Marginal note:Assignment of agreements

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

• Marginal note:Individuals

  (2) In the case of an individual,

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

  • (b) only rights and obligations in relation to the business may be assigned.

• Marginal note:Exceptions

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

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

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

  • (c) a collective agreement.

• Marginal note:Factors to be considered

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

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

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

• Marginal note:Restriction

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

• Marginal note:Copy of order

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

Marginal note:Certain rights limited

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

• Marginal note:Lease

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

• Marginal note:Public utilities

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

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

• Marginal note:Eligible financial contracts

  (7) Subsection (1)

  • (a) does not apply in respect of an eligible financial contract within the meaning of subsection 65.1(8); and

  • (b) does not prevent a member of the Canadian Payments Association from ceasing to act as a clearing agent or group clearer for an insolvent person in accordance with the Canadian Payments Act and the by-laws and rules of that Association.

Preferences and Transfers at Undervalue

Marginal note:Preferences

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

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

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

• Marginal note:Preference presumed

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

• Marginal note:Exception — margin deposits

  (2.1) In the case of a margin deposit made by a clearing member with a clearing house, the clearing member and the clearing house are deemed to be dealing with each other at arm’s length and subsection (2) does not apply.

Marginal note:Transfer at undervalue

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

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

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

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

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

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

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

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

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

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

• Marginal note:Establishing values

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

• Meaning of “person who is privy”

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

Marginal note:Application of sections 95 to 101

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

• Marginal note:Interpretation

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

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

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

• Marginal note:Application of sections 95 to 101 if proposal annulled

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

• Marginal note:Vote of creditors not dealing at arm’s length

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

Marginal note:Court order — interlocutory or permanent

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

Marginal note:Postponement of equity claims

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

Marginal note:Application of provincial law to lessors’ rights

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

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

  (2) The court shall, on proof of any of the facts referred to in section 173, which proof may be given orally under oath, by affidavit or otherwise,