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, and of any related interest, penalties or other amounts, or

    • (iii) any provision of provincial legislation that has a purpose similar 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, and 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 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, or an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, and of any related interest, penalties or other amounts, or

    • (iii) any provision of provincial legislation that has a purpose similar 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, and 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.

• Marginal note:Operation of similar legislation

  (3) An order made under section 11.02, other than the portions of that order that affect the exercise of rights of Her Majesty referred to in paragraph (1)(a) or (b), 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, or an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, and of any related interest, penalties or other amounts, or

  • (c) any provision of provincial legislation that has a purpose similar 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, and 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.

Marginal note:Regulatory bodies

• 11.1 (1) Subject to subsection (3), no order made under section 11.02 affects the rights of a regulatory body with respect to any investigation in respect of the company or any action, suit or proceeding taken or to be taken by it against the company, except when it is seeking to enforce any of its rights as a secured creditor or an unsecured creditor.

• Marginal note:Declaration that regulatory body is acting as creditor

  (2) If there is a dispute as to whether a regulatory body is seeking to enforce any of its rights as a secured creditor or an unsecured creditor, the court may, on application made by the company with notice given to the regulatory body, make an order declaring that the regulatory body is or would be so seeking to enforce its rights.

• Marginal note:Exception — compromise or arrangement not viable

  (3) Subsection (1) does not apply in respect of any or all actions, suits or proceedings taken or to be taken by a regulatory body if the court, on application made by the company with notice given to the regulatory body, makes an order declaring that a viable compromise or arrangement could not be made in respect of the company if that subsection were to apply.

• Marginal note:Restriction

  (4) The court shall not make the declaration referred to in subsection (3) if it is of the opinion that it is in the public interest that the regulatory body not be affected by the order made under section 11.02.

• Meaning of “regulatory body”

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

Marginal note:Interim financing

• 11.2 (1) A court may, on application by a debtor company, make an order, on any conditions that the court considers appropriate, declaring that the property of the company is subject to a security or charge in favour of any person specified in the order who agrees to lend to the company an amount that is approved by the court as being required by the company, having regard to its cash-flow statement,

  • (a) for the period of 30 days following the initial application in respect of the company if the order is made on the initial application in respect of the company; or

  • (b) for any period specified in the order if the order is made on any application in respect of a company other than the initial application and notice has been given to the secured creditors likely to be affected by the security or charge.

• Marginal note:Restriction

  (2) An order may be made under subsection (1) in respect of any period after the period of 30 days following the initial application in respect of the company only if the monitor has reported to the court under paragraph 23(1)(b) that the company’s cash-flow statement is reasonable.

• Marginal note:Rank

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

• Marginal note:Other orders

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

• Marginal note:Factors to be considered

  (5) In deciding whether to make an order referred to in subsection (1), the court must consider, among other things,

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

  • (b) how the company is to be governed during the proceedings;

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

  • (d) whether the loan will enhance the prospects of a viable compromise or arrangement being made in respect of the company;

  • (e) the nature and value of the company’s assets; and

  • (f) whether any creditor will be materially prejudiced as a result of the company’s continued operations.

Marginal note:Assignments

• 11.3 (1) The court may, on the application of a debtor company, make an order assigning the rights and obligations of the company under any agreement to any person, to be specified by the court, who has agreed to the assignment.

• Marginal note:Notice

  (2) The applicant must give notice of the assignment in the prescribed manner to every party to the agreement.

• Marginal note:Exceptions

  (3) Subsection (1) does not apply in respect of rights and obligations

  • (a) under an eligible financial contract within the meaning of subsection 11.05(3);

  • (b) under a collective agreement; or

  • (c) that are not assignable by reason of their nature.

• Marginal note:Factors to be considered

  (4) In deciding whether to make an assignment, the court must consider, among other things,

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

  • (b) whether it would be appropriate to assign the rights and obligations to that person.

• Marginal note:Restriction

  (5) The court may not make an order assigning an agreement unless it is satisfied that all financial defaults in relation to the agreement will be remedied.

Marginal note:Critical supplier

• 11.4 (1) On application by a debtor company, the court may make an order declaring a person to be a critical supplier to the company if the court is satisfied that the person is a supplier of goods or services to the company and that those goods or services are critical to the company’s continued operation.

• Marginal note:Obligation to supply

  (2) If the court declares a person to be a critical supplier, the court may make an order requiring the person to supply any goods or services specified by the court to the company on any terms and conditions that are consistent with the supply relationship or that the court considers appropriate.

• Marginal note:Security or charge in favour of critical supplier

  (3) If the court makes an order under subsection (2), the court shall, in the order, declare that the property of the company is subject to a security or charge in favour of the person declared to be a critical supplier, in an amount equal to the value of the goods or services supplied under the terms of the order.

• Marginal note:Rank

  (4) The court may specify in the order that the security or charge ranks in priority over the claim of any secured creditor of the company.

Marginal note:Removal of directors

• 11.5 (1) The court may, on the application of any person interested in the matter, make an order removing from office any director of a debtor company in respect of which an order has been made under this Act if the court is satisfied that the director is unreasonably impairing or is likely to unreasonably impair the possibility of a viable compromise or arrangement being made in respect of the company or is acting or is likely to act inappropriately as a director in the circumstances.

• Marginal note:Filling vacancy

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

Marginal note:Security or charge relating to director’s indemnification

• 11.51 (1) The court may, on the application of a debtor company, make an order declaring that the property of the company is subject to a security or charge, in an amount that the court considers appropriate, in favour of any director or officer of the company to indemnify the director or officer against obligations and liabilities that he or she may incur as a director or an officer of the company after the commencement of proceedings against the company under this Act.

• Marginal note:Rank

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

• Marginal note:Restriction — indemnification insurance

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

• Marginal note:Declaration in cases of gross negligence, etc.

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

Marginal note:Court may order security or charge to cover certain costs

11.52 The court may make an order declaring that property of a debtor company is subject to a security or charge, in an amount that the court considers appropriate, in respect of

• (a) the costs of the monitor, including the remuneration and expenses of any financial, legal or other experts engaged by the monitor in the course of the monitor’s duties;

• (b) the remuneration and expenses of any financial, legal or other experts engaged by the company for the purpose of proceedings under this Act; and

• (c) the costs of any interested party in relation to the remuneration and expenses of any financial, legal or other experts engaged by it, if the court is satisfied that the incurring of those costs is necessary for the effective participation of the interested party in the proceedings under this Act.

Marginal note:Court to appoint monitor

• 11.7 (1) When an order is made on the initial application in respect of a debtor company, the court shall at the same time appoint a person to monitor the business and financial affairs of the company. The person so appointed must be a trustee, within the meaning of subsection 2(1) of the Bankruptcy and Insolvency Act.

• Marginal note:Restrictions on who may be monitor

  (2) Except with the permission of the court and on any conditions that the court may impose, no trustee may be appointed as monitor in relation to a company

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

    • (i) a director, an officer or an employee of the company,

    • (ii) related to the company or to any director or officer of the company, or

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

  • (b) if the trustee is

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

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

• Marginal note:Court may replace monitor

  (3) On application by a creditor of the company, the court may, if it considers it appropriate in the circumstances, replace the monitor by appointing another trustee, within the meaning of subsection 2(1) of the Bankruptcy and Insolvency Act, to monitor the business and financial affairs of the company.

Marginal note:Fixing of deadline for filing claims

12. The court may make an order fixing a deadline for creditors to file their claims against a company for the purpose of voting at a creditors’ meeting held under section 4 or 5.

PART IIIGENERAL

Claims

Marginal note:Claims that may be dealt with by a compromise or an arrangement

• 19. (1) Subject to subsection (2), in addition to deemed claims, the only claims that may be dealt with by a compromise or an arrangement in respect of a debtor company are

  • (a) claims that relate to debts and liabilities, present or future, to which the company is subject on the earlier of

    • (i) the day on which the initial application was made in respect of the company, and

    • (ii) if the company had filed a notice of intention under section 50.4 of the Bankruptcy and Insolvency Act or an application under this Act was made by the company with the consent of inspectors referred to in section 116 of the Bankruptcy and Insolvency Act, the day that is the date of the initial bankruptcy event within the meaning of subsection 2(1) of that Act; and

  • (b) claims that relate to debts and liabilities, present or future, to which the company may become subject before the compromise or arrangement is sanctioned by reason of any obligation incurred by the company before the earlier of the days referred to in subparagraphs (a)(i) and (ii).

• Marginal note:Exception

  (2) A compromise or an arrangement in respect of a debtor company may not deal with any claim that relates to any of the following debts or liabilities unless the compromise or arrangement explicitly provides for the claim’s compromise and the relevant creditor has agreed to the compromise or arrangement:

  • (a) any fine, penalty, restitution order or other order similar in nature to a fine, penalty or restitution order, imposed by a court in respect of an offence;

  • (b) any award of damages by a court in civil proceedings in respect of

    • (i) bodily harm intentionally inflicted, or sexual assault, or

    • (ii) wrongful death resulting from an act referred to in subparagraph (i);

  • (c) any debt or liability arising out of fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity or, in the Province of Quebec, as a trustee or an administrator of the property of others;

  • (d) any debt or liability for obtaining property or services by false pretences or fraudulent misrepresentation, other than a debt or liability of the company that arises from the purchase or sale of a share or unit of the company or from the rescission of any such purchase or sale; or

  • (e) any debt for interest owed in relation to an amount referred to in any of paragraphs (a) to (d).

Marginal note:Determination of amount of claims

• 20. (1) For the purposes of this Act, the amount represented by a claim of any secured or unsecured creditor is to be determined as follows:

  • (a) the amount of an unsecured claim is the amount

    • (i) in the case of a company in the course of being wound up under the Winding-up and Restructuring Act, proof of which has been made in accordance with that Act,

    • (ii) in the case of a company that has made an authorized assignment or against which a bankruptcy order has been made under the Bankruptcy and Insolvency Act, proof of which has been made in accordance with that Act, or

    • (iii) in the case of any other company, proof of which might be made under the Bankruptcy and Insolvency Act, but if the amount so provable is not admitted by the company, the amount is to be determined by the court on summary application by the company or by the creditor; and

  • (b) the amount of a secured claim is the amount, proof of which might be made under the Bankruptcy and Insolvency Act if the claim were unsecured, but the amount if not admitted by the company is, in the case of a company subject to pending proceedings under the Winding-up and Restructuring Act or the Bankruptcy and Insolvency Act, to be established by proof in the same manner as an unsecured claim under the Winding-up and Restructuring Act or the Bankruptcy and Insolvency Act, as the case may be, and, in the case of any other company, the amount is to be determined by the court on summary application by the company or the creditor.

• Marginal note:Admission of claims

  (2) Despite subsection (1), the company may admit the amount of a claim for voting purposes under reserve of the right to contest liability on the claim for other purposes, and nothing in this Act, the Winding-up and Restructuring Act or the Bankruptcy and Insolvency Act prevents a secured creditor from voting at a meeting of secured creditors or any class of them in respect of the total amount of a claim as admitted.

• Marginal note:Claims acquired after initial application

  (3) No person is entitled to vote on a claim acquired after the initial application in respect of the company, unless the entire claim is acquired.

Marginal note:Law of set-off or compensation to apply

21. The law of set-off or compensation applies to all claims made against a debtor company and to all actions instituted by it for the recovery of debts due to the company in the same manner and to the same extent as if the company were plaintiff or defendant, as the case may be.

Classes of Creditors

Marginal note:Company may establish classes

• 22. (1) Subject to subsection (3), a debtor company may divide its creditors into classes for the purpose of a meeting to be held under section 4 or 5 in respect of a compromise or an arrangement relating to a company and, if it does so, it must apply to the court for approval of the division before any meeting is held.

• Marginal note:Factors

  (2) For the purpose of subsection (1), creditors may be included in the same class if their interests are sufficiently similar to give them a commonality of interest, taking into account

  • (a) the nature of the debts, liabilities or obligations giving rise to their claims;

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

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

  • (d) any further criteria, consistent with those set out in paragraphs (a) to (c), that are prescribed.

• Marginal note:Claims of shareholders

  (3) Creditors having a claim against a debtor company arising from the rescission of a purchase or sale of a share or unit of the company — or a claim for damages arising from the purchase or sale of a share or unit of the company — must be in the same class of creditors in relation to those claims and may not, as members of that class, vote at a meeting to be held under section 4 in respect of a compromise or an arrangement relating to the company.

Monitors

Marginal note:Duties and functions

• 23. (1) The monitor shall

  • (a) except as otherwise ordered by the court, when an order is made on the initial application in respect of a debtor company,

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

    • (ii) within five days after the order is made,

      • (A) send a copy of the order to every known creditor who has a claim against the company of more than $1,000, and

      • (B) make a list showing the name and address of those creditors publicly available in the prescribed manner;

  • (b) review the company’s cash-flow statement as to its reasonableness and file a report with the court on the monitor’s findings;

  • (c) make, or cause to be made, any appraisal or investigation the monitor considers necessary to determine with reasonable accuracy the state of the company’s business and financial affairs and the cause of its financial difficulties or insolvency and file a report with the court on the monitor’s findings;

  • (d) file a report with the court on the state of the company’s business and financial affairs, containing prescribed information,

    • (i) without delay after ascertaining any material adverse change in the company’s projected cash-flow or financial circumstances,

    • (ii) at least seven days before any meeting of creditors under section 4 or 5,

    • (iii) not later than 45 days, or any longer period that the court may specify, after the end of each of the company’s fiscal quarters, and

    • (iv) at any other times that the court may order;

  • (e) advise the company’s creditors of the filing of the report referred to in any of paragraphs (b) to (d);

  • (f) file with the Superintendent of Bankruptcy a copy of the documents specified by the regulations and pay the prescribed filing fee;

  • (g) attend court proceedings held under this Act that relate to the company, and meetings of the company’s creditors, if the monitor considers that his or her attendance is necessary for the fulfilment of his or her duties or functions;

  • (h) if the monitor is of the opinion that it would be more beneficial to the company’s creditors if proceedings in respect of the company were taken under the Bankruptcy and Insolvency Act, so advise the court without delay after coming to that opinion;

  • (i) advise the court on the reasonableness and fairness of any compromise or arrangement that is proposed between the company and its creditors;

  • (j) unless the court otherwise orders, make publicly available, in the prescribed manner, all documents filed with the court, and all court decisions, relating to proceedings held under this Act in respect the company and provide the company’s creditors with information as to how they may access those documents and decisions; and

  • (k) carry out any other functions in relation to the company that the court may direct.

• Marginal note:Monitor not liable

  (2) If the monitor acts in good faith and takes reasonable care in preparing the report referred to in any of paragraphs (1)(b) to (d), the monitor is not liable for loss or damage to any person resulting from that person’s reliance on the report.

Marginal note:Right of access

24. For the purposes of monitoring the company’s business and financial affairs, the monitor shall have access to the company’s property, including the premises, books, records, data, including data in electronic form, and other financial documents of the company, to the extent that is necessary to adequately assess the company’s business and financial affairs.

Marginal note:Obligation to act honestly and in good faith

25. In exercising any of his or her powers or in performing any of his or her duties and functions, the monitor must act honestly and in good faith and comply with the Code of Ethics referred to in section 13.5 of the Bankruptcy and Insolvency Act.

Powers, Duties and Functions of Superintendent of Bankruptcy

Marginal note:Public records

• 26. (1) The Superintendent of Bankruptcy must keep, or cause to be kept, in the form that he or she considers appropriate and for the prescribed period, a public record of prescribed information relating to proceedings under this Act. On request, and on payment of the prescribed fee, the Superintendent of Bankruptcy must provide, or cause to be provided, any information contained in that public record.

• Marginal note:Other records

  (2) The Superintendent of Bankruptcy must keep, or cause to be kept, in the form that he or she considers appropriate and for the prescribed period, any other records relating to the administration of this Act that he or she considers appropriate.

Marginal note:Applications to court and right to intervene

27. The Superintendent of Bankruptcy may apply to the court to review the appointment or conduct of a monitor and may intervene, as though he or she were a party, in any matter or proceeding in court relating to the appointment or conduct of a monitor.

Marginal note:Complaints

28. The Superintendent of Bankruptcy must receive and keep a record of all complaints regarding the conduct of monitors.

Marginal note:Investigations

• 29. (1) The Superintendent of Bankruptcy may make, or cause to be made, any inquiry or investigation regarding the conduct of monitors that he or she considers appropriate.

• Marginal note:Rights

  (2) For the purpose of the inquiry or investigation, the Superintendent of Bankruptcy or any person whom he or she appoints for the purpose

  • (a) 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 in the possession or under the control of a monitor under this Act; and

  • (b) may, with the leave of the court granted on an ex parte application, examine the books, records, data, including data in electronic form, documents and papers relating to any compromise or arrangement to which this Act applies that are in the possession or under the control of any other person designated in the order granting the leave, and for that purpose may under a warrant from the court enter and search any premises.

• Marginal note:Staff

  (3) The Superintendent of Bankruptcy may engage the services of persons having technical or specialized knowledge, and persons to provide administrative services, to assist the Superintendent of Bankruptcy in conducting an inquiry or investigation, and may establish the terms and conditions of their engagement. The remuneration and expenses of those persons, when certified by the Superintendent of Bankruptcy, are payable out of the appropriation for the office of the Superintendent.

Marginal note:Powers in relation to licence

• 30. (1) If, after making or causing to be made an inquiry or investigation into the conduct of a monitor, it appears to the Superintendent of Bankruptcy that the monitor has not fully complied with this Act and its regulations or that it is in the public interest to do so, the Superintendent of Bankruptcy may

  • (a) cancel or suspend the monitor’s licence as a trustee under the Bankruptcy and Insolvency Act; or

  • (b) place any condition or limitation on the licence that he or she considers appropriate.

• Marginal note:Notice to trustee

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

• Marginal note:Subpoena or summons

  (3) The Superintendent of Bankruptcy may, for the purpose of the hearing, issue a subpoena or other request or summons, requiring and commanding any person named in it

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

  • (b) to testify to all matters within his or her knowledge relative to the subject-matter of the inquiry or investigation into the conduct of the monitor; and

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

• Marginal note:Effect throughout Canada

  (4) A person may be summoned from any part of Canada by virtue of a subpoena, request or summons issued under subsection (3).

• Marginal note:Fees and allowances

  (5) Any person summoned under subsection (3) is entitled to receive the like fees and allowances for so doing as if summoned to attend before the Federal Court.

• Marginal note:Procedure at hearing

  (6) At the hearing, the Superintendent of Bankruptcy

  • (a) has the power to administer oaths;

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

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

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

• Marginal note:Record

  (7) The notice referred to in subsection (2) and, if applicable, the summary of oral evidence referred to in paragraph (6)(d), together with any documentary evidence that the Superintend­ent of Bankruptcy receives in evidence, form the record of the hearing, and that record and the hearing are public unless the Superintendent of Bankruptcy is satisfied that personal or other matters that may be disclosed are of such a nature that the desirability of avoiding public disclosure of those matters, in the interest of a third party or in the public interest, outweighs the desirability of the access by the public to information about those matters.

• Marginal note:Decision

  (8) The decision of the Superintendent of Bankruptcy after the hearing, together with the reasons for the decision, must be given in writing to the monitor not later than three months after the conclusion of the hearing, and is public.

• Marginal note:Review by Federal Court

  (9) A decision of the Superintendent of Bankruptcy given under subsection (8) is deemed to be a decision of a federal board, commission or other tribunal that may be reviewed and set aside under the Federal Courts Act.

Marginal note:Delegation

• 31. (1) The Superintendent of Bankruptcy may, in writing, authorize any person to exercise or perform, subject to any terms and conditions that he or she may specify in the authorization, any of the powers, duties or functions of the Superintendent of Bankruptcy under sections 29 and 30.

• Marginal note:Notification to monitor

  (2) If the Superintendent of Bankruptcy delegates in accordance with subsection (1), the Superintendent or the delegate must give notice of the delegation in the prescribed manner to any monitor who may be affected by the delegation.

Agreements

Marginal note:Disclaimer or resiliation of agreements

• 32. (1) Subject to subsection (3), a debtor company may disclaim or resiliate any agreement to which it is a party on the day of the filing of the initial application in respect of the company by giving 30 days notice to the other parties to the agreement in the prescribed manner.

• Marginal note:Exceptions

  (2) Subsection (1) does not apply in respect of

  • (a) an eligible financial contract within the meaning of subsection 11.05(3);

  • (b) a collective agreement;

  • (c) a financing agreement if the debtor is the borrower; and

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

• Marginal note:Party may challenge

  (3) Within 15 days after being given notice of the disclaimer or resiliation, a party to the agreement may apply to the court for a declaration that subsection (1) does not apply in respect of the agreement, and the court, on notice to any parties that it may direct, shall, subject to subsection (4), make that declaration.

• Marginal note:Circumstances for not making declaration

  (4) No declaration under subsection (3) shall be made if the court is satisfied that a viable compromise or arrangement could not be made in respect of the company without the disclaim­er or resiliation of the agreement and all other agreements that the company has disclaimed or resiliated under subsection (1).

• Marginal note:Intellectual property

  (5) If the company has, in any agreement, granted the use of any intellectual property to a party to the agreement, the disclaimer or resiliation of the agreement does not affect the party’s right to use the intellectual property so long as that party continues to perform its obligations in relation to the use of the intellectual property.

• Marginal note:Deemed claim of other party

  (6) If an agreement is disclaimed or resiliated by a company, every other party to the agreement is deemed to have a claim for damages as an unsecured creditor.

Marginal note:Collective agreements

• 33. (1) If proceedings under this Act have been commenced in respect of a debtor company, any collective agreement that the company has entered into as the employer remains in force, and may not be altered except as provided in this section or under the laws of the jurisdiction governing collective bargaining between the company and the bargaining agent.

• Marginal note:Application for authorization to serve notice to bargain

  (2) A debtor company that is a party to a collective agreement and that is unable to reach a voluntary agreement with the bargaining agent to revise any of the provisions of the collective agreement may, on giving five days notice to the bargaining agent, apply to the court for an order authorizing the company to serve a notice to bargain under the laws of the jurisdiction governing collective bargaining between the company and the bargaining agent.

• Marginal note:Conditions for issuance of order

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

  • (a) a viable compromise or arrangement could not be made in respect of the company, taking into account the terms of the collective agreement;

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

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

• Marginal note:No delay on vote

  (4) The vote of the creditors in respect of a compromise or an arrangement may not be delayed solely because the period provided in the laws of the jurisdiction governing collective bargaining between the company and the bargaining agent has not expired.

• Marginal note:Claims arising from termination or amendment

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

• Marginal note:Order to disclose information

  (6) On the application of the bargaining agent and on notice to the person to whom the application relates, the court may, subject to any terms and conditions it specifies, make an order requiring the person to make available to the bargaining agent any information specified by the court in the person’s possession or control that relates to the company’s business or financial affairs and that is relevant to the collective bargaining between the company and the bargaining agent. The court may make the order only after the company has been authorized to serve a notice to bargain under subsection (2).

• Marginal note:Parties

  (7) For the purpose of this section, the parties to a collective agreement are the debtor company and the bargaining agent that are bound by the collective agreement.

• Marginal note:Unrevised collective agreements remain in force

  (8) For greater certainty, any collective agreement that the company and the bargaining agent have not agreed to revise remains in force, and the court shall not alter its terms.

Marginal note:Certain rights limited

• 34. (1) No person may terminate or amend any agreement, including a security agreement, with a debtor company, or claim an accelerated payment, or a forfeiture of the term, under any agreement, including a security agreement, with a debtor company by reason only that an order has been made under this Act in respect of the company.

• Marginal note:Lease

  (2) If the agreement referred to in subsection (1) is a lease, the lessor may not terminate or amend the lease by reason only that an order has been made under this Act in respect of the company or that the company has not paid rent in respect of any period before the filing of the initial application in respect of the company.

• Marginal note:Public utilities

  (3) No public utility may discontinue service to a debtor company by reason only that an order has been made under this Act in respect of the company or that the company has not paid for services rendered, or for goods provided, before the filing of the initial application in respect of the company.

• Marginal note:Certain acts not prevented

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

  • (a) prohibiting a person from requiring payments to be made in cash for goods, services, use of leased property or other valuable consideration provided after the date of the filing of initial application in respect of the company; or

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

• Marginal note:Provisions of section override agreement

  (5) Any provision in an agreement that has the effect of providing for, or permitting, anything that, in substance, is contrary to this section is of no force or effect.

• Marginal note:Powers of court

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

Obligations and Prohibitions

Marginal note:Obligation to provide assistance

• 35. (1) A debtor company shall provide to the monitor the assistance that is necessary to enable the monitor to adequately carry out the monitor’s functions.

• Marginal note:Obligation to duties set out in section 158 of the Bankruptcy and Insolvency Act

  (2) A debtor company shall perform the duties set out in section 158 of the Bankruptcy and Insolvency Act that are appropriate and applicable in the circumstances

Marginal note:Restriction on disposal of certain business assets

• 36. (1) A debtor company in respect of which an order has been made under this Act may not sell or dispose of any of its assets outside the ordinary course of its business unless authorized to do so by a court.

• Marginal note:Notice to creditors

  (2) A company that applies to the court for the authorization must give notice of the application to all secured creditors who are likely to be affected by the proposed sale or disposal of the assets to which the application relates.

• Marginal note:Factors to be considered

  (3) In deciding whether to grant the authorization, the court must consider, among other things,

  • (a) whether the process leading to the proposed sale or disposal of the assets to which the application relates was reasonable in the circumstances;

  • (b) whether the monitor approved the process leading to the proposed sale or disposal of the assets;

  • (c) whether the monitor has filed with the court a report stating that in his or her opinion the sale or disposal of the assets would be more beneficial to the creditors than if the sale or disposal took place under the Bankruptcy and Insolvency Act;

  • (d) the extent to which the creditors were consulted in respect of the proposed sale or disposal of the assets;

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

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

• Marginal note:Additional factors

  (4) In addition to taking the factors referred to in subsection (3) into account, if the proposed sale or disposal of the assets is to a person who is related to the company, the court may grant the authorization only if it is satisfied that

  • (a) good faith efforts were made to sell or dispose of the assets to persons who are not related to the company or who are neither directors or officers of the company nor individuals who control it; and

  • (b) the consideration to be received is superior to the consideration that would be received under all other offers actually received in respect of the assets.

• Marginal note:Direction that assets may be sold free of charges, etc.

  (5) In granting an authorization for the sale or disposal of assets, the court may order that the assets may be sold or disposed of free and clear of any security, charge or other restriction, but if it so orders, it shall also order that the proceeds realized from the sale or disposal of the assets are subject to a security, charge or other restriction in favour of the creditors whose security, charges or other restrictions are affected by the order.

• Marginal note:Related persons

  (6) For the purpose of this section, a person who is related to the debtor company includes a person who controls the company, a director or an officer of the company and a person who is related to a director or an officer of the company.

Her Majesty

Marginal note:Deemed trusts

• 37. (1) Subject to subsection (2), despite 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 debtor company shall not be regarded as being held in trust for Her Majesty unless it would be so regarded in the absence of that statutory provision.

• Marginal note:Exceptions

  (2) Subsection (1) 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 does it apply 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 if

  • (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, 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 the corresponding federal provision.

Marginal note:Status of Crown claims

• 38. (1) In relation to a proceeding under this Act, all claims, including secured claims, of Her Majesty in right of Canada or a province or any body under an enactment respecting workers’ compensation, in this section and in section 39 called a “workers’ compensation body”, rank as unsecured claims.

• Marginal note:Exceptions

  (2) Subsection (1) does not apply

  • (a) in respect of 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 if those provisions do not have as their sole or principal purpose the establishment of a means of securing claims of Her Majesty or a workers’ compensation body; and

  • (b) to the extent provided in subsection 39(2), to claims that are secured by a security referred to in subsection 39(1), if the security is registered in accordance with subsection 39(1).

• Marginal note:Operation of similar legislation

  (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, or an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, and of any related interest, penalties or other amounts, or

  • (c) any provision of provincial legislation that has a purpose similar 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 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,

  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.

Marginal note:Statutory Crown securities

• 39. (1) In relation to a proceeding under this Act in respect of a debtor company, 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 a province or a workers’ compensation body is valid in relation to claims against the company only if the security is registered before the date of the filing of the initial application in respect of the company under any system of registration of securities that is available not only to Her Majesty in right of Canada or a province or a workers’ compensation body, but also to any other creditor who holds a security, and that is open to the public for information or the making of searches.

• Marginal note:Effect of security

  (2) 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 setting them up 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.

Marginal note:Act binding on Her Majesty

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

Miscellaneous

Marginal note:Certain sections of Winding-up and Restructuring Act do not apply

41. Sections 65 and 66 of the Winding-up and Restructuring Act do not apply to any compromise or arrangement to which this Act applies.

Marginal note:Act to be applied conjointly with other Acts

42. The provisions of this Act may be applied together with the provisions of any Act of Parliament, or of the legislature of any province, that authorizes or makes provision for the sanction of compromises or arrangements between a company and its shareholders or any class of them.

Marginal note:Claims in foreign currency

43. If a compromise or an arrangement is proposed in respect of a debtor company, a claim for a debt that is payable in a currency other than Canadian currency is to be converted to Canadian currency as of the date of the initial application in respect of the company unless otherwise provided in the proposed compromise or arrangement.

PART IVCROSS-BORDER INSOLVENCIES

Purpose

Marginal note:Purpose

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

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

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

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

• (d) the protection and the maximization of the value of debtor company’s property; and

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

Interpretation

Marginal note:Definitions

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

  “foreign court”

  « tribunal étranger »

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

  “foreign main proceeding”

  « principale »

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

  “foreign non-main proceeding”

  « secondaire »

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

  “foreign proceeding”

  « instance étrangère »

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

  “foreign representative”

  « représentant étranger »

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

  • (a) monitor the debtor company’s business and financial affairs for the purpose of reorganization; or

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

• Marginal note:Centre of debtor company’s main interests

  (2) For the purposes of this Part, in the absence of proof to the contrary, a debtor company’s registered office is deemed to be the centre of its main interests.

Recognition of Foreign Proceeding

Marginal note:Application for recognition of a foreign proceeding

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

• Marginal note:Documents that must accompany application

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

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

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

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

• Marginal note:Documents may be considered as proof

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

• Marginal note:Other evidence

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

• Marginal note:Translation

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

Marginal note:Order recognizing foreign proceeding

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

• Marginal note:Nature of foreign proceeding to be specified

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

Marginal note:Order relating to recognition of a foreign main proceeding

• 48. (1) Subject to subsections (2) to (4), on the making of an order recognizing a foreign proceeding that is specified to be a foreign main proceeding, the court shall make an order, subject to any terms and conditions it considers appropriate,

  • (a) staying, until otherwise ordered by the court, for any period that the court considers necessary, all proceedings taken or that might be taken against the debtor company under the Bankruptcy and Insolvency Act or the Winding-up and Restructuring Act;

  • (b) restraining, until otherwise ordered by the court, further proceedings in any action, suit or proceeding against the debtor company;

  • (c) prohibiting, until otherwise ordered by the court, the commencement of any action, suit or proceeding against the debtor company; and

  • (d) prohibiting the debtor company from selling or otherwise disposing of, outside the ordinary course of its business, any of the debtor company’s property in Canada that relates to the business and prohibiting the debtor company from selling or otherwise disposing of any of its other property in Canada.

• Marginal note:Scope of order

  (2) The order made under subsection (1) must be consistent with any order that may be made under this Act.

• Marginal note:When subsec- tion (1) does not apply

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

• Marginal note:Application of this and other Acts

  (4) Nothing in subsection (1) precludes the debtor company from commencing or continuing proceedings under this Act, the Bankruptcy and Insolvency Act or the Winding-up and Restructuring Act in respect of the debtor company.

Marginal note:Other orders

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

  • (a) if the foreign proceeding is a foreign non-main proceeding, referred to in subsection 48(1);

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

  • (c) authorizing the foreign representative to monitor the debtor company’s business and financial affairs in Canada for the purpose of reorganization.

• Marginal note:Restriction

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

• Marginal note:Application of this and other Acts

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

Marginal note:Terms and conditions of orders

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

Marginal note:Commencement or continuation of proceedings

51. If an order is made recognizing a foreign proceeding, the foreign representative may commence and continue proceedings under this Act in respect of a debtor company as if the foreign representative were a creditor of the debtor company, or the debtor company, as the case may be.

Obligations

Marginal note:Cooperation — court

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

• Marginal note:Cooperation — other authorities in Canada

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

Marginal note:Obligations of foreign representative

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

• (a) without delay, inform the court of

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

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

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

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

Multiple Proceedings

Marginal note:Concurrent proceedings

54. If any proceedings under this Act in respect of a debtor company are commenced at any time after an order recognizing the foreign proceeding is made, the court shall review any order made under section 49 and, if it determines that the order is inconsistent with any orders made in the proceedings under this Act, the court shall amend or revoke the order.

Marginal note:Multiple foreign proceedings

• 55. (1) If, at any time after an order is made in respect of a foreign non-main proceeding in respect of a debtor company, an order recognizing a foreign main proceeding is made in respect of the debtor company, the court shall review any order made under section 49 in respect of the foreign non-main proceeding and, if it determines that the order is inconsistent with any orders made under that section in respect of the foreign main proceedings, the court shall amend or revoke the order.

• Marginal note:Multiple foreign proceedings

  (2) If, at any time after an order is made in respect of a foreign non-main proceeding in respect of the debtor company, an order recognizing another foreign non-main proceeding is made in respect of the debtor company, the court shall, for the purpose of facilitating the coordination of the foreign non-main proceedings, review any order made under section 49 in respect of the first recognized proceeding and amend or revoke the order if it considers it appropriate.

Miscellaneous Provisions

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

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

Marginal note:Foreign representative status

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

Marginal note:Foreign proceeding appeal

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

Marginal note:Presumption of insolvency

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

Marginal note:Credit for recovery in other jurisdictions

• 60. (1) In making a compromise or an arrangement of a debtor company, the following shall be taken into account in the distribution of dividends to the company’s creditors in Canada as if they were a part of that distribution:

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

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

• Marginal note:Restriction

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

Marginal note:Court not prevented from applying certain rules

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

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

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

PART VADMINISTRATION

Marginal note:Regulations

62. The Minister may make regulations for carrying out the purposes and provisions of this Act, including regulations

• (a) specifying documents for the purpose of paragraph 23(1)(f); and

• (b) prescribing anything that by this Act is to be prescribed.

Marginal note:Review of Act

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

• Marginal note:Reference to parliamentary committee

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

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

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

• Marginal note:Revision of term

  (7) Despite subsection (2), if a notice to bargain referred to in subsection 65.12(1) of the Bankruptcy and Insolvency Act has been served, the parties may agree to revise the term of the collective agreement without approval of the Board.

• Marginal note:Revision of term

  (8) Despite subsection (2), if a notice to bargain referred to in subsection 33(2) of the Companies’ Creditors Arrangement Act has been served, the parties may agree to revise the term of the collective agreement without approval of the Board.

• (b) subsection 224(1.2) of the Income Tax Act shall apply to employer’s contributions, employee’s contributions, and related interest, penalties or other amounts, subject to subsections 69(1), 69.1(1) and 69.2(1) of the Bankruptcy and Insolvency Act and section 11.09 of the Companies’ Creditors Arrangement Act.

• (b) subsection 224(1.2) of the Income Tax Act shall apply to employer’s premiums, employee’s premiums, and related interest, penalties or other amounts, subject to subsections 69(1), 69.1(1) and 69.2(1) of the Bankruptcy and Insolvency Act and section 11.09 of the Companies’ Creditors Arrangement Act.

• Marginal note:Garnishment

  (1.2) Notwithstanding any other provision of this Act, the Bankruptcy and Insolvency Act, any other enactment of Canada, any enactment of a province or any law, but subject to subsections 69(1), 69.1(1) and 69.2(1) of the Bankruptcy and Insolvency Act and section 11.09 of the Companies’ Creditors Arrangement Act, if the Minister has knowledge or suspects that a particular person is, or will become within one year, liable to make a payment