Bankruptcy and Insolvency Act

Marginal note:Certain rights limited

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

  • (a) the insolvent person is insolvent; or

  • (b) a notice of intention or a proposal has been filed in respect of the insolvent person.

• Marginal note:Idem

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

  • “(c) the insolvent person has not paid rent or royalties, as the case may be, or other payments of a similar nature, in respect of a period preceding the filing of

    • (i) the notice of intention, if one was filed, or

    • (ii) the proposal, if no notice of intention was filed.”

• Marginal note:Idem

  (3) Where a notice of intention or a proposal has been filed in respect of an insolvent person, no public utility may discontinue service to that insolvent person by reason only that

  • (a) the insolvent person is insolvent;

  • (b) a notice of intention or a proposal has been filed in respect of the insolvent person; or

  • (c) the insolvent person has not paid for services rendered, or material provided, before the filing of

    • (i) the notice of intention, if one was filed, or

    • (ii) the proposal, if no notice of intention was filed.

• Marginal note:Certain acts not prevented

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

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

    • (i) the notice of intention, if one was filed, or

    • (ii) the proposal, if no notice of intention was filed;

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

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

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

    • (ii) 60 days after the commencement of proceedings under this Act unless, during that period, the insolvent person

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

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

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

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

• 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 subsections (1) to (3) do not apply, or apply only to the extent declared by the court, where the applicant satisfies the court that the operation of those subsections would likely cause it significant financial hardship.

• Marginal note:Eligible financial contracts

  (7) Subsection (1) does not apply

  • (a) in respect of an eligible financial contract; or

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

• (8) [Repealed, 2007, c. 29, s. 92]

• Marginal note:Permitted actions

  (9) Despite subsections 69(1) and 69.1(1), the following actions are permitted in respect of an eligible financial contract that is entered into before the filing, in respect of an insolvent person of a notice of intention or, where no notice of intention is filed, a proposal, and that 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 insolvent person 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

  (10) If net termination values determined in accordance with an eligible financial contract referred to in subsection (9) are owed by the insolvent person to another party to the eligible financial contract, that other party is deemed, for the purposes of paragraphs 69(1)(a) and 69.1(1)(a), to be a creditor of the insolvent person with a claim provable in bankruptcy in respect of those net termination values.