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 with the insolvent person, or claim an accelerated payment, or a forfeiture of the term, under any 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; 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 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.

• Marginal note:Definitions

  (8) In subsections (7) and (9),

  eligible financial contract

  contrat financier admissible

  eligible financial contract means

  • (a) a currency or interest rate swap agreement,

  • (b) a basis swap agreement,

  • (c) a spot, future, forward or other foreign exchange agreement,

  • (d) a cap, collar or floor transaction,

  • (e) a commodity swap,

  • (f) a forward rate agreement,

  • (g) a repurchase or reverse repurchase agreement,

  • (h) a spot, future, forward or other commodity contract,

  • (i) an agreement to buy, sell, borrow or lend securities, to clear or settle securities transactions or to act as a depository for securities,

  • (j) any derivative, combination or option in respect of, or agreement similar to, an agreement or contract referred to in paragraphs (a) to (i),

  • (k) any master agreement in respect of any agreement or contract referred to in paragraphs (a) to (j),

  • (k.1) any master agreement in respect of a master agreement referred to in paragraph (k),

  • (l) a guarantee of the liabilities under an agreement or contract referred to in paragraphs (a) to (k.1), or

  • (m) any agreement of a kind prescribed; (contrat financier admissible)

  net termination value

  valeurs nettes dues à la date de résiliation

  net termination value means the net amount obtained after setting off the mutual obligations between the parties to an eligible financial contract in accordance with its provisions. (valeurs nettes dues à la date de résiliation)

• Marginal note:Application of paragraphs 69(1)(a) and 69.1(1)(a)

  (9) For greater certainty, where an eligible financial contract entered into before the filing in respect of an insolvent person of

  • (a) a notice of intention, or

  • (b) a proposal, where no notice of intention was filed,

  is terminated on or after that filing, the setting off of obligations between the insolvent person and the other parties to the eligible financial contract, in accordance with its provisions, shall be permitted, and if net termination values determined in accordance with the eligible financial contract are owed by the insolvent person to another party to the eligible financial contract, that other party shall be 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.