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

Act current to 2022-09-22 and last amended on 2022-09-01. Previous Versions

PART IIIProposals (continued)

DIVISION IIConsumer Proposals (continued)

Marginal note:Deemed annulment — default of payment

  •  (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  • Marginal note:Deemed annulment — amendment withdrawn or refused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an amendment to a consumer proposal filed before the deemed annulment of the consumer proposal under subsection (1) is withdrawn or refused by the creditors or the court, the consumer proposal is deemed to be annulled at the time that the amendment is withdrawn or refused.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 a report in the prescribed form in relation to the deemed annulment; and

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

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

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

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

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

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

  • 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 or disposition of property or payment duly made, or anything duly done under or in pursuance of the consumer proposal and, despite the deemed annulment, a guarantee given under the consumer proposal remains in full force and effect in accordance with its terms.

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

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

  • Marginal note:Automatic revival

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

  • Marginal note:Notice if no automatic revival

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

  • 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 was deemed to be annulled, and the court, if it considers it appropriate to do so in the circumstances, may make an order reviving the consumer proposal, on any terms that the court considers appropriate.

  • 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 a report in the prescribed form 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).

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

Marginal note:Effects of annulment

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

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

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

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

  • Marginal note:Idem

    (2) Where a consumer proposal is annulled or deemed annulled, the rights of the creditors are revived for the amount of their claims less any dividends received.

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

 [Repealed, 2005, c. 47, s. 54]

Marginal note:Certain rights limited

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

    • (a) the consumer debtor is insolvent, or

    • (b) a consumer proposal has been filed in respect of the consumer debtor

    until the consumer proposal has been withdrawn, refused by the creditors or the court, annulled or deemed annulled.

  • Marginal note:Idem

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

    • “(c) the consumer debtor has not paid rent in respect of a period preceding the filing of the consumer proposal.”

  • Marginal note:Idem

    (3) Where a consumer proposal has been filed in respect of a consumer debtor, no public utility may discontinue service to that consumer debtor by reason only that

    • (a) the consumer debtor is insolvent,

    • (b) a consumer proposal has been filed in respect of the consumer debtor, or

    • (c) the consumer debtor has not paid for services rendered, or material provided, before the filing of the consumer proposal

    until the consumer proposal has been withdrawn, refused by the creditors or the court, annulled or deemed annulled.

  • Marginal note:Certain acts not prevented

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

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

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

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

  • Marginal note:Powers of court

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

  • Marginal note:Eligible financial contracts

    (7) Subsection (1) does not apply in respect of an eligible financial contract.

  • Marginal note:Permitted actions

    (8) Despite section 69.2, the following actions are permitted in respect of an eligible financial contract that is entered into before the filing of a consumer proposal and is terminated on or after that filing, but only in accordance with the provisions of that contract:

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

    • (b) any dealing with financial collateral including

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

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

  • Marginal note:Net termination values

    (9) If net termination values determined in accordance with an eligible financial contract referred to in subsection (8) are owed by the consumer debtor to another party to the eligible financial contract, that other party is deemed, for the purposes of subsection 69.2(1), to be a creditor of the consumer debtor with a claim provable in bankruptcy in respect of those net termination values.

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

Marginal note:Assignment of wages

  •  (1) An assignment of existing or future wages made by a consumer debtor before the filing of a consumer proposal is of no effect in respect of wages earned after the filing of the consumer proposal.

  • Marginal note:Assignment of debts at request of administrator

    (2) In order to ensure compliance with the terms of a consumer proposal, the administrator may, at any time after the consumer proposal is filed, require of, and take from, the consumer debtor an assignment of any amount payable to the consumer debtor, including wages, that may become payable in the future, but no such assignment can, unless the consumer debtor agrees, be for an amount greater than is due and payable pursuant to the terms of the consumer proposal.

  • Marginal note:Third parties protected

    (3) An assignment made pursuant to subsection (2) is of no effect against a person owing the amount payable until a notice of the assignment is served on that person.

  • Marginal note:When section ceases to apply

    (4) This section ceases to apply where the consumer proposal is refused by the creditors or by the court, or is withdrawn, annulled or deemed annulled.

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

Marginal note:No dismissal, etc., of employee

 No employer shall dismiss, suspend, lay off or otherwise discipline a consumer debtor on the sole ground that a consumer proposal has been filed in respect of that consumer debtor.

  • 1992, c. 27, s. 32

Marginal note:Amendment to consumer proposal

 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;

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

Marginal note:Certificate if consumer proposal performed

  •  (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).

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

Marginal note:Administrator’s accounts, discharge

 The form and content of the administrator’s accounts, the procedure for the preparation and taxation of those accounts and the procedure for the discharge of the administrator shall be as prescribed.

  • 1992, c. 27, s. 32

Marginal note:Act to apply

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

  • Marginal note:Where consumer debtor is bankrupt

    (2) Where a consumer proposal is made by a consumer debtor who is a bankrupt,

    • (a) the consumer proposal must be approved by the inspectors, if any, before any further action is taken thereon;

    • (b) the consumer debtor must have obtained the assistance of a trustee who shall act as administrator of the proposal in the preparation and execution thereof;

    • (c) the time with respect to which the claims of creditors shall be determined is the time at which the consumer debtor became bankrupt; and

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

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

PART IVProperty of the Bankrupt

Marginal note:Property of bankrupt

  •  (1) The property of a bankrupt divisible among his creditors shall not comprise

    • (a) property held by the bankrupt in trust for any other person;

    • (b) any property that as against the bankrupt is exempt from execution or seizure under any laws applicable in the province within which the property is situated and within which the bankrupt resides;

    • (b.1) goods and services tax credit payments that are made in prescribed circumstances to the bankrupt and that are not property referred to in paragraph (a) or (b);

    • (b.2) prescribed payments relating to the essential needs of an individual that are made in prescribed circumstances to the bankrupt and that are not property referred to in paragraph (a) or (b); or

    • (b.3) without restricting the generality of paragraph (b), property in a registered retirement savings plan, a registered retirement income fund or a registered disability savings plan, as those expressions are defined in the Income Tax Act, or in any prescribed plan, other than property contributed to any such plan or fund in the 12 months before the date of bankruptcy,

    but it shall comprise

    • (c) all property wherever situated of the bankrupt at the date of the bankruptcy or that may be acquired by or devolve on the bankrupt before their discharge, including any refund owing to the bankrupt under the Income Tax Act in respect of the calendar year — or the fiscal year of the bankrupt if it is different from the calendar year — in which the bankrupt became a bankrupt, except the portion that

      • (i) is not subject to the operation of this Act, or

      • (ii) in the case of a bankrupt who is the judgment debtor named in a garnishee summons served on Her Majesty under the Family Orders and Agreements Enforcement Assistance Act, is garnishable money that is payable to the bankrupt and is to be paid under the garnishee summons, and

    • (d) such powers in or over or in respect of the property as might have been exercised by the bankrupt for his own benefit.

  • Marginal note:Deemed trusts

    (2) Subject to subsection (3), notwithstanding any provision in federal or provincial legislation that has the effect of deeming property to be held in trust for Her Majesty, property of a bankrupt shall not be regarded as held in trust for Her Majesty for the purpose of paragraph (1)(a) unless it would be so regarded in the absence of that statutory provision.

  • Marginal note:Exceptions

    (3) Subsection (2) does not apply in respect of amounts deemed to be held in trust under subsection 227(4) or (4.1) of the Income Tax Act, subsection 23(3) or (4) of the Canada Pension Plan or subsection 86(2) or (2.1) of the Employment Insurance Act (each of which is in this subsection referred to as a “federal provision”) nor in respect of amounts deemed to be held in trust under any law of a province that creates a deemed trust the sole purpose of which is to ensure remittance to Her Majesty in right of the province of amounts deducted or withheld under a law of the province where

    • (a) that law of the province imposes a tax similar in nature to the tax imposed under the Income Tax Act and the amounts deducted or withheld under that law of the province are of the same nature as the amounts referred to in subsection 227(4) or (4.1) of the Income Tax Act, or

    • (b) the province is a province providing a comprehensive pension plan as defined in subsection 3(1) of the Canada Pension Plan, that law of the province establishes a provincial pension plan as defined in that subsection and the amounts deducted or withheld under that law of the province are of the same nature as amounts referred to in subsection 23(3) or (4) of the Canada Pension Plan,

    and for the purpose of this subsection, any provision of a law of a province that creates a deemed trust is, notwithstanding any Act of Canada or of a province or any other law, deemed to have the same effect and scope against any creditor, however secured, as the corresponding federal provision.

  • R.S., 1985, c. B-3, s. 67
  • 1992, c. 27, s. 33
  • 1996, c. 23, s. 168
  • 1997, c. 12, s. 59
  • 1998, c. 19, s. 250
  • 2005, c. 47, s. 57
  • 2007, c. 36, s. 32
  • 2019, c. 29, s. 134
 
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