Marginal note:Certain rights limited

• 34. (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 debtor company by reason only that proceedings commenced under this Act or that the company is insolvent.

• 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 proceedings commenced under this Act, that the company is insolvent or that the company has not paid rent in respect of any period before the commencement of those proceedings.

• Marginal note:Public utilities

  (3) No public utility may discontinue service to a company by reason only that proceedings commenced under this Act, that the company is insolvent or that the company has not paid for services rendered or goods provided before the commencement of those proceedings.

• 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 commencement of proceedings under this Act;

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

  • (c) preventing a lessor of aircraft objects  under an agreement with the company from taking possession of the aircraft objects

    • (i) if, after proceedings commence under this Act, the company defaults in protecting or maintaining the aircraft objects in accordance with the agreement,

    • (ii) 60 days after the day on which proceedings commence under this Act unless, during that period, the company

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

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

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

    • (iii) if, during the period that begins on the expiry of the 60-day period 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: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 11.05(3); 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 or the by-laws or rules of that Association.

Marginal note:Restriction on disposition of business assets

• 36. (1) A debtor company in respect of which an order has been made under this Act may not sell or otherwise dispose of assets outside the ordinary course of business unless authorized to do so by a court. Despite any requirement for shareholder approval, including one under federal or provincial law, the court may authorize the sale or disposition even if shareholder approval was not obtained.

• Marginal note:Notice to creditors

  (2) A company that applies to the court for an authorization is to give notice of the application to the secured creditors who are likely to be affected by the proposed sale or disposition.

• Marginal note:Factors to be considered

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

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

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

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

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

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

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

• Marginal note:Additional factors — related persons

  (4) If the proposed sale or disposition is to a person who is related to the company, the court may, after considering the factors referred to in subsection (3), grant the authorization only if it is satisfied that

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

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

• Marginal note:Related persons

  (5) For the purpose of subsection (4), a person who is related to the company includes

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

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

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

• Marginal note:Assets may be disposed of free and clear

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

• Marginal note:Restriction — employers

  (7) The court may grant the authorization only if the court is satisfied that the company can and will make the payments that would have been required under paragraphs 6(4)(a) and (5)(a) if the court had sanctioned the compromise or arrangement.

Preferences and Transfers at Undervalue

Marginal note:Application of sections 38 and 95 to 101 of the Bankruptcy and Insolvency Act

• 36.1 (1) Sections 38 and 95 to 101 of the Bankruptcy and Insolvency Act apply, with any modifications that the circumstances require, in respect of a compromise or arrangement unless the compromise or arrangement provides otherwise.

• Marginal note:Interpretation

  (2) For the purposes of subsection (1), a reference in sections 38 and 95 to 101 of the Bankruptcy and Insolvency Act

  • (a) to “date of the bankruptcy” is to be read as a reference to “day on which proceedings commence under this Act”;

  • (b) to “trustee” is to be read as a reference to “monitor”; and

  • (c) to “bankrupt”, “insolvent person” or “debtor” is to be read as a reference to “debtor company”.

Marginal note:Statutory Crown securities

• 39. (1) In relation to proceedings 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, before the day on which proceedings commence, the security is registered under a 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:Forms of cooperation

  (3) For the purpose of this section, cooperation may be provided by any appropriate means, including

  • (a) the appointment of a person to act at the direction of the court;

  • (b) the communication of information by any means considered appropriate by the court;

  • (c) the coordination of the administration and supervision of the debtor company’s assets and affairs;

  • (d) the approval or implementation by courts of agreements concerning the coordination of proceedings; and

  • (e) the coordination of concurrent proceedings regarding the same debtor company.

• Marginal note:Public policy exception

  (2) Nothing in this Part prevents the court from refusing to do something that would be contrary to public policy.

Marginal note:Regulations

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

• Marginal note:Related persons

  (5) Despite subsection 4(5) of the Bankruptcy and Insolvency Act,

  • (a) for the purposes of paragraph 6(d), an individual is considered to deal at arm’s length with a related person if the Minister is satisfied that, having regard to the circumstances — including the terms and conditions of the individual’s employment with the former employer, their remuneration and the duration, nature and importance of the work performed for the former employer — it is reasonable to conclude that the individual would have entered into a substantially similar contract of employment with the former employer if they had been dealing with each other at arm’s length; and

  • (b) for the purposes of subsection 21(4), individuals who are related to each other are, in the absence of evidence to the contrary, deemed not to deal with each other at arm’s length while so related.

• (a) the individual’s employment terminated in the circumstances prescribed by regulation;

Marginal note:Exceptions

6. An individual is not eligible to receive a payment in respect of any wages earned during a period in which the individual

• (a) was an officer or director of the former employer;

• (b) had a controlling interest within the meaning of the regulations in the business of the former employer;

• (c) occupied a managerial position within the meaning of the regulations with the former employer; or

• (d) was not dealing at arm’s length with

  • (i) an officer or director of the former employer,

  • (ii) a person who had a controlling interest within the meaning of the regulations in the business of the former employer, or

  • (iii) an individual who occupied a managerial position within the meaning of the regulations with the former employer.

Marginal note:Application

8. To receive a payment, an individual is to apply to the Minister in the manner and during the period provided for in the regulations.

Marginal note:Minister’s determination of eligibility

9. If the Minister determines that the applicant is eligible to receive a payment, the Minister shall make the payment.

Marginal note:Notification

10. The Minister is to inform the applicant of their eligibility or ineligibility to receive a payment.

REVIEW BY MINISTER

Marginal note:Request for review

11. An applicant who is informed under section 10 may request a review of their eligibility or ineligibility, as the case may be.

Marginal note:Review

12. The Minister may confirm, vary or rescind a determination of eligibility made under section 9. If the Minister varies the determination, the Minister shall make any payment resulting from the variation.

Marginal note:Review is final

13. Subject to the right of appeal under section 14, the Minister’s confirmation, variation or rescission, as the case may be, is final and may not be questioned or reviewed in any court.

APPEAL TO ADJUDICATOR

Marginal note:Appeal on question of law or jurisdiction

14. The applicant may appeal the decision made by the Minister under section 12 to an adjudicator only on a question of law or jurisdiction.

Marginal note:Appeal on the record

16. The appeal is to be an appeal on the record and no new evidence is admissible.

Marginal note:Adjudicator’s decision

17. The adjudicator may confirm, vary or rescind the decision made by the Minister under section 12. If the adjudicator varies the decision, the Minister shall make any payment resulting from the variation.

Marginal note:No review by certiorari, etc.

19. No order may be made to review, prohibit or restrain and no process entered or proceeding taken to question, review, prohibit or restrain in any court — whether by way of injunction, certiorari, prohibition, quo warranto or otherwise — an action of an adjudicator under this Act.

Marginal note:Decision is final

20. The adjudicator’s decision is final and may not be questioned or reviewed in any court.

ADMINISTRATION

Duties of Trustees and Receivers

Marginal note:General duties

• 21. (1) For the purposes of this Act, a trustee or a receiver, as the case may be, shall

  • (a) identify each individual who is owed wages that were earned during the six months immediately before the date of the bankruptcy or the first day on which there was a receiver in relation to the individual’s employer, as the case may be;

  • (b) determine the amount of wages owing to each individual in respect of those six months;

  • (c) inform each individual other than one who is in a class prescribed by regulation of the existence of the program established by section 4 and of the conditions under which payments may be made under this Act;

  • (d) provide the Minister and each individual other than one who is in a class prescribed by regulation with the information prescribed by regulation in relation to the individual and with the amount of wages owing to the individual in respect of those six months; and

  • (e) inform the Minister of when the trustee is discharged or the receiver completes their duties, as the case may be.

• Marginal note:Compliance with directions

  (2) A trustee or receiver shall comply with any directions of the Minister relating to the administration of this Act.

• Marginal note:Duty to assist

  (3) A person, other than one described in subsection (4), who has or has access to information described in paragraph (1)(d) shall, on request, provide it to the trustee or the receiver, as the case may be.

• Marginal note:Duty to assist — payroll contractors

  (4) In the case of a person who is dealing at arm’s length with and providing payroll services to a bankrupt or insolvent person, they shall provide a description of the information that they do not have access to, an estimate of the cost of providing the information that they have and an estimate of the cost of providing the information that they only have access to.

Marginal note:Fees and expenses

• 22. (1) The trustee’s or receiver’s fees and expenses, in relation to the performance of their duties under this Act, are to be paid out of the estate of the bankrupt employer or the property of the insolvent employer, as the case may be.

• Marginal note:Minister to pay fees and expenses

  (2) The Minister shall, in the circumstances prescribed by regulation, pay the fees or expenses that are prescribed by regulation.