Winding-up and Restructuring Act

Marginal note:Order of priority for payment of claims

• 161 (1) Subject to this Act, claims shall be paid in the following order of priority:

  • (a) costs of liquidation and the mortgage insurance and special insurance portions of the expenses described in paragraph 686(1)(a) of the Insurance Companies Act;

  • (b) claims of preferred creditors, specified in section 72;

  • (c) claims of policyholders of the company ranking as follows:

    • (i) in the case of policies of life insurance and policies of accident and sickness insurance,

      • (A) if transfer or reinsurance is not effected as provided in section 162, claims that have arisen under those policies of the company, in accordance with the terms thereof, prior to the date of the filing of the statement of the liquidator in the Office of the Superintendent as provided in subsection 168(1), less any amount previously advanced by the company on the security of those policies, and claims to the value of those policies computed as provided in section 163, or

      • (B) if transfer or reinsurance is effected as provided in section 162, of all or any of the policies of the company,

        • (I) in respect of those policies of the company for which transfer or reinsurance is effected, the consideration payable for the transfer or reinsurance of the policies of the company, and

        • (II) in respect of those policies of the company for which transfer or reinsurance is not effected, claims that have arisen under those policies, in accordance with the terms thereof, prior to the date of the filing of the statement of the liquidator in the Office of the Superintendent as provided in subsection 168(1), less any amount previously advanced by the company on the security of those policies and claims to the value of those policies computed as provided in section 163, and

    • (ii) in the case of policies of insurance other than policies of life insurance and policies of accident and sickness insurance,

      • (A) firstly, claims that have arisen under those policies of the company by reason of the occurrence of the event insured against, in accordance with the terms thereof, prior to the date of the filing of the statement of the liquidator in the Office of the Superintendent as provided in subsection 168(1), less any amount previously advanced by the company on the security of those policies, and

      • (B) secondly, the claims of such policyholders to the value of those policies computed as provided in section 163 or, where transfer or reinsurance is effected as provided in section 162 of all or any of the policies of the company, the consideration payable for the transfer or reinsurance of the policies of the company or, as the case may be, claims that have arisen under those policies of the company by reason of the cancellation of such policies, in accordance with the terms thereof, prior to the date of the filing of the statement of the liquidator in the Office of the Superintendent as provided in subsection 168(1), less any amount previously advanced by the company on the security of the policies so cancelled; and

  • (d) expenses described in paragraph 686(1)(a) of the Insurance Companies Act that were incurred by the Superintendent in respect of the company and assessed against and paid by other companies pursuant to that Act, and interest in respect thereof at such rate as is specified by the Superintendent.

• Marginal note:Claims re life companies

  (2) No payment on a claim by

  • (a) a creditor of a company insuring risks under policies referred to in subparagraph 161(1)(c)(i), or

  • (b) a policyholder of the company claiming a minimum amount that the company has agreed to pay under a policy or in respect of an amount for which a segregated fund is maintained under section 451, subsection 542.03(2) or section 593 of the Insurance Companies Act for a deficiency if the assets of the fund are insufficient to satisfy such a claim

  shall be made unless the assets of the company are sufficient to pay the claims referred to in subsection (1) and all of the terms of the policies of policyholders referred to in that subsection have been satisfied in full including any interest component of those policies accruing to the date of payment of the claim.

• Marginal note:Interest component

  (3) For the purposes of subsection (2), the interest component of the claims of policyholders referred to in subparagraph 161(1)(c)(i) shall be treated as part of the claim that has arisen under the policy in accordance with the terms thereof.

• Marginal note:Claims re other companies

  (4) No payment on a claim by a creditor of a company insuring risks under policies referred to in subparagraph 161(1)(c)(ii) shall be made unless the assets of the company are sufficient to pay the claims referred to in subsection (1).

• Marginal note:Subordinated debt holders

  (5) Holders of subordinated indebtedness, within the meaning of subsection 2(1) of the Insurance Companies Act, of a company and other indebtedness that by their terms rank equally or are subordinate to such indebtedness are entitled to receive payment on their claims only if the assets of the company are sufficient to pay the claims referred to in subsections (2) and (4).

• Marginal note:Priority of claims of policyholders in foreign companies

  (6) Notwithstanding anything in this Part, but subject to subsection (8), if a company is a foreign company, no claim, after the payment of costs of liquidation and the mortgage insurance and special insurance portions of the expenses described in paragraph 686(1)(a) of the Insurance Companies Act, other than claims of

  • (a) the preferred creditors referred to in paragraph (1)(b),

  • (b) holders of policies of a class of insurance specified in the order of the Superintendent under Part XIII of the Insurance Companies Act, and

  • (c) expenses described in paragraph 686(1)(a) of the Insurance Companies Act, that were incurred by the Superintendent in respect of the company and assessed against and paid by other companies pursuant to that Act, and interest in respect thereof at such rate as is specified by the Superintendent,

  ranks against the assets, and the balance, if any, of the assets remaining after the claims are paid shall be applied by the liquidator in satisfaction of the claims of any other creditors of the insurance business in Canada of the foreign company in accordance with subsections (2) and (4), but not including policyholders and creditors of the foreign company in respect of a class of insurance not specified in that order.

• Marginal note:Definitions

  (7) In subsection (8),

  assets in Canada

  actif au Canada

  assets in Canada means assets in Canada, within the meaning of subsection 2(1) of the Insurance Companies Act, of a foreign company; (actif au Canada)

  assets under the control of the chief agent

  actif sous le contrôle de l’agent principal

  assets under the control of the chief agent means the other assets of the foreign company that are held in Canada under the control of its chief agent, within the meaning of section 571 of the Insurance Companies Act, including all amounts received or receivable in respect of its insurance business in Canada. (actif sous le contrôle de l’agent principal)

• Marginal note:Other foreign company priority provisions

  (8) Where a foreign company is authorized to insure in Canada

  • (a) risks falling within the class of life insurance; and

  • (b) risks falling within some other class of insurance, other than accident and sickness insurance, accident insurance, personal accident insurance and sickness insurance,

    • (i) in the case of

      • (A) the costs of liquidation, the mortgage insurance and special insurance portions of the expenses described in paragraph 686(1)(a) of the Insurance Companies Act, and

      • (B) the claims of preferred creditors,

      the costs, portions of expenses and claims shall be paid from the assets in Canada, maintained for the policies referred to in subparagraphs (ii) and (iii), together with the assets under the control of the chief agent, in such proportion as the court considers fair and equitable,

    • (ii) in the case of policies falling within the classes of life insurance, accident and sickness insurance, accident insurance, personal accident insurance and sickness insurance, claims shall be paid

      • (A) firstly, from the assets in Canada maintained for those policies,

      • (B) secondly, from the assets under the control of the chief agent in such proportion as the court considers fair and equitable, and

      • (C) thirdly, from the balance, if any, of any assets referred to in clauses (iii)(A) and (B) remaining after the claims under subparagraphs (i) and (iii) are paid,

    • (iii) in the case of policies falling within some other class of insurance, claims shall be paid

      • (A) firstly, from the assets in Canada maintained for those policies,

      • (B) secondly, from the assets under the control of the chief agent in such proportion as the court considers fair and equitable, and

      • (C) thirdly, from the balance, if any, of any assets referred to in clauses (ii)(A) and (B) remaining after the claims under subparagraphs (i) and (ii) are paid, and

    • (iv) in the case of expenses described in paragraph 686(1)(a) of the Insurance Companies Act that were incurred by the Superintendent in respect of the foreign company and assessed against and paid by other companies pursuant to that Act, the expenses shall be paid from the balance, if any, of the assets referred to in clauses (ii)(A) and (B) and (iii)(A) and (B) remaining after the claims under subparagraphs (i), (ii) and (iii) are paid.

• Marginal note:Priority of costs, etc.

  (9) For greater certainty, the costs, claims and expenses referred to in subsections (6) and (8) shall be paid in accordance with the priorities set out in subsection 161(1).

• Marginal note:Release of balance of assets to company

  (10) The liquidator may, with the approval of the court, release to the foreign company any balance of the assets remaining after payment of claims in the order of priority prescribed by subsection (9).

• Marginal note:Payment of liabilities

  (11) Notwithstanding anything in this section, the liquidator may, in carrying on the business of the company pursuant to paragraph 35(1)(b), with the approval of the court, pay liabilities relating to the portion of the business being carried on, where the payment is considered desirable for the retention of goodwill and enhancement of value to the estate of the company.