First Session, Thirty-eighth Parliament,
53-54 Elizabeth II, 2004-2005
STATUTES OF CANADA 2005CHAPTER 47
An Act to establish the Wage Earner Protection Program Act, to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act and to make consequential amendments to other Acts
ASSENTED TO
25th NOVEMBER, 2005
BILL C-55
RECOMMENDATION
Her Excellency the Governor General recommends to the House of Commons the appropriation of public revenue under the circumstances, in the manner and for the purposes set out in a measure entitled “An Act to establish the Wage Earner Protection Program Act, to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act and to make consequential amendments to other Acts”.
SUMMARY
This enactment establishes the Wage Earner Protection Program Act. That Act provides for the payment of wages to individuals whose employment is terminated and who are owed wages by employers who are bankrupt or subject to receivership. It sets out the conditions of eligibility to receive payments, the maximum amount covered by the Program, the application, review and appeal process of the Program and the administrative arrangements for its implementation, including enforcement mechanisms. The Act provides regulation-making powers for carrying out the purposes of the Act and it provides for a review of the Act five years after its coming into force.
This enactment also contains amendments to the Bankruptcy and Insolvency Act. Those amendments include changes to the appointment and oversight functions of the Superintendent of Bankruptcy, as well as to the obligations and powers of trustees in bankruptcy, interim receivers and receivers. The amendments also expand the Act to cover income trusts. Also, new provisions regarding corporate proposals are created to address, among other things, the treatment of contracts, collective agreements, interim financing and governance arrangements. Changes are made to the priority of charges, including in respect of wages and pension contributions. The scope of application of consumer proposals is expanded. New provisions are introduced to deal with bankrupts with high income tax debts and those with surplus income, to exempt registered retirement savings plans from seizure, and to allow for the automatic discharge of second-time bankrupts. The period of eligibility of discharge of student debts is reduced. There are changes to the treatment of preferences as well as numerous technical changes. The amendments also provide for a review of the Act after five years.
This enactment also contains amendments to the Companies’ Creditors Arrangement Act. Many of the amendments parallel those made to provisions dealing with corporate proposals in the Bankruptcy and Insolvency Act. The amendments also expand the Act to cover income trusts. The scope of application of the initial stay is clarified, notably regarding regulatory measures. New provisions are introduced regarding the treatment of contracts, collective agreements, interim financing and governance arrangements. The appointment and role of the monitor are further clarified and made subject to the oversight of the Superintendent of Bankruptcy. A new Part on cross-border insolvencies is added. The amendments also provide for a review of the Act after five years.
Also available on the Parliament of Canada Web Site at the following address:http://www.parl.gc.ca
TABLE OF PROVISIONS
AN ACT TO ESTABLISH THE WAGE EARNER PROTECTION PROGRAM ACT, TO AMEND THE BANKRUPTCY AND INSOLVENCY ACT AND THE COMPANIES’ CREDITORS ARRANGEMENT ACT AND TO MAKE CONSEQUENTIAL AMENDMENTS TO OTHER ACTS
1.       Wage Earner Protection Program Act
AN ACT TO ESTABLISH A PROGRAM FOR MAKING PAYMENTS TO INDIVIDUALS IN RESPECT OF WAGES OWED TO THEM BY EMPLOYERS WHO ARE BANKRUPT OR SUBJECT TO A RECEIVERSHIP
SHORT TITLE
1.       Wage Earner Protection Program Act
INTERPRETATION
2.       Meaning of “wages”
DESIGNATION OF MINISTER
3.       Power of Governor in Council
PROGRAM ESTABLISHED
4.       Establishment
ELIGIBILITY FOR PAYMENTS
5.       Conditions of eligibility
6.       Exceptions
AMOUNTS COVERED BY PROGRAM
7.       Amount of payment
APPLICATION FOR PAYMENT
8.       Application
9.       Minister’s determination
10.       Notification
REVIEW AND APPEAL
11.       Request for review
12.       Review decision
13.       Review decision is final
14.       Appeal of review decision
15.       Appointment of adjudicator
16.       Appeal on the record
17.       Adjudicator’s decision
18.       Copies of decision
19.       Decision is final
20.       No review by certiorari, etc.
ADMINISTRATION
Duties of Trustees and Receivers
21.       General duties
22.       Fees and disbursements
Powers of Minister
23.       Directions to trustees and receivers
24.       Power to summon, etc.
25.       Inspections
26.       Duty to assist
27.       Information to be made available to Minister
28.       Information that the Minister may disclose
29.       Social Insurance Number
30.       Delegation
31.       Audit of applications
32.       Determination of overpayment
33.       Garnishment
34.       No payment or partial payment
Financial Provisions
35.       Payments out of C.R.F.
36.       Subrogation
37.       Amount not assignable
Offences and Penalties
38.       Offences
39.       Obstruction
40.       Punishment
Regulations
41.       Regulations
REVIEW OF ACT
42.       Review
2-123.       Bankruptcy And Insolvency Act
124-131.       Companies’ Creditors Arrangement Act
TRANSITIONAL PROVISIONS
132.       Transitional
133.       Transitional
134.       Transitional
135.       Transitional
CONSEQUENTIAL AMENDMENTS
136.       Canada Labour Code
137.       Canada Pension Plan
138.       Employment Insurance Act
139.       Income Tax Act
COORDINATING AMENDMENT
140.       Bill C-23
COMING INTO FORCE
141.       Order in council
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53-54 ELIZABETH II
——————
CHAPTER 47
An Act to establish the Wage Earner Protection Program Act, to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act and to make consequential amendments to other Acts
[Assented to 25th November, 2005]
Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:
WAGE EARNER PROTECTION PROGRAM ACT
1. The Wage Earner Protection Program Act is enacted as follows:
An Act to establish a program for making payments to individuals in respect of wages owed to them by employers who are bankrupt or subject to a receivership
SHORT TITLE
Short title
1. This Act may be cited as the Wage Earner Protection Program Act.
INTERPRETATION
Meaning of “wages”
2. (1) In this Act, “wages” includes salaries, commissions, compensation for services rendered, vacation pay and any other amounts prescribed by regulation but does not include severance or termination pay.
Employers subject to a receivership
(2) For the purposes of this Act, an employer is subject to a receivership when any property of the employer is under the possession or control of a receiver.
Meaning of “receiver”
(3) In this Act, “receiver” means a receiver within the meaning of subsection 243(2) of the Bankruptcy and Insolvency Act.
Words and expressions
(4) Unless otherwise provided, words and expressions used in this Act have the same meaning as in the Bankruptcy and Insolvency Act.
DESIGNATION OF MINISTER
Power of Governor in Council
3. The Governor in Council may designate a member of the Queen’s Privy Council for Canada to be the Minister for the purposes of this Act.
PROGRAM ESTABLISHED
Establishment
4. The Wage Earner Protection Program is established to make payments to individuals in respect of wages owed to them by employers who are bankrupt or subject to a receivership.
ELIGIBILITY FOR PAYMENTS
Conditions of eligibility
5. An individual is eligible to receive a payment if
(a) the individual’s employment with an employer was terminated, within the meaning of the regulations;
(b) the former employer is bankrupt or subject to a receivership;
(c) the individual is owed wages by the former employer; and
(d) the wages that are owed 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 former employer.
Exceptions
6. (1) An individual is ineligible to receive a payment if, at the date of his or her former employer’s bankruptcy, or the first day on which there was a receiver in relation to the former employer, the individual had been employed by the former employer for a period of three months or less or, in relation to any category of wage earners specified by the regulations, any shorter period specified in the regulations.
Other exceptions
(2) An individual is ineligible to receive a payment in respect of any wages earned during a period in which the individual
(a) was an officer or a director of the former employer;
(b) had a controlling interest, within the meaning of the regulations, in the business of the former employer; or
(c) occupied a managerial position, within the meaning of the regulations, with the former employer.
AMOUNTS COVERED BY PROGRAM
Amount of payment
7. (1) The amount that may be paid under this Act to an eligible individual is the amount of wages owing to the individual that were earned in the six months immediately before the date of bankruptcy or the first day on which there was a receiver in relation to the former employer less any deductions applicable to the payment under a federal or provincial law.
Maximum
(2) The maximum amount that may be paid under this Act to an eligible individual in respect of any particular bankruptcy or receivership is the greater of
(a) $3,000, and
(b) an amount equal to four times the maximum weekly insurable earnings under the Employment Insurance Act;
less any deductions applicable under a federal or provincial law.
Allocation of payments
(3) Unless otherwise prescribed by regulation, payments made under this Act to an individual are to be allocated to vacation pay only after payments are first allocated to all other components of wages owing to the individual.
APPLICATION FOR PAYMENT
Application
8. To receive a payment, an individual must apply to the Minister in the form and manner, and within the period, provided for in the regulations.
Minister’s determination
9. If the Minister determines that the applicant is eligible for a payment, the Minister must approve the making of the payment.
Notification
10. The Minister must inform the applicant of the Minister’s determination.
REVIEW AND APPEAL
Request for review
11. An applicant who is the subject of a determination may, in accordance with the regulations, request a review of the determination.
Review decision
12. After considering the request for a review, the Minister may confirm, vary or rescind the determination.
Review decision is final
13. Subject to the right of appeal under section 14, the review decision is final and may not be questioned or reviewed in any court.
Appeal of review decision
14. An applicant may appeal a review decision to an adjudicator only on a question of law or a question of jurisdiction. An appeal must be made in accordance with the regulations.
Appointment of adjudicator
15. An appeal is to be heard by an adjudicator appointed by the Minister.
Appeal on the record
16. An appeal is an appeal on the record.
Adjudicator’s decision
17. After considering an appeal, the adjudicator may confirm, vary or rescind the review decision.
Copies of decision
18. The adjudicator must send a copy of his or her decision, and the reasons for it, to each party to the appeal.
Decision is final
19. The adjudicator’s decision is final and may not be questioned or reviewed in any court.
No review by certiorari, etc.
20. No order shall be made, process entered or proceeding taken in any court — whether by way of injunction, certiorari, prohibition, quo warranto or otherwise — to question, review, prohibit or restrain an adjudicator in any proceedings of the adjudicator.
ADMINISTRATION
Duties of Trustees and Receivers
General duties
21. (1) For the purposes of this Act, every trustee and receiver shall
(a) identify each individual who is owed wages by a bankrupt or insolvent employer, as the case may be, that were earned during the period of six months immediately before the date of the bankruptcy or the first day on which there was a receiver in relation to the employer;
(b) determine the amount of wages owing to each individual in respect of that six-month period;
(c) inform each individual of the existence of the program established by section 4 and the conditions under which payments may be made under this Act;
(d) provide the Minister and each individual, in accordance with the regulations, with information prescribed by the regulations in relation to the individual and the amount of wages owing to the individual in respect of the six-month period; and
(e) inform the Minister
(i) in the case of a trustee, when he or she is discharged, and
(ii) in the case of a receiver, when the receiver has completed his or her duties as receiver.
Compliance with directions
(2) A trustee or receiver must comply with any directions of the Minister relating to the administration of this Act.
Fees and disbursements
22. (1) A trustee or receiver who performs duties for the purposes of this Act may charge reasonable fees and disbursements for the performance of those duties.
Payment
(2) The fees and disbursements are to be paid out of the property or estate of the bankrupt or insolvent employer.
Powers of Minister
Directions to trustees and receivers
23. (1) The Minister may give directions to trustees and receivers in respect of the perform­ance of their duties under this Act.
Directions not statutory instruments
(2) A direction given by the Minister is not a statutory instrument within the meaning of the Statutory Instruments Act.
Power to summon, etc.
24. (1) For the purposes of the administration of this Act, the Minister may
(a) summon any person before him or her and require the person to give evidence, orally or in writing, and on oath or, if the person is entitled to affirm in civil matters, on solemn affirmation;
(b) require any person to provide the Minister with any information or document that the Minister considers necessary; and
(c) require any person to provide an affidavit or a statutory declaration attesting to the truth of any information provided by the person.
Taking oaths, etc.
(2) Any person, if designated by the Minister for the purpose, may administer oaths and take and receive affidavits, statutory declarations and solemn affirmations for the purpose of or incidental to the administration of this Act. Every person so designated has, with respect to any such oath, affidavit, declaration or affirmation, all the powers of a commissioner for administering oaths or taking affidavits.
Acceptance of oaths, etc.
(3) The Minister may, for the purposes of administering this Act, accept any oath admin­istered or any affidavit, statutory declaration or solemn affirmation taken or received by any person who has the powers of a commissioner for taking affidavits and who is an officer or employee of
(a) a department or other portion of the federal public administration specified in any of Schedules I, IV and V to the Financial Administration Act; or
(b) a department of the government of a province.
Inspections
25. (1) A person designated by the Minister for the purpose may, at any reasonable time, enter any place in which he or she reasonably believes there is any information or document relevant to the administration of this Act and may, in that place,
(a) inspect any books, records, electronic data or other documents that he or she reasonably believes may contain information that is relevant to the administration of this Act;
(b) use or cause to be used any computer system to examine any data contained in or available to the computer system;
(c) reproduce or cause to be reproduced any record from the data in the form of a print-out or other intelligible output;
(d) take any document or other thing from the place for examination or, in the case of a document, for copying; and
(e) use or cause to be used any copying equipment to make copies of any documents.
Prior authorization
(2) If any place referred to in subsection (1) is a dwelling-house, the designated person may not enter the dwelling-house without the consent of the occupant, except under the authority of a warrant issued under subsection (3).
Warrant to enter dwelling-house
(3) A judge may issue a warrant authorizing the designated person to enter a dwelling-house subject to the conditions specified in the warrant if, on ex parte application, the judge is satisfied by information on oath that
(a) there are reasonable grounds to believe that the dwelling-house is a place referred to in subsection (1);
(b) entry into the dwelling-house is necessary for any purpose related to the administration of this Act; and
(c) entry into the dwelling-house has been, or there are reasonable grounds to believe that entry will be, refused.
Orders if entry not authorized
(4) If the judge is not satisfied that entry into the dwelling-house is necessary for any purpose related to the administration of this Act, the judge may, to the extent that access was or may be expected to be refused and that information or documents are or may be expected to be kept in the dwelling-house,
(a) order the occupant of the dwelling-house to provide the Minister, or a person designated by the Minister for the purpose, with reasonable access to any information or document that is or should be kept in the dwelling-house; and
(b) make any other order that is appropriate in the circumstances to carry out the purposes of this Act.
Duty to assist
26. The owner or person in charge of a place that is entered by the designated person and every person found there must
(a) give the designated person all reasonable assistance to enable him or her to exercise his or her powers and perform his or her duties; and
(b) provide the designated person with any information relevant to the administration of this Act that he or she requires.
Information to be made available to Minister
27. Despite section 127 and subsection 139(5) of the Employment Insurance Act, personal information relating to an applicant that is collected or obtained by the Canada Employment Insurance Commission must, if requested by the Minister, be made available to the Minister to determine the applicant’s eli-gibility to receive a payment under this Act.
Information that the Minister may disclose
28. Personal information that has been collected or obtained by the Minister in the administration of this Act may be disclosed by the Minister to any person or body, to the extent that the disclosure is necessary in order for the Minister to obtain information required for the administration of this Act.
Social Insurance Number
29. No person shall knowingly use, communicate or allow to be communicated the Social Insurance Number of an individual that was obtained for a purpose related to an application for a payment under this Act except for the purpose of the administration or enforcement of this Act or the Income Tax Act.
Delegation
30. The Minister may delegate to any person the exercise of any power or the performance of any duty or function that may be exercised or performed by the Minister under this Act.
Audit of applications
31. (1) Subject to subsections (2) to (4), the Minister may, on his or her initiative, conduct an audit of any application for payment under this Act.
Applications with payment
(2) An audit of an application in respect of which a payment was made may be conducted at any time within three years after the day on which the payment was made.
Exception
(3) If the Minister has reasonable grounds to believe that a payment was made on the basis of any false or misleading information, an audit of the application in respect of which the payment was made may be conducted at any time within six years after the payment was made.
Other applications
(4) An audit of an application in respect of which no payment was made may be conducted at any time within three years after the day on which the applicant was sent a notice informing the applicant that he or she was not eligible to receive a payment.
Determination of overpayment
32. (1) If the Minister determines that an individual who received a payment was not eligible to receive the payment or has received a payment in an amount greater than the amount the individual was eligible to receive, the Minister shall send to the individual a notice
(a) informing the individual of the determination; and
(b) specifying the amount that the individual was not eligible to receive.
Debt due to Her Majesty
(2) The amount specified in the notice may be recovered from the individual as a debt due to Her Majesty in right of Canada.
Certificate of default
(3) The amount of any debt referred to in subsection (2) that remains unpaid 30 days after the notice referred to in that subsection is sent may be certified by the Minister, and registration of the certificate in the Federal Court has the same effect as a judgment of that Court for a debt of the amount specified in the certificate and all related registration costs.
Garnishment
33. If the Minister is of the opinion that a person is or is about to become liable to make a payment to a person who is liable to Her Majesty under section 32, the Minister may, by written notice, order the first person to pay to the Receiver General, on account of the second person’s liability, all or part of the money otherwise payable to the second person.
No payment or partial payment
34. If the Minister determines that an individual has not received a payment that he or she is eligible to receive, or has not received the full amount that he or she is eligible to receive, the Minister shall approve a payment to the individual in an amount equal to the amount that the individual did not receive.
Financial Provisions
Payments out of C.R.F.
35. There may be paid out of the Consolidated Revenue Fund all payments authorized to be made under this Act.
Subrogation
36. (1) If a payment is made under this Act to an individual in respect of unpaid wages, Her Majesty in right of Canada is, to the extent of the amount of the payment, subrogated to any rights the individual may have in respect of those unpaid wages against
(a) the bankrupt or insolvent employer; and
(b) if the bankrupt or insolvent employer is a corporation, a director of the corporation.
Maintaining an action
(2) For the purposes of subsection (1), Her Majesty in right of Canada may maintain an action against a bankrupt or insolvent employer, or a director, either in the name of the individual referred to in that subsection or in the name of Her Majesty in right of Canada.
Amount not assignable
37. An amount that is payable under this Act is not capable of being assigned, charged, attached, anticipated or given as security and any transaction appearing to do so is void or, in the Province of Quebec, null.
Offences and Penalties
Offences
38. (1) Every person commits an offence who
(a) makes a false or deceptive entry, or omits to enter a material particular, in any record or book of account that contains information that supports an application under this Act;
(b) in relation to an application under this Act, makes a representation that the person knows to be false or misleading;
(c) in relation to an application under this Act, makes a declaration that the person knows is false or misleading because of the non-disclosure of facts;
(d) being required under this Act to provide information, provides information or makes a representation that the person knows to be false or misleading;
(e) obtains a payment under this Act by false pretence;
(f) being the payee of any cheque issued as a payment under this Act, knowingly negotiates or attempts to negotiate it knowing that the person is not entitled to the payment or any part of the payment; or
(g) participates in, assents to or acquiesces in an act or omission mentioned in any of paragraphs (a) to (f).
Trustees and receivers
(2) Every person who fails to comply with any of the requirements of subsection 21(1) commits an offence.
Limitation of prosecutions
(3) A prosecution for an offence under subsection (1) or (2) may be commenced at any time within six years after the time when the subject-matter of the prosecution arose.
Obstruction
39. (1) Every person commits an offence who delays or obstructs a person in the exercise of his or her powers or the performance of his or her duties under this Act.
Limitation of prosecutions
(2) A prosecution for an offence under subsection (1) may be commenced at any time within two years after the time when the subject-matter of the prosecution arose.
Punishment
40. Every person who is guilty of an offence under section 38 or 39 is liable on summary conviction to a fine of not more than $5,000 or to imprisonment for a term of not more than six months, or to both.
Regulations
Regulations
41. (1) The Governor in Council may make regulations generally for carrying out the purposes of this Act, including regulations
(a) prescribing any amounts to be wages for the purposes of this Act;
(b) defining what constitutes a termination of employment for the purposes of paragraph 5(a);
(c) specifying categories of wage earners and periods of time for the purposes of subsection 6(1);
(d) defining the expressions “controlling interest” and “managerial position” for the purposes of subsection 6(2);
(e) respecting the period within which, and the manner and form in which, applications for payments are to be made;
(f) respecting the period within which and the manner in which payments are to be made;
(g) respecting the period within which, and the manner and form in which, a review of a determination may be requested or an appeal may be made from a review decision;
(h) prescribing the information that is to be provided by trustees and receivers to the Minister and to individuals for the purposes of paragraph 21(1)(d); and
(i) respecting the period within which, and the manner and form in which, trustees and receivers are to provide the information referred to in paragraph (h).
Allocation of payments
(2) The Governor in Council may make regulations respecting the allocation of payments under this Act to the different components of wages for the purposes of subsection 7(3).
REVIEW OF ACT
Review
42. Within five years after the day on which this section comes into force, the Minister must cause a review of this Act and its administration and operation to be conducted, and cause a report on the review to be laid before each House of Parliament on any of the first 15 days on which that House is sitting after the review is completed.
AMENDMENTS TO THE BANKRUPTCY AND INSOLVENCY ACT
2. (1) The definition “settlement” in section 2 of the Bankruptcy and Insolvency Act is repealed.
(2) The definition “localité d’un débiteur” in section 2 of the French version of the Act is repealed.
(3) The definitions “court”, “creditor”, and “person” in section 2 of the Act are replaced by the following:
“court”« tribunal »
“court”, except in paragraphs 178(1)(a) and (a.1) and sections 204.1 to 204.3 , means a court referred to in subsections 183(1) and (1.1) or a judge of that court, and includes a registrar when exercising the powers of the court conferred on a registrar under this Act;
“creditor”« créancier »
“creditor” means a person having a claim provable as a claim under this Act;
“person”« personne »
“person” includes a partnership, an unincorporated association, a corporation, a cooperative society, an organization or an income trust, the successors of a partnership, of an association, of a corporation, of a society, of an organization or of an income trust, and the heirs, executors, liquidators of the succession, administrators or other legal representative of a person;
(4) The definition “locality of a debtor” in section 2 of the English version of the Act is replaced by the following:
“locality of a debtor”« localité »
“locality of a debtor” means the principal place
(a) where the debtor has carried on business during the year immediately preceding the date of the initial bankruptcy event,
(b) where the debtor has resided during the year immediately preceding the date of the initial bankruptcy event, or
(c) in cases not coming within paragraph (a) or (b), where the greater portion of the property of the debtor is situated;
(5) Section 2 of the Act is amended by adding the following in alphabetical order:
“bargaining agent”« agent négociateur »
“bargaining agent” means any trade union that has entered into a collective agreement on behalf of the employees of a person;
“collective agreement”« convention collective »
“collective agreement”, in relation to an insolvent person, means a collective agreement within the meaning of the jurisdiction governing collective bargaining between the insolvent person and a bargaining agent;
“current assets”« actif à court terme »
“current assets” means unrestricted cash, or any other asset that, in the normal course of operations, is expected to be converted into cash or consumed in the production of income within one year or within the normal operating cycle when it is longer than a year;
“date of the bankruptcy”« date de la faillite »
“date of the bankruptcy”, in respect of a person, means the date of
(a) the granting of a bankruptcy order against the person,
(b) the filing or making of an assignment by or in respect of the person, or
(c) the event that causes an assignment by the person to be deemed;
“director”« administra- teur »
“director” includes any individual, however designated, acting in any capacity that is similar to that of a director of a corporation;
“income trust”« fiducie de revenu »
“income trust” means a trust
(a) that has assets in Canada, and
(b) the units of which are traded on a prescribed stock exchange;
“time of the bankruptcy”« moment de la faillite »
“time of the bankruptcy”, in respect of a person, means the time of
(a) the granting of a bankruptcy order against the person,
(b) the filing of an assignment by or in respect of the person, or
(c) the event that causes an assignment by the person to be deemed;
“transfer at undervalue”« opération sous-évaluée »
“transfer at undervalue” means a transaction in which the consideration received by a person is conspicuously less than the fair market value of the property or services sold or disposed of by the person in the transaction;
(6) Section 2 of the French version of the Act is amended by adding the following in alphabetical order:
« localité »“locality of a debtor”
« localité » En parlant d’un débiteur, le lieu principal où, selon le cas :
a) il a exercé ses activités au cours de l’année précédant l’ouverture de sa faillite;
b) il a résidé au cours de l’année précédant l’ouverture de sa faillite;
c) se trouve la plus grande partie de ses biens, dans les cas non visés aux alinéas a) ou b).
3. Section 2.1 of the Act is replaced by the following:
Designation of beneficiary
2.1 A change in the designation of a beneficiary in an insurance contract is deemed to be a disposition of property for the purpose of this Act.
4. Section 3 of the Act is repealed.
5. (1) Subsection 4(1) of the Act is amended by adding the following in alphabetical order:
“entity”« entité »
“entity” means a person other than an individ-ual;
(2) Paragraphs 4(2)(b) and (c) of the Act are replaced by the following:
(b) an entity and
(i) a person who controls the entity, if it is controlled by one person,
(ii) a person who is a member of a related group that controls the entity, or
(iii) any person connected in the manner set out in paragraph (a) to a person described in subparagraph (i) or (ii); or
(c) two entities
(i) both controlled by the same person or group of persons,
(ii) each of which is controlled by one person and the person who controls one of the entities is related to the person who controls the other entity,
(iii) one of which is controlled by one person and that person is related to any member of a related group that controls the other entity,
(iv) one of which is controlled by one person and that person is related to each member of an unrelated group that controls the other entity,
(v) one of which is controlled by a related group a member of which is related to each member of an unrelated group that controls the other entity, or
(vi) one of which is controlled by an unrelated group each member of which is related to at least one member of an unrelated group that controls the other entity.
(3) Paragraphs 4(3)(a) to (d) of the Act are replaced by the following:
(a) if two entities are related to the same entity within the meaning of subsection (2), they are deemed to be related to each other;
(b) if a related group is in a position to control an entity, it is deemed to be a related group that controls the entity whether or not it is part of a larger group by whom the entity is in fact controlled;
(c) a person who has a right under a contract, in equity or otherwise, either immediately or in the future and either absolutely or contingently, to, or to acquire, ownership interests, however designated, in an entity, or to control the voting rights in an entity, is, except when the contract provides that the right is not exercisable until the death of an individual designated in the contract, deemed to have the same position in relation to the control of the entity as if the person owned the ownership interests;
(d) if a person has ownership interests in two or more entities, the person is, as holder of any ownership interest in one of the entities, deemed to be related to himself or herself as holder of any ownership interest in each of the other entities;
(4) Section 4 of the Act is amended by adding the following after subsection (3):
Question of fact
(4) It is a question of fact whether persons not related to one another were at a particular time dealing with each other at arm’s length.
Presumption
(5) Persons related to each other are deemed not to deal with each other at arm’s length while so related.
6. (1) Subsection 5(1) of the Act is replaced by the following:
Appointment
5. (1) The Governor in Council shall appoint a Superintendent of Bankruptcy to hold office during good behaviour for a term of not more than five years, but the Superintendent may be removed from office by the Governor in Council for cause. The Superintendent’s term may be renewed for one or more further terms.
Salary
(1.1) The Superintendent shall be paid the salary that the Governor in Council may fix.
(2) Subsection 5(3) of the Act is amended by adding the following after paragraph (a):
(b) monitor the conditions that led to a trustee being issued a licence to determine whether those conditions continue to exist after the licence has been issued and take the appropriate action if he or she determines that the conditions no longer exist;
(3) Paragraph 5(3)(e) of the Act is replaced by the following:
(e) from time to time, make or cause to be made any inquiry or investigation of estates or other matters to which this Act applies, including the conduct of a trustee or a trustee acting as a receiver, within the meaning of subsection 243(2), or as an interim receiver, that the Superintendent considers appropriate, and for the purpose of the inquiry or investigation the Superintendent or any person appointed by the Superintendent for the purpose shall have access to and the right to examine and make copies of all books, records, data, including data in electronic form, documents and papers, that are relevant to an inquiry or investigation pertaining or relating to any estate or other matter to which this Act applies;
(4) Subsection 5(4) of the Act is amended by striking out the word “and” at the end of paragraph (d) and by adding the following after paragraph (d):
(d.1) issue directives respecting the rules governing hearings for the purposes of section 14.02; and
7. Subsection 6(1) of the English version of the Act is replaced by the following:
Outside investigations
6. (1) The Superintendent may engage any persons that the Superintendent considers advisable to conduct any inquiry or investigation or to take any other necessary action outside of the office of the Superintendent, and the cost and expenses of those persons shall, when certified by the Superintendent, be payable out of the appropriation for the office of the Superintendent.
8. (1) Subsection 10(1) of the Act is replaced by the following:
Investigations or inquiries by Superintendent
10. (1) If, on information supplied by an official receiver, trustee or other person, the Superintendent suspects, on reasonable grounds, that a person has, in connection with any estate or matter to which this Act applies, committed an offence under this or any other Act of Parliament, the Superintendent may, if it appears to the Superintendent that the alleged offence might not otherwise be investigated, make or cause to be made any inquiries or investigations that the Superintendent considers appropriate.
(2) Subsection 10(3) of the Act is replaced by the following:
Examination
(3) If, on the application of the Superintendent or the Superintendent’s authorized representative, a subpoena has been issued by the court, the Superintendent may, for the purpose of an inquiry or investigation under subsection (1), examine or cause to be examined under oath before the registrar of the court or other authorized person, the trustee, the debtor, any person who the Superintendent suspects, on reasonable grounds, has knowledge of the affairs of the debtor, or any person who is or has been an agent or a mandatary, or a clerk, a servant, an officer, a director or an employee of the debtor or the trustee, with respect to the conduct, dealings and transactions of the debtor, the causes of the bankruptcy or insolvency of the debtor, the disposition of the debtor’s property or the administration of the estate, and may order any person liable to be so examined to produce any books, records, data, including data in electronic form, documents or papers in the person’s possession or under the person’s control.
9. Subsection 13(3) of the Act is replaced by the following:
Non-eligibility
(3) The Superintendent may refuse to issue a licence to an applicant who is insolvent or has been found guilty of an indictable offence that, in the Superintendent’s opinion, is of a character that would impair the trustee’s capacity to perform his or her fiduciary duties.
10. Paragraph 13.2(5)(a) of the Act is replaced by the following:
(a) if the trustee has been found guilty of an indictable offence that, in the Superintend­ent’s opinion, is of a character that would impair the trustee’s capacity to perform his or her fiduciary duties;
11. (1) Section 13.3 of the Act is amended by adding the following after subsection (1):
Copy of application to Superintendent
(1.1) A trustee who applies for the permission of the court for the purposes of subsection (1) shall without delay send a copy of the application to the Superintendent.
(2) Paragraph 13.3(2)(b) of the Act is replaced by the following:
(b) the receiver, within the meaning of subsection 243(2), or the liquidator of the property of any person related to the debtor,
12. Subsection 13.4(1) of the Act is replaced by the following:
Trustee may act for secured creditor on certain conditions
13.4 (1) No trustee shall, while acting as the trustee of an estate, act for or assist a secured creditor of the estate to assert any claim against the estate or to realize or otherwise deal with the security that the secured creditor holds, unless the trustee has obtained a written opinion of legal counsel who has not acted for the secured creditor in the previous two years and is not related to the trustee that the security is valid and enforceable as against the estate.
13. Sections 13.5 and 13.6 of the Act are replaced by the following:
Code of Ethics
13.5 A trustee shall comply with the prescribed Code of Ethics.
Persons disqualified from working for trustee
13.6 A trustee shall not engage the services of a person
(a) whose trustee licence has been cancelled under paragraph 13.2(5)(a) or subsection 14.01(1); or
(b) who is the subject of a direction made by the Superintendent under paragraph 14.03(1)(d).
14. Subsection 14.01(1) of the Act is amended by striking out the word “and” at the end of paragraph (e), by adding the word “and” at the end of paragraph (f) and by adding the following after paragraph (f):
(g) require the trustee to do anything that the Superintendent considers appropriate and that the trustee has agreed to.
15. Subsection 14.02(1) of the Act is replaced by the following:
Notice to trustee
14.02 (1) Before deciding whether to exercise any of the powers referred to in subsection 14.01(1), the Superintendent shall send the trustee written notice of the powers that the Superintendent may exercise and the reasons why they may be exercised and afford the trustee a reasonable opportunity for a hearing.
Subpoena or summons
(1.1) The Superintendent may, for the purpose of the hearing, issue a subpoena or other request or summons, requiring and commanding any person named in it
(a) to appear at the time and place mentioned in it;
(b) to testify to all matters within his or her knowledge relative to the subject-matter of the investigation into the conduct of the trustee; and
(c) to bring and produce any books, records, data, including data in electronic form, documents or papers in the person’s possession or under the person’s control relative to the subject-matter of the investigation.
Effect throughout Canada
(1.2) A person may be summoned from any part of Canada by virtue of a subpoena, request or summons issued under subsection (1.1).
Fees and allowances
(1.3) Any person summoned under subsection (1.1) is entitled to receive the like fees and allowances for so doing as if summoned to attend before the Federal Court.
16. (1) The portion of subsection 14.03(1) of the Act before paragraph (a) is replaced by the following:
Conservatory measures
14.03 (1) Subject to subsection (2), the Superintendent may, for the protection of an estate, the rights of the creditors or the debtor,
(2) Paragraph 14.03(2)(b) of the Act is replaced by the following:
(b) the Superintendent makes or causes to be made any inquiry or investigation under paragraph 5(3)(e);
(3) Paragraph 14.03(2)(f) of the Act is replaced by the following:
(f) a trustee has been found guilty of an indictable offence that, in the Superintend­ent’s opinion, is of a character that would impair the trustee’s capacity to perform the trustee’s fiduciary duties, or has failed to comply with any of the conditions or limitations to which the trustee’s licence is subject; or
17. Subsections 14.06(1.1) and (1.2) of the Act are replaced by the following:
Application
(1.1) In subsections (1.2) to (6), a reference to a trustee means a trustee in a bankruptcy or proposal and includes
(a) an interim receiver;
(b) a receiver within the meaning of subsection 243(2); and
(c) any other person who has been lawfully appointed to take, or has lawfully taken, possession or control of any property of an insolvent person or a bankrupt that was acquired for, or is used in relation to, a business carried on by the insolvent person or bankrupt.
Non-liability in respect of certain matters
(1.2) Despite anything in any federal or provincial law, if a trustee carries on in that position the business of the debtor or continues the employment of the debtor’s employees, the trustee is not by reason of that fact personally liable in respect of any claim against the debtor or related to a requirement imposed on the debtor to pay an amount if the claim is in relation to a debt or liability, present or future, to which the debtor is subject on the day on which the trustee is appointed.
18. Subsection 19(3) of the Act is repealed.
19. Section 21 of the Act is replaced by the following:
Verifying bankrupt’s statement of affairs
21. The trustee shall verify the bankrupt’s statement of affairs referred to in paragraph 158(d).
20. (1) Subsection 25(1) of the Act is replaced by the following:
Trust account
25. (1) When acting under the authority of this Act, a trustee shall, without delay, deposit in a bank all funds received for an estate in a separate trust account for each estate.
(2) Subsections 25(1.1) to (1.3) of the English version of the Act are replaced by the following:
Other deposit-taking institutions must be insured
(1.1) The trustee may deposit the funds in a deposit-taking institution, other than a bank as defined in section 2, only if deposits held by that institution are insured or guaranteed under a provincial or federal enactment that provides depositors with protection against the loss of funds on deposit with that institution.
Foreign funds
(1.2) If the funds are situated in a country other than Canada, the trustee may, if authorized by the Superintendent, deposit them in a financial institution in that country that is similar to a bank.
Permission needed for certain acts
(1.3) The trustee shall not withdraw any funds from the trust account of an estate without the permission in writing of the inspectors or, on application, the court, except for the payment of dividends and charges incidental to the administration of the estate.
(3) Section 25 of the Act is amended by adding the following after subsection (1.3):
Investments in government securities
(1.4) A trustee may, with the permission of the court, invest the funds in short-term securities of the Government of Canada or the government of a province held in trust for the estate.
(4) Subsection 25(3) of the Act is replaced by the following:
Not in private account
(3) The trustee shall not deposit any funds received by the trustee when acting under the authority of this Act in any banking account kept by the trustee for the trustee’s personal use.
21. The portion of subsection 28(1) of the Act before paragraph (a) is replaced by the following:
Documents to be forwarded to Superintendent
28. (1) The trustee shall, without delay after their receipt or preparation, send to the Superintendent, in the prescribed manner, true copies of the documents referred to in section 155 and a true copy of
22. Subsection 29(2) of the Act is repealed.
23. Section 30 of the Act is amended by adding the following after subsection (2):
If no inspectors
(3) If no inspectors are appointed, the trustee may do all or any of the things referred to in subsection (1).
Sale or disposal to related persons
(4) The trustee may sell or otherwise dispose of any of the bankrupt’s property to a person who is related to the bankrupt only with the court’s authorization.
Related persons
(5) For the purpose of subsection (4), in the case of a bankrupt other than an individual, a person who is related to the bankrupt includes a person who controls the bankrupt, a director or an officer of the bankrupt and a person who is related to a director or an officer of the bankrupt.
Factors to be considered
(6) In deciding whether to grant the authorization, the court must consider, among other things,
(a) whether the process leading to the proposed sale or disposal of the property was reasonable in the circumstances;
(b) the extent to which the creditors were consulted in respect of the proposed sale or disposal;
(c) the effects of the proposed sale or disposal on creditors and other interested parties;
(d) whether the consideration to be received for the property is reasonable and fair, taking into account the market value of the property;
(e) whether good faith efforts were made to sell or dispose of the property to persons who are not related to the bankrupt; and
(f) whether the consideration to be received is superior to the consideration that would be received under all other offers actually received in respect of the property.
24. Subsections 31(1) and (2) of the Act are replaced by the following:
Borrowing powers with permission of court
31. (1) With the permission of the court, an interim receiver, a receiver within the meaning of subsection 243(2) or a trustee may make necessary or advisable advances, incur obligations, borrow money and give security on the debtor’s property in any amount, on any terms and on any property that may be authorized by the court and those advances, obligations and money borrowed must be repaid out of the debtor’s property in priority to the creditors’ claims.
Security under Bank Act
(2) For the purpose of giving security under section 427 of the Bank Act, the interim receiver, receiver or trustee, when carrying on the business of the bankrupt, is deemed to be a person engaged in the class of business previously carried on by the bankrupt.
25. Section 33 of the Act is replaced by the following:
Reimbursement only of trustee’s disbursement advances
33. The court may make an order providing for the sale of any or all of the assets of the estate of the bankrupt, either by tender, private sale or public auction, setting out the terms and conditions of the sale and directing that the proceeds from the sale are to be used for the purpose of reimbursing the trustee in respect of any costs that may be owing to the trustee or of any moneys the trustee may have advanced as disbursements for the benefit of the estate.
26. Section 34 of the Act is amended by adding the following after subsection (2):
Notice to Superintendent’s division office
(3) The trustee must send notice to the Superintendent’s division office of the day and time when any application for directions made under subsection (1) is to be heard and of the day and time when the trustee intends to report to the court as required by the Superintendent under subsection (2).
27. Subsection 35(3) of the Act is replaced by the following:
Time limitation
(3) If a bankrupt is an individual, a notice referred to in subsection (1) is operative only during the three-month period immediately after the date of the bankruptcy unless the court, on application, extends that period on any terms that it considers fit.
28. Subsection 36(1) of the Act is replaced by the following:
Duty of former trustee on substitution
36. (1) On the appointment of a substituted trustee, the former trustee shall without delay pass his or her accounts before the court and deliver to the substituted trustee all the property of the estate, together with all books, records and documents of the bankrupt and of the administration of the estate, as well as a statement of receipts and disbursements that contains a complete account of all moneys received by the trustee out of the property of the bankrupt or otherwise, the amount of interest received by the trustee, all moneys disbursed and expenses incurred and the remuneration claimed by the trustee, together with full particulars, description and value of all the bankrupt’s property that has not been sold or realized, setting out the reason why the property has not been sold or realized and the disposition made of the property.
29. Subsection 40(1) of the Act is replaced by the following:
Disposal of unrealizable property
40. (1) Any property of a bankrupt that is listed in the statement of affairs referred to in paragraph 158(d) or otherwise disclosed to the trustee before the bankrupt’s discharge and that is found incapable of realization must be returned to the bankrupt before the trustee’s application for discharge, but if inspectors have been appointed, the trustee may do so only with their permission.
30. (1) Subsection 47(1) of the Act is replaced by the following:
Appointment of interim receiver
47. (1) If the court is satisfied that a notice is about to be sent or has been sent under subsection 244(1), it may, subject to subsection (3), appoint a trustee as interim receiver of all or any part of the debtor’s property that is subject to the security to which the notice relates until the earliest of
(a) the appointment of a receiver within the meaning of subsection 243(2) in respect of any of the debtor’s property,
(b) the filing of or making of an assignment by or in respect of the debtor,
(c) the granting of a bankruptcy order against the debtor,
(d) the filing of or making of a proposal by or in respect of the debtor,
(e) the filing of a notice of intention by the debtor, and
(f) the expiry of 60 days after the appointment, or any period specified by the court.
(2) Subsection 47(2) of the Act is amended by adding the word “and” at the end of paragraph (a), by striking out the word “and” at the end of paragraph (b) and by repealing paragraph (c).
31. (1) The portion of subsection 47.1(1) of the Act before paragraph (a) is replaced by the following:
Appointment of interim receiver
47.1 (1) If a notice of intention has been filed under section 50.4 or a proposal has been filed under subsection 62(1), the court may at any time after the filing, subject to subsection (3), appoint as interim receiver of all or any part of the debtor’s property,
(2) Section 47.1 of the Act is amended by adding the following after subsection (1):
Duration of appointment
(1.1) The appointment expires on the earliest of
(a) the appointment of a receiver within the meaning of subsection 243(2) in respect of any of the debtor’s property,
(b) the filing of or making of an assignment by or in respect of the debtor,
(c) the event that causes an assignment by the debtor to be deemed,
(d) the granting of a bankruptcy order against the debtor, and
(e) the day on which the court approves the proposal.
(3) Subsection 47.1(2) of the Act is amended by adding the word “and” at the end of paragraph (b), by striking out the word “and” at the end of paragraph (c) and by repealing paragraph (d).
32. Paragraph 47.2(3)(a) of the Act is replaced by the following:
(a) the form and content of their accounts, including their final statement of receipts and disbursements,
33. Subsection 49(2) of the Act is replaced by the following:
Sworn statement
(2) The assignment must be accompanied by a sworn statement in the prescribed form showing the debtor’s property that is divisible among his or her creditors, the names and addresses of all his or her creditors and the amounts of their respective claims.
34. (1) Subsection 50(2) of the Act is replaced by the following:
Documents to be filed
(2) Subject to section 50.4, proceedings for a proposal shall be commenced, in the case of an insolvent person, by filing with a licensed trustee, and in the case of a bankrupt, by filing with the trustee of the estate,
(a) a copy of the proposal in writing setting out the terms of the proposal and the particulars of any securities or sureties proposed, signed by the person making the proposal and the proposed sureties if any; and
(b) the prescribed statement of affairs.
Filing of documents with the official receiver
(2.1) Copies of the documents referred to in subsection (2) must, at the time the proposal is filed under subsection 62(1), also be filed by the trustee with the official receiver in the locality of the debtor.
(2) Paragraph 50(6)(a) of the Act is replaced by the following:
(a) a statement indicating, on a weekly basis, the projected cash-flow of the insolvent person (in this section referred to as the “cash-flow statement”), or a revised cash-flow statement if a cash-flow statement had previously been filed under subsection 50.4(2) in respect of that insolvent person, prepared by the person making the proposal, reviewed for its reasonableness by the trustee and signed by the trustee and the person making the proposal;
(3) Subsection 50(10) of the Act is amended by striking out the word “and” at the end of paragraph (a) and by adding the following after paragraph (a):
(a.1) send a report about the material adverse change to the creditors without delay after ascertaining the change; and
(4) Section 50 of the Act is amended by adding the following after subsection (12):
Effect of declaration
(12.1) If the court declares that the proposal is deemed to have been refused by the creditors, paragraphs 57(a) to (c) apply.
35. (1) The portion of subsection 50.4(1) of the English version of the Act before paragraph (a) is replaced by the following:
Notice of intention
50.4 (1) Before filing a copy of a proposal with a licensed trustee, an insolvent person may file a notice of intention, in the prescribed form, with the official receiver in the insolvent person’s locality, stating
(2) Paragraph 50.4(2)(a) of the Act is replaced by the following:
(a) a statement indicating, on a weekly basis, the projected cash-flow of the insolvent person (in this section referred to as the “cash-flow statement”), prepared by the insolvent person, reviewed for its reasonableness by the trustee under the notice of intention, and signed by the trustee and the insolvent person;
(3) Subsection 50.4(6) of the Act is replaced by the following:
Trustee to notify creditors
(6) Within five days after the filing of a notice of intention under subsection (1), the trustee named in the notice shall send to every known creditor, in the prescribed manner, a copy of the notice including all of the information referred to in paragraphs (1) (a) to (c).
(4) Subsection 50.4(7) of the Act is amended by striking out the word “and” at the end of paragraph (a), by adding the word “and” at the end of paragraph (b) and by adding the following after paragraph (b):
(c) shall send a report about the material adverse change to the creditors without delay after ascertaining the change.
(5) Paragraph 50.4(8)(b) of the Act is replaced by the following:
(b) the trustee shall, without delay, file with the official receiver, in the prescribed form, a report of the deemed assignment;
(b.1) the official receiver shall 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; and
(6) The portion of subsection 50.4(9) of the Act before paragraph (a) is replaced by the following:
Extension of time for filing proposal
(9) The insolvent person may, before the expiry of the 30-day period referred to in subsection (8) or of any extension granted under this subsection, apply to the court for an extension, or further extension, as the case may be, of that period, and the court, on notice to any interested persons that the court may direct, may grant the extensions, not exceeding 45 days for any individual extension and not exceeding in the aggregate five months after the expiry of the 30-day period referred to in subsection (8), if satisfied on each application that
36. The Act is amended by adding the following after section 50.5:
Interim financing
50.6 (1) A court may, on the application of a debtor, other than an individual, in respect of whom a notice of intention has been filed under section 50.4 or a proposal has been filed under subsection 62(1), make an order, on any conditions that the court considers appropriate, declaring that the debtor’s property is subject to a security or charge in favour of any person specified in the order who agrees to lend to the debtor an amount that is approved by the court as being required by the debtor, having regard to the debtor’s cash-flow statement referred to in paragraph 50(6)(a) or 50.4(2)(a), as the case may be,
(a) for the period of 30 days after the filing of the notice of intention;
(b) for the period of 30 days after the filing of the proposal, if no notice of intention has been filed under section 50.4 in respect of the debtor; or
(c) for any period specified in the order, if notice of the application has been given to the secured creditors likely to be affected by the security or charge.
Rank
(2) The court may specify in the order that the security or charge ranks in priority over the claim of any secured creditor of the debtor.
Other orders
(3) The court may, in the order, specify that the security or charge ranks in priority over any security or charge arising from a previous order made under subsection (1) only with the consent of the person in whose favour the previous order was made.
Factors to be considered
(4) In deciding whether to make the order, the court must consider, among other things,
(a) the period the debtor is expected to be subject to proceedings under this Act;
(b) how the debtor’s business and financial affairs are to be governed during the proceedings;
(c) whether the debtor’s management has the confidence of its major creditors;
(d) whether the loan agreement will enhance the debtor’s prospects as a going concern if the proposal is approved;
(e) the nature and value of the debtor’s property;
(f) whether any creditor will be materially prejudiced as a result of the debtor’s continued operations; and
(g) if notice of the application was given to the secured creditors, whether the debtor has provided a cash-flow statement for the period ending 120 days after the making of the application for the order.
37. (1) Subparagraph 54(2)(a)(i) of the Act is replaced by the following:
(i) all unsecured creditors, other than a creditor having a claim against the debtor arising from the rescission of a purchase or sale of a share or unit of the debtor — or a claim for damages arising from the purchase or sale of a share or unit of the debtor, and
(2) Section 54 of the Act is amended by adding the following after subsection (4):
Limitation regarding vote on a proposal
(5) Unless the court orders otherwise, a vote on a proposal may not be held until all disallowances of claims that could have an impact on the outcome of the vote have been dealt with by the court or until all appeal periods have elapsed.
Claims acquired after filing of notice of intention or proposal
(6) No person is entitled to vote on a claim acquired after the filing of a notice of intention in respect of a debtor or, if no such notice was filed, after the filing of a proposal in respect of the debtor, unless the entire claim is acquired.
38. Paragraph 57(b) of the Act is replaced by the following:
(b) the trustee shall, without delay, file with the official receiver, in the prescribed form, a report of the deemed assignment;
(b.1) the official receiver shall 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; and
39. (1) Paragraph 60(1.3)(a) of the Act is replaced by the following:
(a) it provides for payment to the employees and former employees, immediately after court approval of the proposal, of amounts at least equal to the amounts that they would be qualified to receive under paragraph 136(1)(d) if the employer became bankrupt on the date of the filing of the notice of intention, or proposal if no notice of intention was filed, as well as wages, salaries, commissions or compensation for services rendered after that date and before the court approval of the proposal, together with, in the case of travelling salespersons, disbursements properly incurred by them in and about the bankrupt’s business during the same period; and
(2) Section 60 of the Act is amended by adding the following after subsection (1.4):
Proposals by employers — prescribed pension plans
(1.5) No proposal in respect of an employer who participates in a prescribed pension plan for the benefit of its employees shall be approved by the court unless
(a) the proposal provides for payment of the following amounts that are unpaid to the fund established for the purpose of the pension plan:
(i) an amount equal to the sum of all amounts that were deducted from the employees’ remuneration for payment to the fund,
(ii) if the prescribed pension plan is regulated by an Act of Parliament,
(A) an amount equal to the normal cost, within the meaning of subsection 2(1) of the Pension Benefits Standards Regulations, 1985, that was required to be paid by the employer to the fund, and
(B) an amount equal to the sum of all amounts that were required to be paid by the employer to the fund under a defined contribution provision, within the meaning of subsection 2(1) of the Pension Benefits Standards Act, 1985; and
(iii) in the case of any other prescribed pension plan,
(A) an amount equal to the amount that would be the normal cost, within the meaning of subsection 2(1) of the Pension Benefits Standards Regulations, 1985, that the employer would be required to pay to the fund if the prescribed plan were regulated by an Act of Parliament, and
(B) an amount equal to the sum of all amounts that would have been required to be paid by the employer to the fund under a defined contribution provision, within the meaning of subsection 2(1) of the Pension Benefits Standards Act, 1985, if the prescribed plan were regulated by an Act of Parliament; and
(b) the court is satisfied that the employer can and will make the payments as required under paragraph (a).
Non-application of subsection (1.5)
(1.6) Despite subsection (1.5), the court may approve a proposal that does not allow for the payment of the amounts referred to in that subsection if it is satisfied that the relevant parties have entered into an agreement, approved by the relevant pension regulator, respecting the payment of those amounts.
40. Paragraph 61(2)(b) of the Act is replaced by the following:
(b) the trustee shall, without delay, file with the official receiver, in the prescribed form, a report of the deemed assignment;
(b.1) the official receiver shall 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; and
41. (1) Subsection 62(1) of the Act is replaced by the following:
Filing of proposal
62. (1) If a proposal is made in respect of an insolvent person, the trustee shall file with the official receiver a copy of the proposal and the prescribed statement of affairs.
(2) Subsection 62(2) of the Act is replaced by the following:
On whom approval binding
(2) Subject to subsection (2.1), a proposal accepted by the creditors and approved by the court is binding on creditors in respect of
(a) all unsecured claims; and
(b) the secured claims in respect of which the proposal was made and that were in classes in which the secured creditors voted for the acceptance of the proposal by a majority in number and two thirds in value of the secured creditors present, or represented by a proxyholder, at the meeting and voting on the resolution to accept the proposal.
When insolvent person is released from debt
(2.1) A proposal accepted by the creditors and approved by the court does not release the insolvent person from any particular debt or liability referred to in subsection 178(1) unless the proposal explicitly provides for the compromise of that debt or liability and the creditor in relation to that debt or liability has assented to the proposal.
42. The Act is amended by adding the following after section 63:
Removal of directors
64. (1) The court may, on the application of any person interested in the matter, make an order removing from office any director of a debtor in respect of whom a notice of intention has been filed under section 50.4 or a proposal has been filed under subsection 62(1) if the court is satisfied that the director is unreasonably impairing or is likely to unreasonably impair the possibility of a viable proposal being made in respect of the debtor or is acting or is likely to act inappropriately as a director in the circumstances.
Filling vacancy
(2) The court may, by order, fill any vacancy created under subsection (1).
Security or charge relating to director’s indemnification
64.1 (1) The court may, on the application of a person in respect of whom a notice of intention has been filed under section 50.4 or a proposal has been filed under subsection 62(1), make an order declaring that the assets of the person are subject to a security or charge, in an amount that the court considers appropriate, in favour of any director or officer of the person to indemnify the director or officer against obligations and liabilities that he or she may incur as a director or an officer of the person after the filing of the notice of intention or the proposal, as the case may be.
Rank
(2) The court may specify in the order that the security or charge ranks in priority over the claim of any secured creditor of the person.
Restriction — indemnification insurance
(3) The court shall not make the order if in its opinion the person could obtain adequate indemnification insurance for the director or officer at a reasonable cost.
Declaration in cases of gross negligence, etc.
(4) The court shall make an order declaring that the security or charge does not apply in respect of a specific obligation or liability incurred by a director or an officer if it is of the opinion that the obligation or liability was incurred as a result of the director’s or officer’s gross negligence or wilful misconduct or, in the Province of Quebec, the director’s gross or intentional fault.
Court may order security or charge to cover certain costs
64.2 (1) The court may make an order declaring that property of a person, other than an individual, in respect of whom a notice of intention has been filed under section 50.4 or a proposal has been filed under subsection 62(1) is subject to a security or charge, in an amount that the court considers appropriate, in respect of
(a) the costs of the interim receiver, the receiver-manager and the trustee, including their legal costs;
(b) the person’s costs incurred in relation to the remuneration and expenses of any financial, legal or other experts engaged by the person for the purpose of any proceedings under this Division; and
(c) the costs of any interested party incurred in relation to the remuneration and expenses of any financial, legal or other experts engaged by the party, if the court is satisfied that the incurring of those costs is necessary for the effective participation of the interested party in the proceedings under this Division in relation to the person.
Rank
(2) The court may specify in the order that the security or charge ranks in priority over the claim of any secured creditor of the person.
43. (1) The portion of subsection 65.1(1) of the Act before paragraph (a) is replaced by the following:
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
(2) Subsection 65.1(4) of the Act is amended by striking out the word “or” at the end of paragraph (a), by adding the word “or” at the end of paragraph (b) and by adding the following after paragraph (b):
(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.
44. The Act is amended by adding the following after section 65.1:
Disclaimer or resiliation of agreements
65.11 (1) A debtor, other than an individual, in respect of whom a notice of intention has been filed under section 50.4 or a proposal has been filed under subsection 62(1) may, subject to subsection (3), disclaim or resiliate any agreement to which the debtor is a party on the date the notice of intention or the proposal was filed by giving 30 days notice to the other parties to the agreement in the prescribed manner.
Exceptions
(2) Subsection (1) does not apply in respect of
(a) an eligible financial contract within the meaning of subsection 65.1(8);
(b) a lease referred to in subsection 65.2(1);
(c) a collective agreement;
(d) a financing agreement if the debtor is the borrower; and
(e) a lease of real property or an immovable if the debtor is the lessor.
Party may challenge
(3) Within 15 days after being given notice of the disclaimer or resiliation, a party to the agreement may apply to the court for a declaration that subsection (1) does not apply in respect of the agreement, and the court, on notice to any parties that it may direct, shall, subject to subsection (4), make that declaration.
Circumstances for not making declaration
(4) No declaration under subsection (3) shall be made if the court is satisfied that a viable proposal could not be made in respect of the debtor without the disclaimer or resiliation of the agreement and all other agreements that the debtor has disclaimed or resiliated under subsection (1) or 65.2(1).
Intellectual property
(5) If the debtor has, in any agreement, granted the use of any intellectual property to a party to the agreement, the disclaimer or resiliation of the agreement does not affect the party’s right to use the intellectual property so long as that party continues to perform its obligations in relation to the use of the intellectual property.
Deemed claim of other party
(6) If an agreement is disclaimed or resil­iated, every other party to the agreement is deemed to have a claim for damages as an unsecured creditor.
Application for authorization to serve a notice to bargain
65.12 (1) An insolvent person in respect of whom a notice of intention is filed under section 50.4 or a proposal is filed under subsection 62(1) who is a party to a collective agreement and who is unable to reach a voluntary agreement with the bargaining agent to revise any of its provisions may, on giving five days notice to the bargaining agent, apply to the court for an order authorizing the insolvent person to serve a notice to bargain under the laws of the jurisdiction governing collective bargaining between the insolvent person and the bargaining agent.
Conditions for issuance of order
(2) The court may issue the order only if it is satisfied that
(a) the insolvent person would not be able to make a viable proposal, taking into account the terms of the collective agreement;
(b) the insolvent person has made good faith efforts to renegotiate the provisions of the collective agreement; and
(c) the failure to issue the order is likely to result in irreparable damage to the insolvent person.
No delay on vote on proposal
(3) The vote of the creditors in respect of a proposal may not be delayed solely because the period provided in the laws of the jurisdiction governing collective bargaining between the insolvent person and the bargaining agent has not expired.
Claims arising from revision of collective agreement
(4) If the parties to the collective agreement agree to revise the collective agreement after proceedings have been commenced under this Act in respect of the insolvent person, the bargaining agent that is a party to the agreement has a claim, as an unsecured creditor, for an amount equal to the value of concessions granted by the bargaining agent with respect to the remaining term of the collective agreement.
Order to disclose information
(5) On the application of the bargaining agent and on notice to the person to whom the application relates, the court may, subject to any terms and conditions it specifies, make an order requiring the person to make available to the bargaining agent any information specified by the court in the person’s possession or control that relates to the insolvent person’s business or financial affairs and that is relevant to the collective bargaining between the insolvent person and the bargaining agent. The court may make the order only after the insolvent person has been authorized to serve a notice to bargain under subsection (1).
Unrevised collective agreements remain in force
(6) For greater certainty, any collective agreement that the insolvent person and the bargaining agent have not agreed to revise remains in force.
Parties
(7) For the purpose of this section, the parties to a collective agreement are the insolvent person and the bargaining agent who are bound by the collective agreement.
Restriction on disposal of certain assets
65.13 (1) An insolvent person, other than an individual, in respect of whom a notice of intention is filed under section 50.4 or a proposal is filed under subsection 62(1) may not sell or otherwise dispose of assets outside the ordinary course of business unless authorized to do so by a court.
Notice to secured creditors
(2) An insolvent person who applies to the court for the authorization must give notice of the application to all secured creditors who are likely to be affected by the proposed sale or disposal of the assets to which the application relates.
Factors to be considered
(3) In deciding whether to grant the authorization, the court must consider, among other things,
(a) whether the process leading to the proposed sale or disposal of the assets was reasonable in the circumstances;
(b) whether the trustee approved the process leading to the proposed sale or disposal of the assets;
(c) whether the trustee has filed with the court a report stating that in his or her opinion the sale or disposal of the assets is necessary for a viable proposal that will provide a better result for creditors than if the assets were sold or disposed of under a bankruptcy;
(d) the extent to which the creditors were consulted in respect of the proposed sale or disposal;
(e) the effects of the proposed sale or disposal on creditors and other interested parties; and
(f) whether the consideration to be received for the assets is reasonable and fair, taking into account the market value of the assets.
Additional factors
(4) In addition to taking the factors referred to in subsection (3) into account, if the proposed sale or disposal is to a person who is related to the insolvent person, the court may grant the authorization only if it is satisfied that
(a) good faith efforts were made to sell or dispose of the assets to persons who are not related to the person proposing to sell or dispose of them; and
(b) the consideration to be received is supe­rior to the consideration that would be received under all other offers actually received in respect of the assets.
Related persons
(5) For the purpose of subsection (4), a person who is related to the insolvent person includes a person who controls the insolvent person, a director or an officer of the insolvent person and a person who is related to a director or an officer of the insolvent person.
Direction that assets may be disposed of free of charges, etc.
(6) In granting an authorization for the sale or disposal of assets, the court may order that the assets may be sold or disposed of free and clear of any security, charge or other restriction, but if it so orders, it shall also order that the proceeds realized from the sale or disposal of the assets are subject to a security, charge or other restriction in favour of the creditors whose security, charges or other restrictions are affected by the order.
45. Section 66 of the Act is amended by adding the following after subsection (1):
Assignments
(1.1) For the purposes of subsection (1), in deciding whether to make an assignment under subsection 84.1(1), the court must, in addition to the factors referred to in subsection 84.1(4), also consider whether the insolvent person would not be able to make a viable proposal without the assignment.
Final statement of receipts and disbursements
(1.2) For the purposes of subsection (1), the trustee is to prepare the final statement of receipts and disbursements referred to in section 151 without delay after
(a) the debtor files or is deemed to have filed an assignment;
(b) the trustee informs the creditors and the official receiver of a default made in the performance of any provision in a proposal; or
(c) the trustee gives the certificate referred to in section 65.3 in respect of the proposal.
Examination by official receiver
(1.3) For the purposes of subsection (1), the examination under oath by the official receiver under subsection 161(1) is to be held, on the attendance of the person who has filed a notice of intention under section 50.4 or a proposal, before the proposal is approved by the court or the person becomes bankrupt.
46. The definition “consumer debtor” in section 66.11 of the Act is replaced by the following:
“consumer debtor”« débiteur consommateur »
“consumer debtor” means an individual who is bankrupt or insolvent and whose aggregate debts, excluding any debts secured by the individual’s principal residence, are not more than $250,000 or any other prescribed amount;
47. Subsection 66.12(2) of the English version of the Act is replaced by the following:
Restriction
(2) A consumer debtor who has filed a notice of intention or a proposal under Division I may not make a consumer proposal until the trustee appointed in respect of the notice of intention or proposal under Division I has been discharged.
48. Paragraph 66.13(2)(d) of the Act is replaced by the following:
(d) subject to subsection (3), file with the official receiver a copy of the consumer proposal, signed by the consumer debtor, and the prescribed statement of affairs.
49. (1) Paragraph 66.14(a) of the Act is amended by adding the word “and” at the end of subparagraph (ii) and by repealing subparagraph (iii).
(2) Subparagraph 66.14(b)(i) of the Act is replaced by the following:
(i) a copy of the consumer proposal and a copy of the statement of affairs referred to in paragraph 66.13(2)(d),
50. Subsection 66.17(2) of the Act is replaced by the following:
Effect of assent or dissent
(2) Unless it is rescinded, any assent or dissent received by the administrator at or before a meeting of creditors has effect as if the creditor had been present and had voted at the meeting.
51. Subsection 66.28(2) of the Act is replaced by the following:
On whom approval binding
(2) Subject to subsection (2.1), a consumer proposal accepted, or deemed accepted, by the creditors and approved, or deemed approved, by the court is binding on creditors in respect of
(a) all unsecured claims; and
(b) secured claims for which proofs of claim have been filed in the manner provided for in sections 124 to 134.
When consumer debtor is released from debt
(2.1) A consumer proposal accepted, or deemed accepted, by the creditors and approved, or deemed approved, by the court does not release the consumer debtor from any particular debt or liability referred to in subsection 178(1) unless the consumer proposal explicitly provides for the compromise of that debt or liability and the creditor in relation to that debt or liability has assented to the consumer proposal.
52. Section 66.31 of the Act is replaced by the following:
Deemed annulment — default of payment
66.31 (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.
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 on the day on which the amendment is withdrawn or refused.
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, in the prescribed form, a report in relation to the deemed annulment; and
(b) send a notice to the creditors informing them of the deemed annulment.
Effects of deemed annulment — consumer proposal made by a bankrupt
(4) When 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 date of the deemed annulment;
(b) the trustee who is the administrator of the consumer proposal shall, within five days after the deemed annulment, 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.
Validity of things done before deemed annulment
(5) A deemed annulment of a consumer proposal does not prejudice the validity of any sale, 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.
Notice of possibility of consumer proposal being automatically revived
(6) If the administrator, in the case of a deemed annulment of a consumer proposal made by a person other than a bankrupt, considers it appropriate to do so in the circumstances, he or she may, with notice to the official receiver, send to the creditors, within 10 days 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 45 days after the day on which it was deemed to be annulled unless one of them files with the administrator a notice of objection, in the prescribed manner, to the revival.
Automatic revival
(7) If the notice is sent by the administrator and no notice of objection is filed during the 45-day period, the consumer proposal is automat­ically revived on the expiry of those 45 days.
Notice if no automatic revival
(8) If a notice of objection is filed with the administrator during the 45-day period, the administrator must, without delay, send 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 the 45-day period.
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 has been 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.
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, in the prescribed form, a report in relation to the revival; and
(b) send a notice to the creditors informing them of the revival.
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).
53. Subsection 66.32(2) of the French version of the Act is replaced by the following:
Rétablissement des droits
(2) En cas d’annulation — effective ou présumée — de la proposition, les droits des créanciers sont rétablis jusqu’à concurrence du montant de leurs réclamations, déduction faite toutefois des dividendes reçus.
54. Section 66.33 of the Act is repealed.
55. The portion of subsection 66.34(1) of the Act before paragraph (a) is replaced by the following:
Certain rights limited
66.34 (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
56. Sections 66.37 and 66.38 of the Act are replaced by the following:
Amendment to consumer proposal
66.37 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” means an individual who is insolvent;
Certificate if consumer proposal performed
66.38 (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.
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).
57. (1) Paragraphs 67(1)(b) and (b.1) of the Act are replaced by the following:
(b) any property, other than property in a registered retirement savings plan or a registered retirement income fund, as those expressions are defined in the Income Tax Act, or in any prescribed plan, 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),
(b.3) subject to any prescribed conditions and limitations, property in a registered retirement savings plan or a registered retirement income fund, as those expressions are defined in the Income Tax Act, other than property contributed to any such plan or fund in the 12 months, or in any longer period that the court may specify, before the date of bankruptcy,
(2) Paragraph 67(1)(c) of the Act is replaced by the following:
(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 his or her 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 of any such refund that is not subject to the operation of this Act, and
58. (1) Subsections 68(1) to (7) of the Act are replaced by the following:
Directives re surplus income
68. (1) The Superintendent shall, by directive, establish in respect of the provinces or one or more bankruptcy districts or parts of bankruptcy districts, the standards for determining the surplus income of an individual bankrupt and the amount that a bankrupt who has surplus income is required to pay to the estate of the bankrupt.
Definitions
(2) The following definitions apply in this section.
“surplus income”« revenu excédentaire »
“surplus income” means the portion of the total income of an individual bankrupt that exceeds that which is necessary to enable the bankrupt to maintain a reasonable standard of living, having regard to the applicable standards established under subsection (1).
“total income”« revenu total »
“total income”, for the purposes of the definition “surplus income”,
(a) includes, despite paragraphs 67(1)(b) and (b.1), all of a bankrupt’s revenues from whatever nature or source that are received by the bankrupt between the date of the bankruptcy and the date of the bankrupt’s discharge, including any amounts received as damages for wrongful dismissal, as a pay equity settlement or under any Act of Parliament or Act of the legislature of a province that relates to workers’ or workmen’s compensation; but
(b) does not include any amounts received by the bankrupt between the date of the bankruptcy and the date of the bankrupt’s discharge, as a gift, a legacy or an inheritance or as any other windfall.
Determination of trustee re surplus income
(3) The trustee shall, having regard to the applicable standards and to the personal and family situation of the bankrupt, determine whether the bankrupt has surplus income. The determination must also be made
(a) whenever the trustee becomes aware of a material change in the bankrupt’s financial situation; and
(b) whenever the trustee is required to prepare a report referred to in subsection 170(1).
Duties of trustee relating to determination
(4) Whenever the trustee is required to determine whether the bankrupt has surplus income, the trustee shall
(a) if the trustee determines that there is surplus income,
(i) fix, having regard to the applicable standards, the amount that the bankrupt is required to pay to the estate of the bankrupt,
(ii) inform, in the prescribed manner, the official receiver, and every creditor who has requested such information, of the amount fixed under subparagraph (i), and
(iii) take reasonable measures to ensure that the bankrupt complies with the requirement to pay; and
(b) if the trustee determines that there is no surplus income, inform, in the prescribed manner, the official receiver, and every creditor who has requested such information, of that determination.
Official receiver recommendation
(5) If the official receiver determines that the amount required to be paid by the bankrupt is substantially not in accordance with the appli­cable standards, the official receiver shall recommend to the trustee and to the bankrupt an amount required to be paid that the official receiver determines is in accordance with the applicable standards.
Trustee may fix another amount
(5.1) On receipt of the official receiver’s recommendation, the trustee may fix, having regard to the applicable standards, another amount as the amount that the bankrupt is required to pay to the estate of the bankrupt, and if the trustee does so, the trustee shall
(a) inform the official receiver and every creditor, in the prescribed manner, of the amount fixed under this subsection; and
(b) take reasonable measures to ensure that the bankrupt complies with the requirement to pay.
Trustee may request mediation
(6) If the trustee and the bankrupt are not in agreement with the amount that the bankrupt is required to pay under subsection (4) or (5.1), the trustee shall, without delay, in the prescribed form, send to the official receiver a request that the matter be determined by mediation and send a copy of the request to the bankrupt.
Creditor may request mediation
(7) On a creditor’s request made within 30 days after the trustee has informed the creditor of the amount fixed under subsection (4) or (5.1), the trustee shall, within five days after the 30-day period, send to the official receiver a request, in the prescribed form, that the matter of the amount that the bankrupt is required to pay be determined by mediation and send a copy of the request to the bankrupt and the creditor.
(2) Subsection 68(10) of the Act is replaced by the following:
Application to court to fix amount
(10) The trustee may, in any of the following circumstances — and shall apply if requested to do so by the official receiver in the circumstances referred to in paragraph (a) — apply to the court to fix, by order, in accordance with the applicable standards, and having regard to the personal and family situation of the bankrupt, the amount that the bankrupt is required to pay to the estate of the bankrupt:
(a) if the trustee has not implemented a recommendation made by the official receiver under subsection (5);
(b) if the matter submitted to mediation has not been resolved by the mediation; or
(c) if the bankrupt has failed to comply with the requirement to pay as determined under this section.
(3) Subsection 68(12) of the Act is replaced by the following:
Modification of order
(12) On the application of any interested person, the court may, at any time, amend an order made under this section to take into account material changes that have occurred in the financial situation of the bankrupt.
(4) Subsection 68(14) of the Act is replaced by the following:
Property included for enforcement purposes
(14) For the purpose of this section, a requirement that a bankrupt pay an amount to the estate of the bankrupt is enforceable against all the bankrupt’s property, including property referred to in paragraphs 67(1)(b) and (b.1).
When obligation to pay ceases
(15) If an opposition to the automatic discharge of an individual bankrupt who is required to pay an amount to the estate of the bankrupt is filed, the bankrupt’s obligation under this section ceases on the day on which the bankrupt would have been automatically discharged had the opposition not been filed, but nothing in this subsection precludes the court from determining that the bankrupt is required to pay an amount that the court considers appropriate to the estate of the bankrupt.
59. Subsection 68.1(2) of the Act is replaced by the following:
Assignment of book debts
(2) An assignment of existing or future amounts receivable as payment for or commission or professional fees in respect of services rendered by a debtor who is an individual before the debtor became bankrupt is of no effect in respect of such amounts earned or generated after the bankruptcy.
60. (1) The portion of paragraph 69(2)(d) of the Act before subparagraph (i) is replaced by the following:
(d) to prevent a creditor who holds security on aircraft objects under an agreement with the insolvent person from taking possession of the aircraft objects
(2) Subparagraph 69(2)(d)(i) of the English version of the Act is replaced by the following:
(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,
61. (1) The portion of paragraph 69.1(2)(d) of the Act before subparagraph (i) is replaced by the following:
(d) to prevent a creditor who holds security on aircraft objects under an agreement with the insolvent person from taking possession of the aircraft objects
(2) Subparagraph 69.1(2)(d)(i) of the English version of the Act is replaced by the following:
(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,
62. (1) Subsection 69.3(1) of the Act is replaced by the following:
Stays of proceedings — bankruptcies
69.3 (1) Subject to subsections (1.1) and (2) and sections 69.4 and 69.5, on the bankruptcy of any debtor, no creditor has any remedy against the debtor or the debtor’s property, or shall commence or continue any action, execution or other proceedings, for the recovery of a claim provable in bankruptcy.
End of stay
(1.1) Subsection (1) ceases to apply in respect of a creditor on the day on which the trustee is discharged.
(2) The portion of subsection 69.3(2) of the Act before paragraph (a) is replaced by the following:
Secured creditors
(2) Subject to subsection (3), sections 79 and 127 to 135 and subsection 248(1), the bankruptcy of a debtor does not prevent a secured creditor from realizing or otherwise dealing with his or her security in the same manner as he or she would have been entitled to realize or deal with it if this section had not been passed, unless the court otherwise orders, but in so ordering the court shall not postpone the right of the secured creditor to realize or otherwise deal with his or her security, except as follows:
(3) Subsection 69.3(3) of the Act is replaced by the following:
Secured creditors — aircraft objects
(3) If a secured creditor who holds security on aircraft objects under an agreement with the bankrupt is postponed from realizing or otherwise dealing with that security, the order under which the postponement is made is terminated
(a) if, after the order is made, the trustee defaults in protecting or maintaining the aircraft objects in accordance with the agreement;
(b) 60 days after the day on which the order is made unless, during that period, the trustee
(i) 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 bankrupt’s financial condition, and
(ii) agreed to perform the obligations under the agreement, other than the bankrupt’s obligation not to become insolvent or an obligation relating to the bankrupt’s financial condition, until the day on which the secured creditor is able to realize or otherwise deal with his or her security; or
(c) if, during the period that begins 60 days after the day on which the order is made and ends on the day on which the secured creditor is able to realize or otherwise deal with his or her security, the trustee defaults in performing an obligation under the agreement, other than the bankrupt’s obligation not to become insolvent or an obligation relating to the bankrupt’s financial condition.
63. Subsection 70(2) of the English version of the Act is replaced by the following:
Costs
(2) Despite subsection (1), one bill of costs of a barrister or solicitor or, in the Province of Quebec, an advocate, including the executing officer’s fees and land registration fees, shall be payable to the creditor who has first attached by way of garnishment or filed with the executing officer an attachment, execution or other process against the property of the bankrupt.
64. Subsection 74(3) of the English version of the Act is replaced by the following:
Caveat may be filed
(3) If a bankrupt owns any real property or immovable or holds any charge registered in a land registry office or has or is believed to have any interest, estate or right in any of them, and for any reason a copy of the bankruptcy order or assignment has not been registered as provided in subsection (1), a caveat or caution may be filed with the official in charge of the land registry by the trustee, and any registration made after the filing of the caveat or caution in respect of the real property, immovable or charge is subject to the caveat or caution unless it has been removed or cancelled under the provisions of the Act under which the real property, immovable, charge, interest, estate or right is registered.
65. (1) Subsection 81(2) of the Act is replaced by the following:
How claim disposed of
(2) The trustee with whom a proof of claim is filed under subsection (1) shall within 15 days after the filing of the claim or within 15 days after the first meeting of creditors, whichever is the later, either admit the claim and deliver possession of the property to the claimant or send notice in the prescribed manner to the claimant that the claim is disputed, with the trustee’s reasons for disputing it, and, unless the claimant appeals the trustee’ decision to the court within 15 days after the sending of the notice of dispute, the claimant is deemed to have abandoned or relinquished all his or her right to or interest in the property to the trustee who may then sell or dispose of the property free of any right, title or interest of the claimant.
(2) Subsection 81(4) of the Act is replaced by the following:
Require proof of claim
(4) The trustee may send notice in the prescribed manner to any person to prove his or her claim to or in property under this section, and, unless that person files with the trustee a proof of claim, in the prescribed form, within 15 days after the sending of the notice, the trustee may then, with the leave of the court, sell or dispose of the property free of any right, title or interest of that person.
66. (1) The portion of subsection 81.1(1) of the Act before paragraph (c) is replaced by the following:
Right of unpaid supplier to repossess goods
81.1 (1) Subject to this section, if a person (in this section referred to as the “supplier”) has sold to another person (in this section referred to as the “purchaser”) goods for use in relation to the purchaser’s business and delivered the goods to the purchaser or to the purchaser’s agent or mandatary, and the purchaser has not fully paid for the goods, the supplier may have access to and repossess the goods at the supplier’s own expense, and the purchaser, trustee or receiver, or the purchaser’s agent or mandatary, as the case may be, shall release the goods, if
(a) the supplier presents a written demand for repossession to the purchaser, trustee or receiver, in the prescribed form and containing the details of the transaction, within a period of 15 days after the day on which the purchaser became bankrupt or became a person who is subject to a receivership;
(b) the goods were delivered within 30 days before the day on which the purchaser became bankrupt or became a person who is subject to a receivership;
(2) Subsections 81.1(4) and (5) of the Act are replaced by the following:
If notice of intention or proposal was filed
(4) If a notice of intention under section 50.4 or a proposal was filed in respect of the purchaser after the delivery of the goods to the purchaser and before the purchaser became bankrupt or became a person who is subject to a receivership, the 30-day period referred to in paragraph (1)(b) is the 30-day period before the filing of the notice of intention or, if there was no notice of intention, the filing of the proposal.
Expiry of supplier’s right
(5) A supplier’s right to repossess goods under this section expires if not exercised within the 15-day period referred to in paragraph (1)(a), unless the period is extended before its expiry by the trustee or receiver, or by the court.
(3) Section 81.1 of the Act is amended by adding the following after subsection (11):
Definitions
(12) The following definitions apply in this section.
“person who is subject to a receivership”« mise sous séquestre »
“person who is subject to a receivership” means a person in respect of whom any property is under the possession or control of a receiver.
“receiver”« séquestre »
“receiver” means a receiver within the meaning of subsection 243(2).
67. The Act is amended by adding the following after section 81.2:
Security for unpaid wages, etc. — bankruptcy
81.3 (1) The claim of a clerk, servant, travelling salesperson, labourer or worker who is owed wages, salaries, commissions or compensation by a bankrupt for services rendered during the six months immediately before the date of bankruptcy is secured, as of that date, to the extent of $2,000, by security on all the current assets of the bankrupt on that date.
Commissions
(2) For the purposes of subsection (1), commissions payable when goods are shipped, delivered or paid for, if shipped, delivered or paid for within the six month period referred to in that subsection, are deemed to have been earned in those six months.
Security for disbursements — bankruptcy
(3) The claim of a travelling salesperson who is owed money by a bankrupt for disbursements properly incurred in and about the bankrupt’s business during the six months immediately before the date of bankruptcy is secured, as of that date, to the extent of $1,000, by security on all the bankrupt’s current assets on that date.
Rank of security
(4) A security under this section ranks above every other claim, right, charge or security against the bankrupt’s current assets, regardless of when that other claim, right, charge or security arose, except rights under sections 81.1 and 81.2 and amounts referred to in subsection 67(3) that have been deemed to be held in trust.
Liability of trustee
(5) If the trustee disposes of current assets covered by the security, the trustee is liable for the claim of the clerk, servant, travelling salesperson, labourer or worker to the extent of the amount realized on the disposition of the current assets, and is subrogated in and to all rights of the clerk, servant, travelling salesperson, labourer or worker of the amounts paid to that person by the trustee.
Meaning of “compensation”
(6) For the purpose of this section and section 81.4, “compensation” includes vacation pay but does not include termination or severance pay.
Proof by delivery
(7) A claim referred to in this section is proved by delivering to the trustee a proof of claim in the prescribed form.
Security for unpaid wages, etc. — receivership
81.4 (1) The claim of a clerk, servant, travelling salesperson, labourer or worker who is owed wages, salaries, commissions or compensation by a person who is subject to a receivership for services rendered during the six months immediately before the first day on which there was a receiver in relation to the person is secured, as of that day, to the extent of $2,000, by security on all the person’s current assets that are in the possession or under the control of the receiver.
Commissions
(2) For the purposes of subsection (1), commissions payable when goods are shipped, delivered or paid for, if shipped, delivered or paid for within the six-month period referred to in that subsection, are deemed to have been earned in those six months.
Security for disbursements — receivership
(3) The claim of a travelling salesperson who is owed money by a person who is subject to a receivership for disbursements properly incurred in and about the person’s business during the six months immediately before the first day on which there was a receiver in relation to the person is secured, as of that day, to the extent of $1,000, by security on all the person’s current assets that are in the possession or under the control of the receiver.
Rank of security
(4) A security under this section ranks above every other claim, right, charge or security against the person’s current assets, regardless of when that other claim, right, charge or security arose, except rights under sections 81.1 and 81.2.
Liability of receiver
(5) If the receiver takes possession or in any way disposes of current assets covered by the security, the receiver is liable for the claim of the clerk, servant, travelling salesperson, labourer or worker to the extent of the amount realized on the disposition of the current assets, and is subrogated in and to all rights of the clerk, servant, travelling salesperson, labourer or worker of the amounts paid to that person by the receiver.
Proof by delivery
(6) A claim referred to in this section is proved by delivering to the receiver a proof of claim in the prescribed form.
Definitions
(7) The following definitions apply in this section.
“person who is subject to a receivership”« personne faisant l’objet d’une mise sous séquestre »
“person who is subject to a receivership” means a person in respect of whom any property is under the possession or control of a receiver.
“receiver”« séquestre »
“receiver” means a receiver within the meaning of subsection 243(2).
Security for unpaid amounts re prescribed pensions plan — bankruptcy
81.5 (1) If the bankrupt is an employer who participated or participates in a prescribed pension plan for the benefit of the bankrupt’s employees, the following amounts that are unpaid on the date of bankruptcy to the fund established for the purpose of the pension plan are secured by security on all the assets of the bankrupt:
(a) an amount equal to the sum of all amounts that were deducted from the employees’ remuneration for payment to the fund;
(b) if the prescribed pension plan is regulated by an Act of Parliament,
(i) an amount equal to the normal cost, within the meaning of subsection 2(1) of the Pension Benefits Standards Regulations, 1985, that was required to be paid by the employer to the fund, and
(ii) an amount equal to the sum of all amounts that were required to be paid by the employer to the fund under a defined contribution provision, within the meaning of subsection 2(1) of the Pension Benefits Standards Act, 1985; and
(c) in the case of any other prescribed pension plan,
(i) an amount equal to the amount that would be the normal cost, within the meaning of subsection 2(1) of the Pension Benefits Standards Regulations, 1985, that the employer would be required to pay to the fund if the prescribed plan were regulated by an Act of Parliament, and
(ii) an amount equal to the sum of all amounts that would have been required to be paid by the employer to the fund under a defined contribution provision, within the meaning of subsection 2(1) of the Pension Benefits Standards Act, 1985, if the prescribed plan were regulated by an Act of Parliament.
Rank of security
(2) A security under this section ranks above every other claim, right, charge or security against the bankrupt’s assets, regardless of when that other claim, right, charge or security arose, except
(a) rights under sections 81.1 and 81.2;
(b) amounts referred to in subsection 67(3) that have been deemed to be held in trust; and
(c) securities under sections 81.3 and 81.4.
Liability of trustee
(3) If the trustee disposes of assets covered by the security, the trustee is liable for the amounts referred to in subsection (1) to the extent of the amount realized on the disposition of the assets, and is subrogated in and to all rights of the fund established for the purpose of the pension plan in respect of those amounts.
Security for unpaid amounts re prescribed pensions plan — receivership
81.6 (1) If a person who is subject to a receivership is an employer who participated or participates in a prescribed pension plan for the benefit of the person’s employees, the following amounts that are unpaid immediately before the first day on which there was a receiver in relation to the person are secured by security on all the person’s assets:
(a) an amount equal to the sum of all amounts that were deducted from the employees’ remuneration for payment to the fund;
(b) if the prescribed pension plan is regulated by an Act of Parliament,
(i) an amount equal to the normal cost, within the meaning of subsection 2(1) of the Pension Benefits Standards Regulations, 1985, that was required to be paid by the employer to the fund, and
(ii) an amount equal to the sum of all amounts that were required to be paid by the employer to the fund under a defined contribution provision, within the meaning of subsection 2(1) of the Pension Benefits Standards Act, 1985; and
(c) in the case of any other prescribed pension plan,
(i) an amount equal to the amount that would be the normal cost, within the meaning of subsection 2(1) of the Pension Benefits Standards Regulations, 1985, that the employer would be required to pay to the fund if the prescribed plan were regulated by an Act of Parliament, and
(ii) an amount equal to the sum of all amounts that would have been required to be paid by the employer to the fund under a defined contribution provision, within the meaning of subsection 2(1) of the Pension Benefits Standards Act, 1985, if the prescribed plan were regulated by an Act of Parliament.
Rank of security
(2) A security under this section ranks above every other claim, right, charge or security against the person’s assets, regardless of when that other claim, right, charge or security arose, except rights under sections 81.1 and 81.2 and securities under sections 81.3 and 81.4.
Liability of receiver
(3) If the receiver disposes of assets covered by the security, the receiver is liable for the amounts referred to in subsection (1) to the extent of the amount realized on the disposition of the assets, and is subrogated in and to all rights of the fund established for the purpose of the pension plan in respect of those amounts.
Definitions
(4) The following definitions apply in this section.
“person who is subject to a receivership”« personne faisant l’objet d’une mise sous séquestre »
“person who is subject to a receivership” means a person in respect of whom any property is under the possession or control of a receiver.
“receiver”« séquestre »
“receiver” means a receiver within the meaning of subsection 243(2).
68. The Act is amended by adding the following after section 84:
Assignments
84.1 (1) The court may, on application by an insolvent person or a trustee, make an order assigning the rights and obligations of the insolvent person under any agreement to any person, specified by the court, who has agreed to the assignment.
Notice
(2) The applicant must give notice of the assignment, in the prescribed manner, to every party to the agreement.
Exceptions
(3) Subsection (1) does not apply in respect of rights and obligations
(a) under an eligible financial contract within the meaning of subsection 65.1(8);
(b) under a lease referred to in subsection 65.2(1);
(c) under a collective agreement; and
(d) that are not assignable by reason of their nature.
Factors to be considered
(4) In deciding whether to make an assignment, the court must consider, among other things,
(a) whether the person to whom the rights and obligations are to be assigned would be able to perform the obligations; and
(b) whether it would be appropriate to assign the rights and obligations to that person.
Restriction
(5) The court may not make the assignment if the court is satisfied that the insolvent person is in default under the agreement.
Certain rights limited
84.2 (1) No person may terminate or amend any agreement, including a security agreement, with an individual bankrupt, or claim an accelerated payment, or a forfeiture of the term, under any agreement, including a security agreement, with the bankrupt, by reason only of the bankruptcy.
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 of the bankruptcy or that the bankrupt has not paid rent in respect of any period before the date of bankruptcy.
Public utilities
(3) No public utility may discontinue service to an individual bankrupt by reason only of the bankruptcy or that the bankrupt has not paid for services rendered, or material provided, before the date of bankruptcy.
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 date of bankruptcy; or
(b) requiring the further advance of money or credit.
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.
Powers of court
(6) The court may, on application by a party to an agreement, 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.
69. The portion of paragraph 86(2)(a) of the Act before subparagraph (i) is replaced by the following:
(a) to claims that are secured by a security or charge of a kind that can be obtained by persons other than Her Majesty or a workers’ compensation body
70. Subsection 87(1) of the Act is replaced by the following:
Statutory Crown securities
87. (1) 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 of a province or of a workers’ compensation body is valid in relation to a bankruptcy or proposal only if the security is registered under a prescribed system of registration before the date of the initial bankruptcy event.
71. Section 91 of the Act and the heading before it are replaced by the following:
Preferences
72. Section 94 of the Act is repealed.
73. Section 96 of the Act is replaced by the following:
Creditor — not at arm’s length
96. If the transfer, charge, payment, obligation or judicial proceeding referred to in section 95 has the effect of giving a creditor who is not at arm’s length a preference over other creditors, the period referred to in subsection 95(1) is one year instead of three months.
Examination of consideration in a transfer
96.1 (1) If a debtor has entered into a transaction with another party, the court may, on the application of the trustee, inquire into whether the transaction was a transfer at undervalue and whether or not the other party was at arm’s length with the debtor.
Judgment for difference — at arm’s length
(2) If the court finds that the other party in the transaction was at arm’s length with the debtor and that the transaction was a transfer at undervalue, the court may give judgment to the trustee against the other party to the transaction, against any other person being privy to the transaction with the debtor or against all those persons for the difference between the actual consideration given or received by the debtor and the fair market value, as determined by the court, of the property or services concerned in the transaction, if
(a) the transaction occurred during the period that begins on the day that is one year before the date of the initial bankruptcy event and that ends on the date of the bankruptcy; and
(b) the debtor was insolvent at the time of, or was rendered insolvent by, the transaction, and the debtor intended to defeat the interests of creditors.
Judgment for difference — not at arm’s length
(3) If the court finds that the other party in the transaction was not at arm’s length with the debtor and that the transaction was a transfer at undervalue, the court may give judgment to the trustee against the other party to the transaction, against any other person being privy to the transaction with the debtor or against all those persons for the difference between the actual consideration given or received by the debtor and the fair market value, as determined by the court, of the property or services concerned in the transaction, if the transaction occurred during the period
(a) that begins on the day that is one year before the date of the initial bankruptcy event and ends on the date of the bankruptcy; or
(b) that begins five years before the date of the initial bankruptcy event and that ends one day before one year before the date of the initial bankruptcy event in the case where
(i) the debtor was insolvent at the time of, or was rendered insolvent by, the transaction, or
(ii) the debtor intended to defeat the interests of creditors.
Establishing values
(4) In making the application referred to in this section, the trustee shall state what, in the trustee’s opinion, was the fair market value of the property or services concerned in the transaction and what, in the trustee’s opinion, was the value of the actual consideration given or received by the debtor in the transaction, and the values on which the court makes any finding under this section are the values so stated by the trustee unless other values are proved.
74. The portion of subsection 97(1) of the Act before paragraph (a) is replaced by the following:
Protected transactions
97. (1) No payment, contract, dealing or transaction to, by or with a bankrupt made between the date of the initial bankruptcy event and the date of the bankruptcy is valid, except the following, which are valid if made in good faith, subject to the provisions of this Act with respect to the effect of bankruptcy on an execution, attachment or other process against property, and subject to the provisions of this Act respecting preferences and transfers at undervalue:
75. The Act is amended by adding the following after section 98:
General assignments of book debts ineffective
98.1 (1) If a person engaged in any trade or business makes an assignment of their existing or future book debts, or any class or part of those debts, and subsequently becomes bankrupt, the assignment of book debts is void as against, or, in the Province of Quebec, may not be set up against, the trustee with respect to any book debts that have not been paid at the date of the bankruptcy.
Foregoing provisions not to apply in some cases
(2) Subsection (1) does not apply to an assignment of book debts that is registered under any statute of any province providing for the registration of assignments of book debts if the assignment is valid in accordance with the laws of the province.
Other cases
(3) Nothing in subsection (1) renders void or, in the Province of Quebec, null any assignment of book debts due at the date of the assignment from specified debtors, or of debts growing due under specified contracts, or any assignment of book debts included in a transfer of a business made in good faith and for adequate valuable consideration.
Definition of “assignment”
(4) For the purposes of this section, “assignment” includes assignment by way of security, hypothec and other charges on book debts.
76. Section 100 of the Act is repealed.
77. Subsection 102(3) of the Act is replaced by the following:
Information and notice
(3) In the case of the bankruptcy of an individual, the trustee shall set out in the notice, in the prescribed form, information concerning the financial situation of the bankrupt and the obligation of the bankrupt, if any, to make payments required under section 68 to the estate of the bankrupt.
78. Subsection 104(1) of the Act is replaced by the following:
Notice of subsequent meetings
104. (1) Meetings of creditors other than the first shall be called by sending a notice of the time and place of the meeting together with an agenda outlining the items for discussion with a reasonable explanation of what is expected to be discussed for each item, not less than five days before the time of each meeting to each creditor at the address given in the creditor’s proof of claim.
79. Subsection 105(4) of the Act is replaced by the following:
Minutes of meeting
(4) The chair of any meeting of creditors shall, within a reasonable time after each meeting, cause minutes of the proceedings at the meeting to be prepared. The minutes shall be signed by the chair or by the chair of the next meeting and shall be retained as part of the books, records and documents referred to in section 26 relating to the administration of the estate.
80. (1) Subsection 109(1) of the English version of the Act is replaced by the following:
Right of creditor to vote
109. (1) A person is not entitled to vote as a creditor at any meeting of creditors unless the person has duly proved a claim provable in bankruptcy and the proof of claim has been duly filed with the trustee before the time appointed for the meeting.
(2) Subsections 109(6) and (7) of the Act are replaced by the following:
Vote of creditors not dealing at arm’s length
(6) If, in respect of the vote on any particular matter at a meeting of creditors, the chair is of the opinion that the outcome of the vote was determined by the vote of a person who did not deal with the debtor at arm’s length at any time within the period that begins on the day that is one year before the date of the initial bankruptcy event and that ends on the date of the bankruptcy, the chair shall redetermine the outcome of the vote by not including the votes of all such creditors, and that new outcome, as redetermined by the chair, is the outcome of the vote, unless an application is made to the court within 10 days by one of the creditors whose vote was not included and the court, if it decides to include the vote of the applicant, determines another outcome for the vote.
81. Subsection 110(1) of the Act is replaced by the following:
Claims acquired after date of bankruptcy
110. (1) No person is entitled to vote on a claim acquired after the date of bankruptcy in respect of a debtor unless the entire claim is acquired.
82. (1) Subsections 113(1) and (2) of the Act are replaced by the following:
Trustee may vote
113. (1) If the trustee is a proxyholder for a creditor, the trustee may vote as a creditor at any meeting of creditors.
Trustee’s vote not to count in respect of certain resolutions
(2) The vote of the trustee — or of the partner, clerk or legal counsel of the trustee, or of the clerk of the legal counsel of the trustee — as proxyholder for a creditor, shall not be counted in respect of any resolution affecting the remuneration or conduct of the trustee.
(2) The portion of subsection 113(3) of the Act before paragraph (a) is replaced by the following:
Persons not entitled to vote
(3) The following persons are not entitled to vote on the appointment of a trustee — and except with the permission of the court and on any condition that the court may impose, the following persons are not entitled to vote on the appointment of inspectors:
83. Subsection 116(1) of the Act is replaced by the following:
Resolution respecting inspectors
116. (1) At the first or a subsequent meeting of creditors, the creditors shall, by resolution, appoint up to five inspectors of the estate of the bankrupt or agree not to appoint any inspectors.
84. Section 118 of the Act is replaced by the following:
Obligation of trustee when inspectors fail to exercise their powers
118. If the inspectors fail to exercise the powers conferred on them, the trustee shall call a meeting of the creditors for the purpose of substituting other inspectors and for the purpose of taking any action or giving any directions that may be necessary.
85. Subsection 120(3) of the Act is replaced by the following:
Duty of inspectors
(3) In addition to the other duties that are attributed to them under this Act, the inspectors shall from time to time verify the bank balance of the estate, examine the trustee’s accounts and inquire into the adequacy of the security filed by the trustee and, subject to subsection (4), shall approve the trustee’s final statement of receipts and disbursements, dividend sheet and disposition of unrealized property.
86. Subsection 124(5) of the Act is repealed.
87. (1) Subsection 126(1) of the English version of the Act is replaced by the following:
Who may examine proofs
126. (1) Every creditor who has filed a proof of claim is entitled to see and examine the proofs of other creditors.
(2) Subsection 126(2) of the Act is replaced by the following:
Worker’s wage claims
(2) Proofs of claims for wages of workers and others employed by the bankrupt may be made in one proof by the bankrupt, by someone on the bankrupt’s behalf, by a representative of a federal or provincial ministry responsible for labour matters, by a representative of a union representing workers and others employed by the bankrupt or by a court-appointed represent­ative, and that proof is to be made by attaching to it a schedule setting out the names and addresses of the workers and others and the amounts severally due to them, but that proof does not disentitle any worker or other wage earner to file a separate proof on his or her own behalf.
88. Paragraph 136(1)(d) of the Act is replaced by the following:
(d) the amount of any wages, salaries, commissions, compensation or disbursements referred to in sections 81.3 and 81.4 that was not paid;
(d.01) the amount equal to the difference a secured creditor would have received but for the operation of sections 81.3 and 81.4 and the amount actually received by the secured creditor;
(d.02) the amount equal to the difference a secured creditor would have received but for the operation of sections 81.5 and 81.6 and the amount actually received by the secured creditor;
89. Subsection 137(1) of the Act is replaced by the following:
Postponement of claims — creditor not at arm’s length
137. (1) A creditor who, at any time before the bankruptcy of a debtor, entered into a transaction with the debtor and who was not at arm’s length with the debtor at that time is not entitled to claim a dividend in respect of a claim arising out of that transaction until all claims of the other creditors have been satisfied, unless the transaction was in the opinion of the trustee or of the court a proper transaction.
90. The Act is amended by adding the following after section 140:
Postponement of claims — purchase of shares etc.
140.1 A creditor is not entitled to claim a dividend in respect of a claim arising from the rescission of a purchase or sale of a share or unit of the bankrupt — or in respect of a claim for damages arising from the purchase or sale of a share or unit of the bankrupt — until all claims of the other creditors have been satisfied.
91. Subsection 147(1) of the Act is replaced by the following:
Levy payable out of dividends for supervision
147. (1) For the purpose of defraying the expenses of the supervision by the Superintendent, there shall be payable to the Superintendent for deposit with the Receiver General a levy on all payments, except the costs referred to in subsection 70(2), made by the trustee by way of dividend or otherwise on account of the creditor’s claims, including Her Majesty in right of Canada or of a province claiming in respect of taxes or otherwise.
92. (1) Subsection 149(1) of the Act is replaced by the following:
Notice that final dividend will be made
149. (1) The trustee may, after the first meeting of the creditors, send a notice, in the prescribed manner, to every person with a claim of which the trustee has notice or knowledge but whose claim has not been proved. The notice must inform the person that, if that person does not prove the claim within a period of 30 days after the sending of the notice, the trustee will proceed to declare a dividend or final dividend without regard to that person’s claim.
(2) Subsection 149(4) of the Act is replaced by the following:
Certain federal claims
(4) Despite subsection (2), a claim may be filed for an amount payable under the following provisions within the time limit referred to in subsection (2), or within three months after the time the return of income or other evidence of the facts on which the claim is based is filed or comes to the attention of the Minister of National Revenue or, in the case of an amount payable under a provision referred to in paragraph (c), the minister in that province responsible for the provision:
(a) subsection 224(1.2) of the Income Tax Act;
(b) any provision of the Canada Pension Plan or of the Employment Insurance Act that refers to subsection 224(1.2) of the Income Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, or an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, and of any related interest, penalties or other amounts;
(c) any provision of provincial legislation that has a purpose similar to subsection 224(1.2) of the Income Tax Act, or that refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, if the sum
(i) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or
(ii) is of the same nature as a contribution under the Canada Pension Plan if the province is a “province providing a comprehensive pension plan” as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a “provincial pension plan” as defined in that subsection;
(d) subsection 82(1.1) of the Excise Tax Act;
(e) subsection 284(1.1) of the Excise Act, 2001;
(f) subsections 97.22(1) and (5) of the Customs Act; and
(g) subsection 72(1.1) of the Air Travellers Security Charge Act.
No dividend allowed
(5) Unless the trustee retains sufficient funds to provide for payment of any claims that may be filed under a provision referred to in any of paragraphs (4)(a) to (g), no dividend shall be declared until the expiry of three months after the trustee has filed all returns that the trustee is required to file.
93. (1) Subsection 152(1) of the Act is replaced by the following:
Statement of receipts and disbursements
152. (1) The trustee’s final statement of receipts and disbursements shall contain
(a) a complete account of
(i) all moneys received by the trustee out of the bankrupt’s property or otherwise,
(ii) the amount of interest received by the trustee,
(iii) all moneys disbursed and expenses incurred by the trustee,
(iv) all moneys disbursed by the trustee for services provided by persons related to the trustee, and
(v) the remuneration claimed by the trustee; and
(b) full particulars of, and a description and value of, all the bankrupt’s property that has not been sold or realized together with the reason why it has not been sold or realized and the disposition made of that property.
(2) Subsection 152(5) of the Act is replaced by the following:
Notice of final dividend, etc.
(5) After the Superintendent has commented on the taxation of the trustee’s accounts or advised the trustee that the Superintendent has no comments to make and the trustee’s accounts have been taxed, the trustee shall send, in the prescribed manner, to every creditor whose claim has been proved, to the registrar, to the Superintendent and to the bankrupt
(a) a copy of the final statement of receipts and disbursements;
(b) a copy of the dividend sheet; and
(c) a notice, in the prescribed form, of the trustee’s intention to pay a final dividend after the expiry of 15 days from the sending of the notice, statement and dividend sheet and to apply to the court for his or her discharge on a subsequent date that is not less than 30 days after the payment of the dividend.
94. (1) Paragraphs 155(d) and (d.1) of the Act are replaced by the following:
(d) all notices, statements and other documents shall be sent in the prescribed manner;
(d.1) if a first meeting of the creditors is requested by the official receiver or by creditors who have in the aggregate at least 25% in value of the proven claims, the trustee shall call the meeting, in the prescribed form and manner, and it must be held within 21 days after being called;
(2) Section 155 of the Act is amended by striking out the word “and” at the end of paragraph (i), by adding the word “and” at the end of paragraph (j) and by adding the following after paragraph (j):
(k) the court’s authorization referred to in subsection 30(4) for a sale or disposal of any of the bankrupt’s property to a person who is related to the bankrupt is required only if the creditors decide that the authorization is required.
95. The Act is amended by adding the following after section 156:
Agreement to pay fees and disbursements
156.1 An individual bankrupt who has never before been bankrupt under the laws of Canada or of any prescribed jurisdiction and who is not required to make payments under section 68 to the estate of the bankrupt may enter into an agreement with the trustee to pay the trustee’s fees and disbursements if the total amount required to be paid under the agreement is not more than the prescribed amount and that total amount is to be paid before the expiry of the 12-month period after the bankrupt’s discharge. The agreement may be enforced after the bankrupt’s discharge.
96. Subsection 157.1(3) of the Act is replaced by the following:
Effect on automatic discharge
(3) Subsection 168.1(1) does not apply to an individual bankrupt who has refused or neg­lected to receive counselling under subsection (1).
97. Subsections 161(2) and (2.1) of the Act are replaced by the following:
Record of examination
(2) The official receiver shall make a record of the examination and shall forward a copy of the record to the Superintendent and the trustee.
Record of examination available to creditors on request
(2.1) If the examination is held
(a) before the first meeting of creditors, the record of the examination shall be communicated to the creditors at the meeting; or
(b) after the first meeting of creditors, the record of examination shall be made available to any creditor who requests it.
98. Subsection 162(2) of the Act is repealed.
99. Section 166 of the Act is replaced by the following:
Penalty for failure to attend for examination
166. If the bankrupt fails to present himself or herself for examination before the official receiver as required by paragraph 158(c) or if the bankrupt or any other person is served with an appointment or a summons to attend for examination and is paid or tendered the proper conduct money and witness fees as fixed by the General Rules but refuses or neglects to attend as required by the appointment or summons, the court may, on the application of the trustee or the official receiver, by warrant cause the bankrupt or other person so in default to be apprehended and brought up for examination.
100. Section 168.1 of the Act is replaced by the following:
Automatic discharge
168.1 (1) Subject to subsections (2) and 157.1(3), the following provisions apply in respect of an individual bankrupt other than a bankrupt referred to in subsection 172.1(1):
(a) in the case of a bankrupt who has never before been bankrupt under the laws of Canada or of any prescribed jurisdiction, the bankrupt is automatically discharged
(i) on the expiry of 9 months after the date of bankruptcy unless, in that 9-month period, an opposition to the discharge has been filed or the bankrupt has been required to make payments under section 68 to the estate of the bankrupt, or
(ii) on the expiry of 21 months after the date of bankruptcy unless an opposition to the discharge has been filed before the automatic discharge takes effect; and
(b) in the case of a bankrupt who has been a bankrupt one time before under the laws of Canada or of any prescribed jurisdiction, the bankrupt is automatically discharged
(i) on the expiry of 24 months after the date of bankruptcy unless, in that 24-month period, an opposition to the discharge has been filed or the bankrupt has been required to make payments under section 68 to the estate of the bankrupt, or
(ii) on the expiry of 36 months after the date of bankruptcy unless an opposition to the discharge has been filed before the automatic discharge takes effect.
Application not precluded
(2) Nothing in subsection (1) precludes a bankrupt from applying to the court for a discharge before the bankrupt would otherwise be automatically discharged, and that subsection ceases to apply to a bankrupt who makes such an application.
Application of other provisions
(3) The provisions of this Act concerning the discharge of bankrupts apply in respect of an individual bankrupt who has never before been bankrupt under the laws of Canada or of any prescribed jurisdiction, to the extent that those provisions are not inconsistent with this section, whether or not the bankrupt applies to the court for a discharge referred to in subsection (2).
Notice of impending discharge
(4) The trustee shall, not less than 15 days before the date of a bankrupt’s automatic discharge, give notice of the impending discharge, in the prescribed form, to the Superintendent, the bankrupt and every creditor who has proved a claim, at the creditor’s latest known address.
Effect of automatic discharge
(5) An automatic discharge is deemed, for all purposes, to be an absolute and immediate order of discharge.
Certificate
(6) Without delay after a bankrupt has been automatically discharged, the trustee shall issue a certificate to the discharged bankrupt, in the prescribed form, declaring that the bankrupt is discharged and is released from all debts except those matters referred to in subsection 178(1). The trustee shall send a copy of the certificate to the Superintendent.
Oppositions to automatic discharge
168.2 (1) The following provisions apply in respect of oppositions to the automatic discharge of an individual bankrupt:
(a) if the Superintendent opposes the discharge, the Superintendent must give notice of the opposition, together with the grounds for it, to the trustee and to the bankrupt before the automatic discharge would otherwise take effect;
(b) if a creditor opposes the discharge, the creditor must give notice of the opposition, together with the grounds for it, to the Superintendent, to the trustee and to the bankrupt before the automatic discharge would otherwise take effect; and
(c) if the trustee opposes the discharge, the trustee must give notice of the opposition in the prescribed form and manner, together with the grounds for the opposition, to the bankrupt and the Superintendent before the automatic discharge would otherwise take effect.
Application for hearing
(2) If the Superintendent, a creditor or the trustee opposes the automatic discharge of an individual bankrupt, the trustee shall, unless the matter is to be dealt with by mediation under section 170.1, apply without delay to the court for an appointment for the hearing of the opposition in the manner referred to in sections 169 to 176, and the hearing must be held
(a) within 30 days after the day on which the appointment is made; or
(b) at any later time that may be fixed by the court at the bankrupt’s or trustee’s request.
101. (1) Subsections 169(1) to (3) of the Act are replaced by the following:
Bankruptcy to operate as application for discharge
169. (1) The making of a bankruptcy order against, or an assignment by, a person other than a corporation or an individual in respect of whom subsection 168.1(1) applies operates as an application for discharge.
Appointment to be obtained by trustee
(2) The trustee, before proceeding to his or her discharge and in any case not earlier than three months and not later than one year after the bankruptcy of a person for whom there is an application for discharge by virtue of subsection (1) shall, on five days notice to the bankrupt, apply to the court for an appointment for a hearing of the application for the bankrupt’s discharge, and the hearing must be held within 30 days after the day on which the appointment is made or at any other time that may be fixed by the court at the bankrupt’s or trustee’s request.
(2) Subsection 169(5) of the French version of the Act is replaced by the following:
Honoraires et débours du syndic
(5) Le tribunal peut, avant de délivrer une convocation, si le syndic le requiert, exiger que soit déposée auprès de celui-ci telle somme, ou que lui soit fournie telle garantie que le tribunal estime appropriées, pour le paiement de ses honoraires et débours occasionnés par la demande de libération.
(3) Subsection 169(6) of the Act is replaced by the following:
Notice to creditors
(6) The trustee, on obtaining or being served with an appointment for hearing an application for discharge, shall, not less than 15 days before the day appointed for the hearing of the application, send a notice of the hearing, in the prescribed form and manner, to the Superintendent, the bankrupt and every known creditor, at the creditor’s latest known address.
102. The portion of subsection 170(1) of the Act before paragraph (a) is replaced by the following:
Trustee to prepare report
170. (1) The trustee shall, in the prescribed circumstances and at the prescribed times, prepare a report, in the prescribed form, with respect to
103. (1) Subsections 170.1(1) to (5) of the Act are replaced by the following:
Mediation request to be sent to official receiver
170.1 (1) If the discharge of an individual bankrupt is opposed by a creditor or the trustee in whole or in part on a ground referred to in paragraph 173(1)(m) or (n), the trustee shall send an application for mediation, in the prescribed form, to the official receiver within five days after the day on which the bankrupt would have been automatically discharged had the opposition not been made, or within any further time after that day that the official receiver may allow.
(2) Subsections 170.1(6) to (9) of the Act are renumbered as subsections 170.1(2) to (5).
104. (1) Subsection 172(1) of the Act is replaced by the following:
Court may grant or refuse discharge
172. (1) On the hearing of an application of a bankrupt for a discharge, other than a bankrupt referred to in section 172.1, the court may
(a) grant or refuse an absolute order of discharge;
(b) suspend the operation of an absolute order of discharge for a specified time; or
(c) grant an order of discharge subject to any terms or conditions with respect to any earnings or income that may afterwards become due to the bankrupt or with respect to the bankrupt’s after-acquired property.
(2) The portion of subsection 172(2) of the Act before paragraph (a) is replaced by the following:
Powers of court to refuse or suspend discharge or grant conditional discharge
(2) The court shall, on proof of any of the facts referred to in section 173 given orally under oath or by affidavit,
(3) Section 172 of the Act is amended by adding the following after subsection (2):
Directions to pay
(2.1) If the court imposes as a condition of discharge that the bankrupt pay money, the court may direct that the bankrupt pay the money to any creditor, to any class of creditors, to the trustee or to the trustee and one or more creditors, in any amount and manner that the court considers appropriate.
105. The Act is amended by adding the following after section 172:
Exception — personal income tax debtors
172.1 (1) In the case of a bankrupt who has $200,000 or more of personal income tax debt and whose personal income tax debt represents 75% or more of the bankrupt’s total unsecured proven claims, the hearing of an application for a discharge may not be held before the expiry of
(a) if the bankrupt has never before been bankrupt under the laws of Canada or of any prescribed jurisdiction,
(i) 9 months after the date of bankruptcy if the bankrupt has not been required to make payments under section 68 to the estate of the bankrupt at any time during those 9 months, or
(ii) 21 months after the date of bankruptcy, in any other case;
(b) if the bankrupt has been a bankrupt one time before under the laws of Canada or of any prescribed jurisdiction,
(i) 24 months after the date of bankruptcy if the bankrupt has not been required to make payments under section 68 to the estate of the bankrupt at any time during those 24 months, or
(ii) 36 months after the date of bankruptcy, in any other case; and
(c) in the case of any other bankrupt, 36 months after the date of the bankruptcy.
Appointment to be obtained by trustee
(2) Before proceeding to the trustee’s discharge and before the first day that the hearing could be held in respect of a bankrupt referred to in subsection (1), the trustee must, on five days notice to the bankrupt, apply to the court for an appointment for a hearing of the application for the bankrupt’s discharge.
Powers of court to refuse or suspend discharge or grant conditional discharge
(3) On the hearing of an application for a discharge referred to in subsection (1), the court shall, subject to subsection (4),
(a) refuse the discharge;
(b) suspend the discharge for any period that the court thinks proper; or
(c) require the bankrupt, as a condition of his or her discharge, to perform any acts, pay any moneys, consent to any judgments or comply with any other terms that the court may direct.
Factors to be considered
(4) In making a decision in respect of the application, the court must take into account
(a) the circumstances of the bankrupt at the time the personal income tax debt was incurred;
(b) the efforts, if any, made by the bankrupt to pay the personal income tax debt;
(c) whether the bankrupt made payments in respect of other debts while failing to make reasonable efforts to pay the personal income tax debt; and
(d) the bankrupt’s financial prospects for the future.
Requirements if discharge suspended
(5) If the court makes an order suspending the discharge, the court shall, in the order, require the bankrupt to file income and expense statements with the trustee each month and to file all returns of income required by law to be filed.
Court may modify after year
(6) If, at any time after the expiry of one year after the day on which any order is made under this section, the bankrupt satisfies the court that there is no reasonable probability that he or she will be in a position to comply with the terms of the order, the court may modify the terms of the order or of any substituted order, in any manner and on any conditions that it thinks fit.
Power to suspend
(7) The powers of suspending and of attaching conditions to the discharge of a bankrupt may be exercised concurrently.
Meaning of “personal income tax debt”
(8) For the purpose of this section, “personal income tax debt” means the amount payable, within the meaning of subsection 223(1) of the Income Tax Act without reference to paragraphs (b) to (c), by an individual and the amount that is payable by an individual under any provincial legislation that imposes a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, including, for greater certainty, the amount of any interest, penalties or fines imposed under the Income Tax Act or the provincial legislation.
106. Section 175 of the Act is repealed.
107. (1) Paragraph 178(1)(e) of the Act is replaced by the following:
(e) any debt or liability for obtaining property or services by false pretences or fraudulent misrepresentation;
(2) Subparagraph 178(1)(g)(ii) of the Act is replaced by the following:
(ii) within seven years after the date on which the bankrupt ceased to be a full- or part-time student; or
(3) Subsection 178(1.1) of the Act is replaced by the following:
Court may order non-application of subsection (1)
(1.1) At any time after five years after a bankrupt who has a debt referred to in paragraph (1)(g) ceases to be a full- or part-time student, as the case may be, under the applicable Act or enactment, the court may, on application, order that subsection (1) does not apply to the debt if the court is satisfied that
(a) the bankrupt has acted in good faith in connection with the bankrupt’s liabilities under the debt; and
(b) the bankrupt has and will continue to experience financial difficulty to such an extent that the bankrupt will be unable to pay the debt.
108. Section 179 of the English version of the Act is replaced by the following:
Partner or co-trustee not released
179. An order of discharge does not release a person who at the time of the bankruptcy was a partner or co-trustee with the bankrupt or was jointly bound or had made a joint contract with the bankrupt, or a person who was surety or in the nature of a surety for the bankrupt.
109. Section 181 of the Act is amended by adding the following after subsection (2):
Final statement of receipts and disbursements
(3) If an order is made under subsection (1), the trustee shall, without delay, prepare the final statements of receipts and disbursements referred to in section 151.
110. (1) Subsection 197(5) of the Act is repealed.
(2) Subsections 197(6.1) to (8) of the Act are replaced by the following:
Costs of discharge opposed
(6.1) If a creditor opposes the discharge of a bankrupt, the court may, if it grants the discharge on the condition that the bankrupt pay an amount or consent to a judgment to pay an amount, award costs, including legal costs, to the opposing creditor out of the estate in an amount that is not more than the amount realized by the estate under the conditional order, including any amount brought into the estate under the consent to the judgment.
Costs where opposition frivolous or vexatious
(7) If a creditor opposes the discharge of a bankrupt and the court finds the opposition to be frivolous or vexatious, the court may order the creditor to pay costs, including legal costs, to the estate.
111. Paragraph 199(b) of the Act is replaced by the following:
(b) obtains credit to a total of $1,000 or more from any person or persons without informing them that the undischarged bankrupt is an undischarged bankrupt,
112. (1) Paragraph 202(1)(h) of the Act is replaced by the following:
(h) being a trustee, makes any arrangement under any circumstances with the bankrupt, or any legal counsel, auctioneer or other person employed in connection with a bankruptcy, for any gift, remuneration or pecuniary or other consideration or benefit whatever beyond the remuneration payable out of the estate, or accepts any such consideration or benefit from any such person, or makes any arrangement for giving up, or gives up, any part of the remuneration, either as a receiver within the meaning of subsection 243(2) or trustee, to the bankrupt or any legal counsel, auctioneer or other person employed in connection with the bankruptcy,
(2) Section 202 of the Act is amended by adding the following after subsection (4):
Witnesses failing to attend, etc.
(5) Every person who fails, without valid excuse, to comply with a subpoena, request or summons issued under subsection 14.02(1.1) is guilty of an offence punishable on summary conviction and liable to a fine of not more than $1,000.
113. Subsection 209(2) of the Act is repealed.
114. The Act is amended by adding the following after section 215:
Claims in foreign currency
215.1 A claim for a debt that is payable in a currency other than Canadian currency is to be converted to Canadian currency
(a) in the case of a proposal in respect of an insolvent person and unless otherwise provided in the proposal, if a notice of intention was filed under subsection 50.4(1), as of the date the notice was filed or, if no notice was filed, as of the date the proposal was filed with the official receiver under subsection 62(1);
(b) in the case of a proposal in respect of a bankrupt and unless otherwise provided in the proposal, as of the date of the bankruptcy; or
(c) in the case of a bankruptcy, as of the date of the bankruptcy.
115. (1) Subsections 243(1) and (2) of the Act are replaced by the following:
Court may appoint receiver
243. (1) On the application of a secured creditor, the court may appoint a person to act as a receiver to take possession or control of all or substantially all of the inventory, the accounts receivable or the other property of an insolvent person or a bankrupt that was acquired for, or is used in relation to, a business carried on by the insolvent person or bankrupt.
Definition of “receiver”
(2) Subject to subsections (3) and (4), in this Part, “receiver” means a person who has been appointed to take, or has taken, possession or control, under
(a) an agreement under which property becomes subject to a security (in this Part referred to as a “security agreement”), or
(b) a court order made under subsection (1) that provides for or authorizes the appointment of a receiver or receiver-manager,
of all or substantially all of
(c) the inventory,
(d) the accounts receivable, or
(e) the other property
of an insolvent person or a bankrupt that was acquired for, or is used in relation to, a business carried on by the insolvent person or bankrupt.
(2) Section 243 of the Act is amended by adding the following after subsection (3):
Trustee must be appointed
(4) Only a trustee may be appointed under subsection (1) or under an agreement or order referred to in paragraph (2)(a) or (b).
116. Subsection 244(4) of the Act is replaced by the following:
Exception
(4) This section does not apply with respect to the inventory, accounts receivable or other property of an insolvent person or of a bankrupt if there is a receiver.
117. (1) The definitions “customer name securities” and “deferred customer” in section 253 of the Act are replaced by the following:
“customer name securities”« valeur mobilière immatriculée »
“customer name securities” means securities that on the date of bankruptcy of a securities firm are held by or on behalf of the securities firm for the account of a customer and are registered or recorded in the appropriate manner in the name of the customer or are in the process of being so registered or recorded, but does not include securities registered or recorded in the appropriate manner in the name of the customer that, by endorsement or otherwise, are negotiable by the securities firm;
“deferred customer”« client responsable »
“deferred customer” means a customer whose misconduct, either in the customer’s capacity as a customer or otherwise, caused or materially contributed to the insolvency of a securities firm;
(2) Section 253 of the Act is amended by adding the following in alphabetical order:
“hold”« détenir »
“hold”, in relation to a security, includes holding it in electronic form;
118. Paragraph 256(1)(d) of the Act is replaced by the following:
(d) a person who, in respect of property of a securities firm, is a receiver within the meaning of subsection 243(2), a receiver-man­ager, a liquidator or any other person with similar functions appointed under a federal or provincial enactment relating to securities that provides for the appointment of that other person, if the securities firm has committed an act of bankruptcy referred to in section 42 within the six months before the filing of the application.
119. Subsection 261(1) of the Act is replaced by the following:
Vesting of securities, etc., in trustee
261. (1) If a securities firm becomes bankrupt, the following securities and cash vest in the trustee:
(a) securities owned by the securities firm;
(b) securities and cash held by any person for the account of the securities firm; and
(c) securities and cash held by the securities firm for the account of a customer, other than customer name securities.
120. (1) Subsection 262(2) of the Act is replaced by the following:
Distribution
(2) To the extent that securities of a particular type are available in the customer pool fund, the trustee shall distribute them to customers with claims to the securities, in proportion to their claims to the securities, up to the appropriate portion of their net equity, unless the trustee determines that, in the circumstances, it would be more appropriate to sell the securities and distribute the proceeds to the customers with claims to the securities in proportion to their claims to the securities.
(2) Paragraph 262(3)(a) of the Act is replaced by the following:
(a) to creditors in the order set out in subsection 136(1);
121. Subsection 263(3) of the Act is replaced by the following:
Customer indebted to securities firm
(3) If a customer to whom customer name securities belong and who is indebted to the securities firm on account of customer name securities not fully paid for, or on another account, does not discharge their indebtedness in full, the trustee may, on notice to the customer, sell sufficient customer name securities to discharge the indebtedness, and those securities are then free of any right, title or interest of the customer. If the trustee so discharges the customer’s indebtedness, the trustee shall deliver any remaining customer name securities to the customer.
122. Part XIII of the Act is replaced by the following:
PART XIII
CROSS-BORDER INSOLVENCIES
Purpose
Purpose
267. The purpose of this Part is to provide mechanisms for dealing with cases of cross-border insolvencies and to promote
(a) cooperation between the courts and other competent authorities in Canada with those of foreign jurisdictions in cases of cross-border insolvencies;
(b) greater legal certainty for trade and investment;
(c) the fair and efficient administration of cross-border insolvencies that protects the interests of creditors and other interested persons, and those of debtors;
(d) the protection and the maximization of the value of debtors’ property; and
(e) the rescue of financially troubled businesses to protect investment and preserve employment.
Interpretation
Definitions
268. (1) The following definitions apply in this Part.
“foreign court”« tribunal étranger »
“foreign court” means a judicial or other authority competent to control or supervise a foreign proceeding.
“foreign main proceeding”« principale »
“foreign main proceeding” means a foreign proceeding in a jurisdiction where the debtor has the centre of the debtor’s main interests.
“foreign non-main proceeding”« secondaire »
“foreign non-main proceeding” means a foreign proceeding, other than a foreign main proceeding.
“foreign proceeding”« instances étrangères »
“foreign proceeding” means a judicial or an administrative proceeding, including an interim proceeding, in a jurisdiction outside Canada dealing with creditor’s collective interests generally under any law relating to bankruptcy or insolvency in which a debtor’s property and affairs are subject to control or supervision by a foreign court for the purpose of reorganization or liquidation.
“foreign representative”« représentant étranger »
“foreign representative” means a person or body, including one appointed on an interim basis, who is authorized, in a foreign proceeding in respect of a debtor, to
(a) administer the debtor’s property or affairs for the purpose of reorganization or liquidation; or
(b) act as a representative in respect of the foreign proceeding.
Centre of debtor’s main interests
(2) For the purposes of this Part, in the absence of proof to the contrary, a debtor’s registered office and, in the case of a debtor who is an individual, the debtor’s ordinary place of residence are deemed to be the centre of the debtor’s main interests.
Recognition of Foreign Proceeding
Application for recognition of a foreign proceeding
269. (1) A foreign representative may apply to the court for recognition of the foreign proceeding in respect of which he or she is a foreign representative.
Documents that must accompany application
(2) Subject to subsection (3), the application must be accompanied by
(a) a certified copy of the instrument, however designated, that commenced the foreign proceeding or a certificate from the foreign court affirming the existence of the foreign proceeding;
(b) a certified copy of the instrument, however designated, authorizing the foreign representative to act in that capacity or a certificate from the foreign court affirming the foreign representative’s authority to act in that capacity; and
(c) a statement identifying all foreign proceedings in respect of the debtor that are known to the foreign representative.
Documents may be considered as proof
(3) The court may, without further proof, accept the documents referred to in paragraphs (2)(a) and (b) as evidence that the proceeding to which they relate is a foreign proceeding and that the applicant is a foreign representative in respect of the foreign proceeding.
Other evidence
(4) In the absence of the documents referred to in paragraphs (2)(a) and (b), the court may accept any other evidence of the existence of the foreign proceeding and of the foreign represent­ative’s authority that it considers appropriate.
Translation
(5) The court may require a translation of any document accompanying the application.
Order recognizing foreign proceeding
270. (1) If the court is satisfied that the application for the recognition of a foreign proceeding relates to a foreign proceeding and that the applicant is a foreign representative in respect of that foreign proceeding, the court shall make an order recognizing the foreign proceeding.
Nature of foreign proceeding to be specified
(2) The court shall specify in the order whether the foreign proceeding is a foreign main proceeding or a foreign non-main proceeding.
Effects of recognition of a foreign main proceeding
271. (1) Subject to subsections (2) to (4), on the making of an order recognizing a foreign proceeding that is specified to be a foreign main proceeding,
(a) no person shall commence or continue any action, execution or other proceedings concerning the debtor’s property, debts, liabilities or obligations;
(b) if the debtor carries on a business, the debtor shall not, outside the ordinary course of the business, sell or otherwise dispose of any of the debtor’s property in Canada that relates to the business and shall not sell or otherwise dispose of any other property of the debtor in Canada; and
(c) if the debtor is an individual, the debtor shall not sell or otherwise dispose of any property of the debtor in Canada.
When subsection (1) does not apply
(2) Subsection (1) does not apply if any proceedings under this Act have been commenced in respect of the debtor at the time the order recognizing the foreign proceeding is made.
Exceptions
(3) The prohibitions in paragraphs (1)(a) and (b) are subject to the exceptions specified by the court in the order recognizing the foreign proceeding that would apply in Canada had the foreign proceeding taken place in Canada under this Act.
Application of this and other Acts
(4) Nothing in subsection (1) precludes the commencement or the continuation of proceedings under this Act, the Companies’ Creditors Arrangement Act or the Winding-up and Restructuring Act in respect of the debtor.
Orders
272. (1) If an order recognizing a foreign proceeding is made, the court may, on application by the foreign representative who applied for the order, if the court is satisfied that it is necessary for the protection of the debtor’s property or the interests of a creditor or creditors, make any order that it considers appropriate, including an order
(a) if the foreign proceeding is a foreign non-main proceeding, imposing the prohibitions referred to in paragraphs 271(1)(a) to (c) and specifying the exceptions to those prohibitions, taking subsection 271(3) into account;
(b) respecting the examination of witnesses, the taking of evidence or the delivery of information concerning the debtor’s property, affairs, debts, liabilities and obligations;
(c) entrusting the administration or realization of all or part of the debtor’s property located in Canada to the foreign representative or to any other person designated by the court; and
(d) appointing a trustee as receiver of all or any part of the debtor’s property in Canada, for any term that the court considers appropriate and directing the receiver to do all or any of the following, namely,
(i) to take possession of all or part of the debtor’s property specified in the appointment and to exercise the control over the property and over the debtor’s business that the court considers appropriate, and
(ii) to take any other action that the court considers appropriate.
Restriction
(2) If any proceedings under this Act have been commenced in respect of the debtor at the time an order recognizing the foreign proceeding is made, an order made under subsection (1) must be consistent with any order that may be made in any proceedings under this Act.
Application of this and other Acts
(3) The making of an order under paragraph (1)(a) does not preclude the commencement or the continuation of proceedings under this Act, the Companies’ Creditors Arrangement Act or the Winding-up and Restructuring Act in respect of the debtor.
Terms and conditions of orders
273. An order under this Part may be made on any terms and conditions that the court considers appropriate in the circumstances.
Commencement or continuation of proceedings
274. If an order recognizing a foreign proceeding is made, the foreign representative may commence or continue any proceedings under sections 43, 46 to 47.1 and 49 and subsections 50(1) and 50.4(1) in respect of a debtor as if the foreign representative were a creditor of the debtor, or the debtor, as the case may be.
Obligations
Cooperation — court
275. (1) If an order recognizing a foreign proceeding is made, the court shall cooperate, to the maximum extent possible, with the foreign representative and the foreign court involved in the foreign proceeding.
Cooperation — other authorities in Canada
(2) If any proceedings under this Act have been commenced in respect of a debtor and an order recognizing a foreign proceeding is made in respect of the debtor, every person who exercises any powers or performs duties and functions in any proceedings under this Act shall cooperate, to the maximum extent possible, with the foreign representative and the foreign court involved in the foreign proceeding.
Obligations of foreign representative
276. If an order recognizing a foreign proceeding is made, the foreign representative who applied for the order shall
(a) without delay, inform the court of
(i) any substantial change in the status of the recognized foreign proceeding,
(ii) any substantial change in the status of the foreign representative’s authority to act in that capacity, and
(iii) any other foreign proceeding in respect of the same debtor that becomes known to the foreign representative; and
(b) publish, without delay after the order is made, once a week for two consecutive weeks, or as otherwise directed by the court, in one or more newspapers in Canada specified by the court, a notice containing the prescribed information.
Multiple Proceedings
Concurrent proceedings
277. If any proceedings under this Act in respect of a debtor are commenced at any time after an order recognizing the foreign proceeding is made,
(a) the court shall review any order made under section 272 and, if it determines that the order is inconsistent with any orders made in the proceedings under this Act, the court shall amend or revoke the order; and
(b) if the foreign proceeding is a foreign main proceeding, the court shall make an order terminating the application of the prohibitions in paragraphs 271(1)(a) to (c) if the court determines that those prohibitions are inconsistent with any similar prohibitions imposed in the proceedings under this Act.
Multiple foreign proceedings
278. (1) If, at any time after an order is made in respect of a foreign non-main proceeding in respect of a debtor, an order recognizing a foreign main proceeding is made in respect of the debtor, the court shall review any order made under section 272 in respect of the foreign non-main proceeding and, if it determines that the order is inconsistent with any orders made under that section in respect of the foreign main proceedings, the court shall amend or revoke the order.
Multiple foreign proceedings
(2) If, at any time after an order is made in respect of a foreign non-main proceeding in respect of the debtor, an order recognizing another foreign non-main proceeding is made in respect of the debtor, the court shall, for the purpose of facilitating the coordination of the foreign non-main proceedings, review any order made under section 272 in respect of the first recognized proceeding and amend or revoke that order if it considers it appropriate.
Miscellaneous Provisions
Authorization to act as representative of proceeding under this Act
279. The court may authorize any person or body to act as a representative in respect of any proceeding under this Act for the purpose of having them recognized in a jurisdiction outside Canada.
Foreign representative status
280. An application by a foreign representative for any order under this Part does not submit the foreign representative to the jurisdiction of the court for any other purpose except with regard to the costs of the proceedings, but the court may make any order under this Part conditional on the compliance by the foreign representative with any other court order.
Foreign proceeding appeal
281. A foreign representative is not prevented from making an application to the court under this Part by reason only that proceedings by way of appeal or review have been taken in a foreign proceeding, and the court may, on an application if such proceedings have been taken, grant relief as if the proceedings had not been taken.
Presumption of insolvency
282. For the purposes of this Part, if a bankruptcy, an insolvency or a reorganization or a similar order has been made in respect of a debtor in a foreign proceeding, a certified copy of the order is, in the absence of evidence to the contrary, proof that the debtor is insolvent and proof of the appointment of the foreign representative made by the order.
Credit for recovery in other jurisdictions
283. (1) If a bankruptcy order, a proposal or an assignment is made in respect of a debtor under this Act, the following shall be taken into account in the distribution of dividends to the debtor’s creditors in Canada as if they were a part of that distribution:
(a) the amount that a creditor receives or is entitled to receive outside Canada by way of a dividend in a foreign proceeding in respect of the debtor; and
(b) the value of any property of the debtor that the creditor acquires outside Canada on account of a provable claim of the creditor or that the creditor acquires outside Canada by way of a transfer that, if the transfer were subject to this Act, would be a preference over other creditors or a transfer at undervalue.
Restriction
(2) Despite subsection (1), the creditor is not entitled to receive a dividend from the distribution in Canada until every other creditor who has a claim of equal rank in the order of priority established under this Act has received a dividend whose amount is the same percentage of that other creditor’s claim as the aggregate of the amount referred to in paragraph (1)(a) and the value referred to in paragraph (1)(b) is of that creditor’s claim.
Court not prevented from applying certain rules
284. (1) Nothing in this Part prevents the court, on the application of a foreign represent­ative or any other interested person, from applying any legal or equitable rules governing the recognition of foreign insolvency orders and assistance to foreign representatives that are not inconsistent with the provisions of this Act.
Court not compelled to give effect to certain orders
(2) Nothing in this Part requires the court to make any order that is not in compliance with the laws of Canada or to enforce any order made by a foreign court.
PART XIV
REVIEW OF ACT
Review of Act
285. (1) Within five years after the coming into force of this section, the Minister shall cause to be laid before both Houses of Parliament a report on the provisions and operation of this Act, including any recommendations for amendments to those provisions.
Reference to parliamentary committee
(2) The report stands referred to the committee of the Senate, the House of Commons or both Houses of Parliament that is designated or established for that purpose, which shall
(a) as soon as possible after the laying of the report, review the report; and
(b) report to the Senate, the House of Commons or both Houses of Parliament, as the case may be, within one year after the laying of the Minister’s report, or any further time authorized by the Senate, the House of Commons or both Houses of Parliament.
Terminology change — chairman
123. The English version of the Act is amended by replacing the word “chairman” with the word “chair” wherever it occurs in the following provisions:
(a) subsection 36(2):
(b) subsection 51(3);
(c) section 52;
(d) section 66.16;
(e) sections 105 and 106;
(f) section 108; and
(g) section 114.
AMENDMENTS TO THE COMPANIES’ CREDITORS ARRANGEMENT ACT
124. (1) Section 2 of the Companies’ Creditors Arrangement Act is renumbered as subsection 2(1).
(2) The definitions “company” and “shareholder” in subsection 2(1) of the Act are replaced by the following:
“company”« compagnie »
“company” means any company, corporation or legal person incorporated by or under an Act of Parliament or of the legislature of a province, any incorporated company having assets or doing business in Canada, wherever incorporated, and any income trust, but does not include banks, authorized foreign banks within the meaning of section 2 of the Bank Act, railway or telegraph companies, insurance companies and companies to which the Trust and Loan Companies Act applies;
“shareholder”« actionnaire »
“shareholder” means a shareholder, member or holder of any units of any company to which this Act applies;
(3) Subsection 2(1) of the Act is amended by adding the following in alphabetical order:
“bargaining agent”« agent négociateur »
“bargaining agent” means any trade union that has entered into a collective agreement on behalf of the employees of a company;
“cash-flow statement”« état de l’évolution de l’encaisse »
“cash-flow statement”, in respect of a company, means the statement referred to in paragraph 10(2)(a) indicating the company’s projected cash flow;
“claim”« réclamation »
“claim” means any indebtedness, liability or obligation of any kind that would be a claim provable within the meaning of section 2 of the Bankruptcy and Insolvency Act;
“collective agreement”« convention collective »
“collective agreement”, in relation to a debtor company, means a collective agreement within the meaning of the jurisdiction governing collective bargaining between the debtor company and a bargaining agent;
“director”« administra- teur »
“director”, in respect of a company, includes any person, however designated, acting in any capacity that is similar to that of a director of a corporation and, in respect of an income trust, includes its trustee;
“income trust”« fiducie de revenu »
“income trust” means a trust
(a) that has assets in Canada, and
(b) the units of which are traded on a prescribed stock exchange;
“initial application”« demande initiale »
“initial application” means the first application made under this Act in respect of a company;
“monitor”« contrôleur »
“monitor”, in respect of a company, means the person appointed under section 11.7 to monitor the business and financial affairs of the company;
“Superintendent of Bankruptcy”« surintendant des faillites »
“Superintendent of Bankruptcy” means the Superintendent of Bankruptcy appointed under subsection 5(1) of the Bankruptcy and Insolvency Act;
(4) Subsection 2(1) of the English version of the Act is amended by adding the following in alphabetical order:
“prescribed”Version anglaise seulement
“prescribed” means prescribed by regulation;
(5) Section 2 of the Act is amended by adding the following after subsection (1):
Meaning of “related”
(2) For the purpose of this Act, section 4 of the Bankruptcy and Insolvency Act applies for the purpose of determining whether a person is related to a company.
125. Subsection 3(1) of the Act is replaced by the following:
Application
3. (1) This Act applies in respect of a debtor company or affiliated debtor companies if the total of claims against the debtor company or affiliated debtor companies, determined in accordance with section 20, is more than $5,000,000 or any other amount that is prescribed.
126. Section 6 of the Act is renumbered as subsection 6(1) and is amended by adding the following:
Restriction — certain Crown claims
(2) Unless Her Majesty agrees otherwise, the court may sanction a compromise or an arrangement only if the compromise or arrangement provides for the payment in full to Her Majesty in right of Canada or a province, within six months after court sanction of the compromise or arrangement, of all amounts that were outstanding at the time of the application for an order under section 11 or 11.02 and that are of a kind that could be subject to a demand under
(a) subsection 224(1.2) of the Income Tax Act;
(b) any provision of the Canada Pension Plan or of the Employment Insurance Act that refers to subsection 224(1.2) of the Income Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, or an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, and of any related interest, penalties or other amounts; or
(c) any provision of provincial legislation that has a purpose similar to subsection 224(1.2) of the Income Tax Act, or that refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, and the sum
(i) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or
(ii) is of the same nature as a contribution under the Canada Pension Plan if the province is a “province providing a comprehensive pension plan” as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a “provincial pension plan” as defined in that subsection.
Restriction — default of remittance to Crown
(3) If an order contains a provision authorized by section 11.09, no compromise or arrangement shall be sanctioned by the court if, at the time the court hears the application for sanction, Her Majesty in right of Canada or a province satisfies the court that the company is in default on any remittance of an amount referred to in subsection (2) that became due after the time of the application for an order under section 11.02.
Restriction — employees, etc.
(4) The court may sanction a compromise or an arrangement only if
(a) the compromise or arrangement provides for payment to the employees and former employees of the company, immediately after the court’s sanction, of
(i) amounts at least equal to the amounts that they would have been qualified to receive under paragraph 136(1)(d) of the Bankruptcy and Insolvency Act if the company had become bankrupt on the date of the filing of initial application in respect of the company, and
(ii) wages, salaries, commissions or compensation for services rendered after that date and before the court’s sanction of the compromise or arrangement, together with, in the case of travelling salespersons, disbursements properly incurred by them in and about the company’s business during the same period; and
(b) the court is satisfied that the company can and will make the payments as required under paragraph (a).
Restriction — pensions plan
(5) If the company participates in a prescribed pension plan for the benefit of its employees, the court may sanction a compromise or an arrangement in respect of the company only if
(a) the compromise or arrangement provides for payment, immediately after the court sanction, of the following amounts that are unpaid to the fund established for the purpose of the pension plan:
(i) an amount equal to the sum of all amounts that were deducted from the employees’ remuneration for payment to the fund,
(ii) if the prescribed pension plan is regulated by an Act of Parliament,
(A) an amount equal to the normal cost, within the meaning of subsection 2(1) of the Pension Benefits Standards Regulations, 1985, that was required to be paid by the employer to the fund, and
(B) an amount equal to the sum of all amounts that were required to be paid by the employer to the fund under a defined contribution provision, within the meaning of subsection 2(1) of the Pension Benefits Standards Act, 1985; and
(iii) in the case of any other prescribed pension plan,
(A) an amount equal to the amount that would be the normal cost, within the meaning of subsection 2(1) of the Pension Benefits Standards Regulations, 1985, that the employer would be required to pay to the fund if the prescribed plan were regulated by an Act of Parliament, and
(B) an amount equal to the sum of all amounts that would have been required to be paid by the employer to the fund under a defined contribution provision, within the meaning of subsection 2(1) of the Pension Benefits Standards Act, 1985, if the prescribed plan were regulated by an Act of Parliament; and
(b) the court is satisfied that the company can and will make the payments as required under paragraph (a).
Non-application of subsection (5)
(6) Despite subsection (5), the court may sanction a compromise or arrangement that does not allow for the payment of the amounts referred to in that subsection if it is satisfied that the relevant parties have entered into an agreement, approved by the relevant pension regulator, respecting the payment of those amounts.
127. Section 10 of the Act is renumbered as subsection 10(1) and is amended by adding the following:
Documents that must accompany initial application
(2) An initial application must be accompanied by
(a) a statement indicating, on a weekly basis, the projected cash flow of the debtor company;
(b) a report containing the prescribed representations of the debtor company regarding the preparation of the cash-flow statement; and
(c) copies of all financial statements, audited or unaudited, prepared during the year before the application or, if no such statements were prepared in that year, a copy of the most recent such statement.
Publication ban
(3) The court may make an order prohibiting the release to the public of any cash-flow statement, or any part of a cash-flow statement, if it is satisfied that the release would unduly prejudice the debtor company and the making of the order would not unduly prejudice the company’s creditors, but the court may, in the order, direct that the cash-flow statement or any part of it be made available to any person specified in the order on any terms or conditions that the court considers appropriate.
128. Sections 11 to 11.5 of the Act are replaced by the following:
General power of court
11. Despite anything in the Bankruptcy and Insolvency Act or the Winding-up and Restructuring Act, if an application is made under this Act in respect of a debtor company, the court, on the application of any person interested in the matter, may, subject to the restrictions set out in this Act, on notice to any other person or without notice as it may see fit, make any order that it considers appropriate in the circumstances.
Rights of suppliers
11.01 No order made under section 11 or 11.02 has the effect of
(a) prohibiting a person from requiring immediate payment for goods, services, use of leased or licensed property or other valuable consideration provided after the order is made; or
(b) requiring the further advance of money or credit.
Stays, etc. — initial application
11.02 (1) A court may, on an initial application in respect of a debtor company, make an order on any terms that it may impose, effective for the period that the court considers necessary, which period may not be more than 30 days,
(a) staying, until otherwise ordered by the court, all proceedings taken or that might be taken in respect of the company under the Bankruptcy and Insolvency Act or the Winding-up and Restructuring Act;
(b) restraining, until otherwise ordered by the court, further proceedings in any action, suit or proceeding against the company; and
(c) prohibiting, until otherwise ordered by the court, the commencement of any action, suit or proceeding against the company.
Stays, etc. — other than initial application
(2) A court may, on an application in respect of a debtor company other than an initial application, make an order, on any terms that it may impose,
(a) staying, until otherwise ordered by the court, for any period that the court considers necessary, all proceedings taken or that might be taken in respect of the company under an Act referred to in paragraph (1)(a);
(b) restraining, until otherwise ordered by the court, further proceedings in any action, suit or proceeding against the company; and
(c) prohibiting, until otherwise ordered by the court, the commencement of any action, suit or proceeding against the company.
Burden of proof on application
(3) The court shall not make the order unless
(a) the applicant satisfies the court that circumstances exist that make the order appropriate; and
(b) in the case of an order under subsection (2), the applicant also satisfies the court that the applicant has acted, and is acting, in good faith and with due diligence.
Restriction
(4) Orders doing anything referred to in subsection (1) or (2) may only be made under this section.
Stays — directors
11.03 (1) An order made under section 11.02 may provide that no person may commence or continue any action against a director of the company on any claim against directors that arose before the commencement of proceedings under this Act and that relates to obligations of the company if directors are under any law liable in their capacity as directors for the payment of those obligations, until a compromise or an arrangement in respect of the company, if one is filed, is sanctioned by the court or is refused by the creditors or the court.
Exception
(2) Subsection (1) does not apply in respect of an action against a director on a guarantee given by the director relating to the company’s obligations or an action seeking injunctive relief against a director in relation to the company.
Persons deemed to be directors
(3) If all of the directors have resigned or have been removed by the shareholders without replacement, any person who manages or supervises the management of the business and affairs of the company is deemed to be a director for the purposes of this section.
Persons obligated under letter of credit or guarantee
11.04 No order made under section 11.02 has affect on any action, suit or proceeding against a person, other than the company in respect of whom the order is made, who is obligated under a letter of credit or guarantee in relation to the company.
Eligible financial contracts
11.05 (1) No order may be made under section 11.02 staying or restraining the exercise of any right to terminate, amend or claim any accelerated payment, or a forfeiture of the term, under an eligible financial contract.
Existing eligible financial contracts
(2) For greater certainty, if an eligible financial contract entered into before an order is made under section 11.02 is terminated on or after the date of the order, the setting off of obligations between the company and the other parties to the eligible financial contract, in accordance with its provisions, is permitted and, if net termination values determined in accord­ance with the eligible financial contract are owed by the company to another party to the eligible financial contract, that other party is deemed to be a creditor of the company with a claim against the company in respect of the net termination values.
Definitions
(3) The following definitions apply in this section.
“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);
(l) any master agreement in respect of a master agreement referred to in paragraph (k);
(m) a guarantee of the liabilities under an agreement or contract referred to in paragraphs (a) to (l); or
(n) any agreement of a prescribed kind.
“net termination value”« valeur nette due 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.
Member of the Canadian Payments Association
11.06 No order may be made under section 11.02 that has the effect of preventing 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 a company in accordance with that Act and the by-laws and rules of that Association.
Aircraft objects
11.07 No order may be made under section 11.02 that has the effect of preventing a creditor who holds security on aircraft objects — or a lessor of aircraft objects — under an agreement with a company from taking possession of the aircraft objects
(a) if, after the commencement of proceedings under this Act, the company defaults in protecting or maintaining the aircraft objects in accordance with the agreement;
(b) 60 days after the commencement of proceedings under this Act unless, during that period, the company
(i) 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,
(ii) 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 proceedings under this Act end, and
(iii) agreed to perform all the obligations arising under the agreement after the proceedings under this Act end; or
(c) if, during the period that begins 60 days after the commencement of the proceedings under this Act 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.
Restriction — certain powers, duties and functions
11.08 No order may be made under section 11.02 that affects
(a) the exercise or performance by the Minister of Finance or the Superintendent of Financial Institutions of any power, duty or function assigned to them by the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act or the Trust and Loan Companies Act;
(b) the exercise or performance by the Governor in Council, the Minister of Finance or the Canada Deposit Insurance Corporation of any power, duty or function assigned to them by the Canada Deposit Insurance Corporation Act; or
(c) the exercise by the Attorney General of Canada of any power, assigned to him or her by the Winding-up and Restructuring Act.
Stay — Her Majesty
11.09 (1) An order made under section 11.02 may provide that
(a) Her Majesty in right of Canada may not exercise rights under subsection 224(1.2) of the Income Tax Act or any provision of the Canada Pension Plan or of the Employment Insurance Act that refers to subsection 224(1.2) of the Income Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, or an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, and of any related interest, penalties or other amounts, in respect of the company if the company is a tax debtor under that subsection or provision, for the period that the court considers appropriate but ending not later than
(i) the expiry of the order,
(ii) the refusal of a proposed compromise by the creditors or the court,
(iii) six months following the court sanction of a compromise or an arrangement,
(iv) the default by the company on any term of a compromise or an arrangement, or
(v) the performance of a compromise or an arrangement in respect of the company; and
(b) Her Majesty in right of a province may not exercise rights under any provision of provincial legislation in respect of the company if the company is a debtor under that legislation and the provision has a purpose similar to subsection 224(1.2) of the Income Tax Act, or refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, and the sum
(i) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or
(ii) is of the same nature as a contribution under the Canada Pension Plan if the province is a “province providing a comprehensive pension plan” as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a “provincial pension plan” as defined in that subsection,
for the period that the court considers appropriate but ending not later than the occurrence or time referred to in whichever of subparagraphs (a)(i) to (v) that may apply.
When order ceases to be in effect
(2) The portions of an order made under section 11.02 that affect the exercise of rights of Her Majesty referred to in paragraph (1)(a) or (b) cease to be in effect if
(a) the company defaults on the payment of any amount that becomes due to Her Majesty after the order is made and could be subject to a demand under
(i) subsection 224(1.2) of the Income Tax Act,
(ii) any provision of the Canada Pension Plan or of the Employment Insurance Act that refers to subsection 224(1.2) of the Income Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, or an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, and of any related interest, penalties or other amounts, or
(iii) any provision of provincial legislation that has a purpose similar to subsection 224(1.2) of the Income Tax Act, or that refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, and the sum
(A) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or
(B) is of the same nature as a contribution under the Canada Pension Plan if the province is a “province providing a comprehensive pension plan” as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a “provincial pension plan” as defined in that subsection; or
(b) any other creditor is or becomes entitled to realize a security on any property that could be claimed by Her Majesty in exercising rights under
(i) subsection 224(1.2) of the Income Tax Act,
(ii) any provision of the Canada Pension Plan or of the Employment Insurance Act that refers to subsection 224(1.2) of the Income Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, or an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, and of any related interest, penalties or other amounts, or
(iii) any provision of provincial legislation that has a purpose similar to subsection 224(1.2) of the Income Tax Act, or that refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, and the sum
(A) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or
(B) is of the same nature as a contribution under the Canada Pension Plan if the province is a “province providing a comprehensive pension plan” as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a “provincial pension plan” as defined in that subsection.
Operation of similar legislation
(3) An order made under section 11.02, other than the portions of that order that affect the exercise of rights of Her Majesty referred to in paragraph (1)(a) or (b), does not affect the operation of
(a) subsections 224(1.2) and (1.3) of the Income Tax Act,
(b) any provision of the Canada Pension Plan or of the Employment Insurance Act that refers to subsection 224(1.2) of the Income Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, or an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, and of any related interest, penalties or other amounts, or
(c) any provision of provincial legislation that has a purpose similar to subsection 224(1.2) of the Income Tax Act, or that refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, and the sum
(i) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or
(ii) is of the same nature as a contribution under the Canada Pension Plan if the province is a “province providing a comprehensive pension plan” as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a “provincial pension plan” as defined in that subsection,
and for the purpose of paragraph (c), the provision of provincial legislation is, despite 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 subsection 224(1.2) of the Income Tax Act in respect of a sum referred to in subparagraph (c)(i), or as subsection 23(2) of the Canada Pension Plan in respect of a sum referred to in subparagraph (c)(ii), and in respect of any related interest, penalties or other amounts.
Regulatory bodies
11.1 (1) Subject to subsection (3), no order made under section 11.02 affects the rights of a regulatory body with respect to any investigation in respect of the company or any action, suit or proceeding taken or to be taken by it against the company, except when it is seeking to enforce any of its rights as a secured creditor or an unsecured creditor.
Declaration that regulatory body is acting as creditor
(2) If there is a dispute as to whether a regulatory body is seeking to enforce any of its rights as a secured creditor or an unsecured creditor, the court may, on application made by the company with notice given to the regulatory body, make an order declaring that the regulatory body is or would be so seeking to enforce its rights.
Exception — compromise or arrangement not viable
(3) Subsection (1) does not apply in respect of any or all actions, suits or proceedings taken or to be taken by a regulatory body if the court, on application made by the company with notice given to the regulatory body, makes an order declaring that a viable compromise or arrangement could not be made in respect of the company if that subsection were to apply.
Restriction
(4) The court shall not make the declaration referred to in subsection (3) if it is of the opinion that it is in the public interest that the regulatory body not be affected by the order made under section 11.02.
Meaning of “regulatory body”
(5) In this section, “regulatory body” means any person or body who has powers, duties or functions relating to the enforcement or administration of any Act of Parliament or of the legislature of a province and includes any person or body prescribed to be a regulatory body for the purpose of this Act.
Interim financing
11.2 (1) A court may, on application by a debtor company, make an order, on any conditions that the court considers appropriate, declaring that the property of the company is subject to a security or charge in favour of any person specified in the order who agrees to lend to the company an amount that is approved by the court as being required by the company, having regard to its cash-flow statement,
(a) for the period of 30 days following the initial application in respect of the company if the order is made on the initial application in respect of the company; or
(b) for any period specified in the order if the order is made on any application in respect of a company other than the initial application and notice has been given to the secured creditors likely to be affected by the security or charge.
Restriction
(2) An order may be made under subsection (1) in respect of any period after the period of 30 days following the initial application in respect of the company only if the monitor has reported to the court under paragraph 23(1)(b) that the company’s cash-flow statement is reasonable.
Rank
(3) The court may specify in the order that the security or charge ranks in priority over the claim of any secured creditor of the company.
Other orders
(4) The court may specify in the order that the security or charge ranks in priority over any security or charge arising from a previous order made under subsection (1) only with the consent of the person in whose favour the previous order was made.
Factors to be considered
(5) In deciding whether to make an order referred to in subsection (1), the court must consider, among other things,
(a) the period during which the company is expected to be subject to proceedings under this Act;
(b) how the company is to be governed during the proceedings;
(c) whether the company’s management has the confidence of its major creditors;
(d) whether the loan will enhance the prospects of a viable compromise or arrangement being made in respect of the company;
(e) the nature and value of the company’s assets; and
(f) whether any creditor will be materially prejudiced as a result of the company’s continued operations.
Assignments
11.3 (1) The court may, on the application of a debtor company, make an order assigning the rights and obligations of the company under any agreement to any person, to be specified by the court, who has agreed to the assignment.
Notice
(2) The applicant must give notice of the assignment in the prescribed manner to every party to the agreement.
Exceptions
(3) Subsection (1) does not apply in respect of rights and obligations
(a) under an eligible financial contract within the meaning of subsection 11.05(3);
(b) under a collective agreement; or
(c) that are not assignable by reason of their nature.
Factors to be considered
(4) In deciding whether to make an assignment, the court must consider, among other things,
(a) whether the person to whom the rights and obligations are to be assigned would be able to perform the obligations; and
(b) whether it would be appropriate to assign the rights and obligations to that person.
Restriction
(5) The court may not make an order assigning an agreement unless it is satisfied that all financial defaults in relation to the agreement will be remedied.
Critical supplier
11.4 (1) On application by a debtor company, the court may make an order declaring a person to be a critical supplier to the company if the court is satisfied that the person is a supplier of goods or services to the company and that those goods or services are critical to the company’s continued operation.
Obligation to supply
(2) If the court declares a person to be a critical supplier, the court may make an order requiring the person to supply any goods or services specified by the court to the company on any terms and conditions that are consistent with the supply relationship or that the court considers appropriate.
Security or charge in favour of critical supplier
(3) If the court makes an order under subsection (2), the court shall, in the order, declare that the property of the company is subject to a security or charge in favour of the person declared to be a critical supplier, in an amount equal to the value of the goods or services supplied under the terms of the order.
Rank
(4) The court may specify in the order that the security or charge ranks in priority over the claim of any secured creditor of the company.
Removal of directors
11.5 (1) The court may, on the application of any person interested in the matter, make an order removing from office any director of a debtor company in respect of which an order has been made under this Act if the court is satisfied that the director is unreasonably impairing or is likely to unreasonably impair the possibility of a viable compromise or arrangement being made in respect of the company or is acting or is likely to act inappropriately as a director in the circumstances.
Filling vacancy
(2) The court may, by order, fill any vacancy created under subsection (1).
Security or charge relating to director’s indemnification
11.51 (1) The court may, on the application of a debtor company, make an order declaring that the property of the company is subject to a security or charge, in an amount that the court considers appropriate, in favour of any director or officer of the company to indemnify the director or officer against obligations and liabilities that he or she may incur as a director or an officer of the company after the commencement of proceedings against the company under this Act.
Rank
(2) The court may specify in the order that the security or charge ranks in priority over the claim of any secured creditor of the company.
Restriction — indemnification insurance
(3) The court shall not make the order if, in its opinion, the company could obtain adequate indemnification insurance for the director or officer at a reasonable cost.
Declaration in cases of gross negligence, etc.
(4) The court shall make an order declaring that the security or charge does not apply in respect of a specific obligation or liability incurred by a director or an officer if it is of the opinion that the obligation or liability was incurred as a result of the director’s or officer’s gross negligence or wilful misconduct or, in the Province of Quebec, the director’s gross or intentional fault.
Court may order security or charge to cover certain costs
11.52 The court may make an order declaring that property of a debtor company is subject to a security or charge, in an amount that the court considers appropriate, in respect of
(a) the costs of the monitor, including the remuneration and expenses of any financial, legal or other experts engaged by the monitor in the course of the monitor’s duties;
(b) the remuneration and expenses of any financial, legal or other experts engaged by the company for the purpose of proceedings under this Act; and
(c) the costs of any interested party in relation to the remuneration and expenses of any financial, legal or other experts engaged by it, if the court is satisfied that the incurring of those costs is necessary for the effective participation of the interested party in the proceedings under this Act.
129. Section 11.7 of the Act is replaced by the following:
Court to appoint monitor
11.7 (1) When an order is made on the initial application in respect of a debtor company, the court shall at the same time appoint a person to monitor the business and financial affairs of the company. The person so appointed must be a trustee, within the meaning of subsection 2(1) of the Bankruptcy and Insolvency Act.
Restrictions on who may be monitor
(2) Except with the permission of the court and on any conditions that the court may impose, no trustee may be appointed as monitor in relation to a company
(a) if the trustee is or, at any time during the two preceding years, was
(i) a director, an officer or an employee of the company,
(ii) related to the company or to any director or officer of the company, or
(iii) the auditor, accountant or legal counsel, or a partner or an employee of the auditor, accountant or legal counsel, of the company; or
(b) if the trustee is
(i) the trustee under a trust indenture issued by the company or any person related to the company, or the holder of a power of attorney under an act constituting a hypothec within the meaning of the Civil Code of Quebec that is granted by the company or any person related to the company, or
(ii) related to the trustee, or the holder of a power of attorney, referred to in subparagraph (i).
Court may replace monitor
(3) On application by a creditor of the company, the court may, if it considers it appropriate in the circumstances, replace the monitor by appointing another trustee, within the meaning of subsection 2(1) of the Bankruptcy and Insolvency Act, to monitor the business and financial affairs of the company.
130. Section 12 of the Act is replaced by the following:
Fixing of deadline for filing claims
12. The court may make an order fixing a deadline for creditors to file their claims against a company for the purpose of voting at a creditors’ meeting held under section 4 or 5.
131. Sections 18 to 22 of the Act are replaced by the following:
PART III
GENERAL
Claims
Claims that may be dealt with by a compromise or an arrangement
19. (1) Subject to subsection (2), in addition to deemed claims, the only claims that may be dealt with by a compromise or an arrangement in respect of a debtor company are
(a) claims that relate to debts and liabilities, present or future, to which the company is subject on the earlier of
(i) the day on which the initial application was made in respect of the company, and
(ii) if the company had filed a notice of intention under section 50.4 of the Bankruptcy and Insolvency Act or an application under this Act was made by the company with the consent of inspectors referred to in section 116 of the Bankruptcy and Insolvency Act, the day that is the date of the initial bankruptcy event within the meaning of subsection 2(1) of that Act; and
(b) claims that relate to debts and liabilities, present or future, to which the company may become subject before the compromise or arrangement is sanctioned by reason of any obligation incurred by the company before the earlier of the days referred to in subparagraphs (a)(i) and (ii).
Exception
(2) A compromise or an arrangement in respect of a debtor company may not deal with any claim that relates to any of the following debts or liabilities unless the compromise or arrangement explicitly provides for the claim’s compromise and the relevant creditor has agreed to the compromise or arrangement:
(a) any fine, penalty, restitution order or other order similar in nature to a fine, penalty or restitution order, imposed by a court in respect of an offence;
(b) any award of damages by a court in civil proceedings in respect of
(i) bodily harm intentionally inflicted, or sexual assault, or
(ii) wrongful death resulting from an act referred to in subparagraph (i);
(c) any debt or liability arising out of fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity or, in the Province of Quebec, as a trustee or an administrator of the property of others;
(d) any debt or liability for obtaining property or services by false pretences or fraudulent misrepresentation, other than a debt or liability of the company that arises from the purchase or sale of a share or unit of the company or from the rescission of any such purchase or sale; or
(e) any debt for interest owed in relation to an amount referred to in any of paragraphs (a) to (d).
Determination of amount of claims
20. (1) For the purposes of this Act, the amount represented by a claim of any secured or unsecured creditor is to be determined as follows:
(a) the amount of an unsecured claim is the amount
(i) in the case of a company in the course of being wound up under the Winding-up and Restructuring Act, proof of which has been made in accordance with that Act,
(ii) in the case of a company that has made an authorized assignment or against which a bankruptcy order has been made under the Bankruptcy and Insolvency Act, proof of which has been made in accordance with that Act, or
(iii) in the case of any other company, proof of which might be made under the Bankruptcy and Insolvency Act, but if the amount so provable is not admitted by the company, the amount is to be determined by the court on summary application by the company or by the creditor; and
(b) the amount of a secured claim is the amount, proof of which might be made under the Bankruptcy and Insolvency Act if the claim were unsecured, but the amount if not admitted by the company is, in the case of a company subject to pending proceedings under the Winding-up and Restructuring Act or the Bankruptcy and Insolvency Act, to be established by proof in the same manner as an unsecured claim under the Winding-up and Restructuring Act or the Bankruptcy and Insolvency Act, as the case may be, and, in the case of any other company, the amount is to be determined by the court on summary application by the company or the creditor.
Admission of claims
(2) Despite subsection (1), the company may admit the amount of a claim for voting purposes under reserve of the right to contest liability on the claim for other purposes, and nothing in this Act, the Winding-up and Restructuring Act or the Bankruptcy and Insolvency Act prevents a secured creditor from voting at a meeting of secured creditors or any class of them in respect of the total amount of a claim as admitted.
Claims acquired after initial application
(3) No person is entitled to vote on a claim acquired after the initial application in respect of the company, unless the entire claim is acquired.
Law of set-off or compensation to apply
21. The law of set-off or compensation applies to all claims made against a debtor company and to all actions instituted by it for the recovery of debts due to the company in the same manner and to the same extent as if the company were plaintiff or defendant, as the case may be.
Classes of Creditors
Company may establish classes
22. (1) Subject to subsection (3), a debtor company may divide its creditors into classes for the purpose of a meeting to be held under section 4 or 5 in respect of a compromise or an arrangement relating to a company and, if it does so, it must apply to the court for approval of the division before any meeting is held.
Factors
(2) For the purpose of subsection (1), creditors may be included in the same class if their interests are sufficiently similar to give them a commonality of interest, taking into account
(a) the nature of the debts, liabilities or obligations giving rise to their claims;
(b) the nature and rank of any security in respect of their claims;
(c) the remedies available to the creditors in the absence of the compromise or arrangement being sanctioned, and the extent to which the creditors would recover their claims by exercising those remedies; and
(d) any further criteria, consistent with those set out in paragraphs (a) to (c), that are prescribed.
Claims of shareholders
(3) Creditors having a claim against a debtor company arising from the rescission of a purchase or sale of a share or unit of the company — or a claim for damages arising from the purchase or sale of a share or unit of the company — must be in the same class of creditors in relation to those claims and may not, as members of that class, vote at a meeting to be held under section 4 in respect of a compromise or an arrangement relating to the company.
Monitors
Duties and functions
23. (1) The monitor shall
(a) except as otherwise ordered by the court, when an order is made on the initial application in respect of a debtor company,
(i) publish, without delay after the order is made, once a week for two consecutive weeks, or as otherwise directed by the court, in one or more newspapers in Canada specified by the court, a notice containing the prescribed information, and
(ii) within five days after the order is made,
(A) send a copy of the order to every known creditor who has a claim against the company of more than $1,000, and
(B) make a list showing the name and address of those creditors publicly available in the prescribed manner;
(b) review the company’s cash-flow statement as to its reasonableness and file a report with the court on the monitor’s findings;
(c) make, or cause to be made, any appraisal or investigation the monitor considers necessary to determine with reasonable accuracy the state of the company’s business and financial affairs and the cause of its financial difficulties or insolvency and file a report with the court on the monitor’s findings;
(d) file a report with the court on the state of the company’s business and financial affairs, containing prescribed information,
(i) without delay after ascertaining any material adverse change in the company’s projected cash-flow or financial circumstances,
(ii) at least seven days before any meeting of creditors under section 4 or 5,
(iii) not later than 45 days, or any longer period that the court may specify, after the end of each of the company’s fiscal quarters, and
(iv) at any other times that the court may order;
(e) advise the company’s creditors of the filing of the report referred to in any of paragraphs (b) to (d);
(f) file with the Superintendent of Bankruptcy a copy of the documents specified by the regulations and pay the prescribed filing fee;
(g) attend court proceedings held under this Act that relate to the company, and meetings of the company’s creditors, if the monitor considers that his or her attendance is necessary for the fulfilment of his or her duties or functions;
(h) if the monitor is of the opinion that it would be more beneficial to the company’s creditors if proceedings in respect of the company were taken under the Bankruptcy and Insolvency Act, so advise the court without delay after coming to that opinion;
(i) advise the court on the reasonableness and fairness of any compromise or arrangement that is proposed between the company and its creditors;
(j) unless the court otherwise orders, make publicly available, in the prescribed manner, all documents filed with the court, and all court decisions, relating to proceedings held under this Act in respect the company and provide the company’s creditors with information as to how they may access those documents and decisions; and
(k) carry out any other functions in relation to the company that the court may direct.
Monitor not liable
(2) If the monitor acts in good faith and takes reasonable care in preparing the report referred to in any of paragraphs (1)(b) to (d), the monitor is not liable for loss or damage to any person resulting from that person’s reliance on the report.
Right of access
24. For the purposes of monitoring the company’s business and financial affairs, the monitor shall have access to the company’s property, including the premises, books, records, data, including data in electronic form, and other financial documents of the company, to the extent that is necessary to adequately assess the company’s business and financial affairs.
Obligation to act honestly and in good faith
25. In exercising any of his or her powers or in performing any of his or her duties and functions, the monitor must act honestly and in good faith and comply with the Code of Ethics referred to in section 13.5 of the Bankruptcy and Insolvency Act.
Powers, Duties and Functions of Superintendent of Bankruptcy
Public records
26. (1) The Superintendent of Bankruptcy must keep, or cause to be kept, in the form that he or she considers appropriate and for the prescribed period, a public record of prescribed information relating to proceedings under this Act. On request, and on payment of the prescribed fee, the Superintendent of Bankruptcy must provide, or cause to be provided, any information contained in that public record.
Other records
(2) The Superintendent of Bankruptcy must keep, or cause to be kept, in the form that he or she considers appropriate and for the prescribed period, any other records relating to the administration of this Act that he or she considers appropriate.
Applications to court and right to intervene
27. The Superintendent of Bankruptcy may apply to the court to review the appointment or conduct of a monitor and may intervene, as though he or she were a party, in any matter or proceeding in court relating to the appointment or conduct of a monitor.
Complaints
28. The Superintendent of Bankruptcy must receive and keep a record of all complaints regarding the conduct of monitors.
Investigations
29. (1) The Superintendent of Bankruptcy may make, or cause to be made, any inquiry or investigation regarding the conduct of monitors that he or she considers appropriate.
Rights
(2) For the purpose of the inquiry or investigation, the Superintendent of Bankruptcy or any person whom he or she appoints for the purpose
(a) shall have access to and the right to examine and make copies of all books, records, data, including data in electronic form, documents and papers in the possession or under the control of a monitor under this Act; and
(b) may, with the leave of the court granted on an ex parte application, examine the books, records, data, including data in electronic form, documents and papers relating to any compromise or arrangement to which this Act applies that are in the possession or under the control of any other person designated in the order granting the leave, and for that purpose may under a warrant from the court enter and search any premises.
Staff
(3) The Superintendent of Bankruptcy may engage the services of persons having technical or specialized knowledge, and persons to provide administrative services, to assist the Superintendent of Bankruptcy in conducting an inquiry or investigation, and may establish the terms and conditions of their engagement. The remuneration and expenses of those persons, when certified by the Superintendent of Bankruptcy, are payable out of the appropriation for the office of the Superintendent.
Powers in relation to licence
30. (1) If, after making or causing to be made an inquiry or investigation into the conduct of a monitor, it appears to the Superintendent of Bankruptcy that the monitor has not fully complied with this Act and its regulations or that it is in the public interest to do so, the Superintendent of Bankruptcy may
(a) cancel or suspend the monitor’s licence as a trustee under the Bankruptcy and Insolvency Act; or
(b) place any condition or limitation on the licence that he or she considers appropriate.
Notice to trustee
(2) Before deciding whether to exercise any of the powers referred to in subsection (1), the Superintendent of Bankruptcy shall send the monitor written notice of the powers that the Superintendent may exercise and the reasons why they may be exercised and afford the monitor a reasonable opportunity for a hearing.
Subpoena or summons
(3) The Superintendent of Bankruptcy may, for the purpose of the hearing, issue a subpoena or other request or summons, requiring and commanding any person named in it
(a) to appear at the time and place mentioned in it;
(b) to testify to all matters within his or her knowledge relative to the subject-matter of the inquiry or investigation into the conduct of the monitor; and
(c) to bring and produce any books, records, data, including data in electronic form, documents or papers in the person’s possession or under the control of the person relative to the subject-matter of the inquiry or investigation.
Effect throughout Canada
(4) A person may be summoned from any part of Canada by virtue of a subpoena, request or summons issued under subsection (3).
Fees and allowances
(5) Any person summoned under subsection (3) is entitled to receive the like fees and allowances for so doing as if summoned to attend before the Federal Court.
Procedure at hearing
(6) At the hearing, the Superintendent of Bankruptcy
(a) has the power to administer oaths;
(b) is not bound by any legal or technical rules of evidence in conducting the hearing;
(c) shall deal with the matters set out in the notice of the hearing as informally and expeditiously as the circumstances and a consideration of fairness permit; and
(d) shall cause a summary of any oral evidence to be made in writing.
Record
(7) The notice referred to in subsection (2) and, if applicable, the summary of oral evidence referred to in paragraph (6)(d), together with any documentary evidence that the Superintend­ent of Bankruptcy receives in evidence, form the record of the hearing, and that record and the hearing are public unless the Superintendent of Bankruptcy is satisfied that personal or other matters that may be disclosed are of such a nature that the desirability of avoiding public disclosure of those matters, in the interest of a third party or in the public interest, outweighs the desirability of the access by the public to information about those matters.
Decision
(8) The decision of the Superintendent of Bankruptcy after the hearing, together with the reasons for the decision, must be given in writing to the monitor not later than three months after the conclusion of the hearing, and is public.
Review by Federal Court
(9) A decision of the Superintendent of Bankruptcy given under subsection (8) is deemed to be a decision of a federal board, commission or other tribunal that may be reviewed and set aside under the Federal Courts Act.
Delegation
31. (1) The Superintendent of Bankruptcy may, in writing, authorize any person to exercise or perform, subject to any terms and conditions that he or she may specify in the authorization, any of the powers, duties or functions of the Superintendent of Bankruptcy under sections 29 and 30.
Notification to monitor
(2) If the Superintendent of Bankruptcy delegates in accordance with subsection (1), the Superintendent or the delegate must give notice of the delegation in the prescribed manner to any monitor who may be affected by the delegation.
Agreements
Disclaimer or resiliation of agreements
32. (1) Subject to subsection (3), a debtor company may disclaim or resiliate any agreement to which it is a party on the day of the filing of the initial application in respect of the company by giving 30 days notice to the other parties to the agreement in the prescribed manner.
Exceptions
(2) Subsection (1) does not apply in respect of
(a) an eligible financial contract within the meaning of subsection 11.05(3);
(b) a collective agreement;
(c) a financing agreement if the debtor is the borrower; and
(d) a lease of real property or an immovable if the debtor is the lessor.
Party may challenge
(3) Within 15 days after being given notice of the disclaimer or resiliation, a party to the agreement may apply to the court for a declaration that subsection (1) does not apply in respect of the agreement, and the court, on notice to any parties that it may direct, shall, subject to subsection (4), make that declaration.
Circumstances for not making declaration
(4) No declaration under subsection (3) shall be made if the court is satisfied that a viable compromise or arrangement could not be made in respect of the company without the disclaim­er or resiliation of the agreement and all other agreements that the company has disclaimed or resiliated under subsection (1).
Intellectual property
(5) If the company has, in any agreement, granted the use of any intellectual property to a party to the agreement, the disclaimer or resiliation of the agreement does not affect the party’s right to use the intellectual property so long as that party continues to perform its obligations in relation to the use of the intellectual property.
Deemed claim of other party
(6) If an agreement is disclaimed or resiliated by a company, every other party to the agreement is deemed to have a claim for damages as an unsecured creditor.
Collective agreements
33. (1) If proceedings under this Act have been commenced in respect of a debtor company, any collective agreement that the company has entered into as the employer remains in force, and may not be altered except as provided in this section or under the laws of the jurisdiction governing collective bargaining between the company and the bargaining agent.
Application for authorization to serve notice to bargain
(2) A debtor company that is a party to a collective agreement and that is unable to reach a voluntary agreement with the bargaining agent to revise any of the provisions of the collective agreement may, on giving five days notice to the bargaining agent, apply to the court for an order authorizing the company to serve a notice to bargain under the laws of the jurisdiction governing collective bargaining between the company and the bargaining agent.
Conditions for issuance of order
(3) The court may issue the order only if it is satisfied that
(a) a viable compromise or arrangement could not be made in respect of the company, taking into account the terms of the collective agreement;
(b) the company has made good faith efforts to renegotiate the provisions of the collective agreement; and
(c) a failure to issue the order is likely to result in irreparable damage to the company.
No delay on vote
(4) The vote of the creditors in respect of a compromise or an arrangement may not be delayed solely because the period provided in the laws of the jurisdiction governing collective bargaining between the company and the bargaining agent has not expired.
Claims arising from termination or amendment
(5) If the parties to the collective agreement agree to revise the collective agreement after proceedings have been commenced under this Act in respect of the company, the bargaining agent that is a party to the agreement is deemed to have a claim, as an unsecured creditor, for an amount equal to the value of concessions granted by the bargaining agent with respect to the remaining term of the collective agreement.
Order to disclose information
(6) On the application of the bargaining agent and on notice to the person to whom the application relates, the court may, subject to any terms and conditions it specifies, make an order requiring the person to make available to the bargaining agent any information specified by the court in the person’s possession or control that relates to the company’s business or financial affairs and that is relevant to the collective bargaining between the company and the bargaining agent. The court may make the order only after the company has been authorized to serve a notice to bargain under subsection (2).
Parties
(7) For the purpose of this section, the parties to a collective agreement are the debtor company and the bargaining agent that are bound by the collective agreement.
Unrevised collective agreements remain in force
(8) For greater certainty, any collective agreement that the company and the bargaining agent have not agreed to revise remains in force, and the court shall not alter its terms.
Certain rights limited
34. (1) No person may terminate or amend any agreement, including a security agreement, with a debtor company, or claim an accelerated payment, or a forfeiture of the term, under any agreement, including a security agreement, with a debtor company by reason only that an order has been made under this Act in respect of the company.
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 an order has been made under this Act in respect of the company or that the company has not paid rent in respect of any period before the filing of the initial application in respect of the company.
Public utilities
(3) No public utility may discontinue service to a debtor company by reason only that an order has been made under this Act in respect of the company or that the company has not paid for services rendered, or for goods provided, before the filing of the initial application in respect of the company.
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 date of the filing of initial application in respect of the company; or
(b) requiring the further advance of money or credit.
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.
Powers of court
(6) The court may, on application by a party to an agreement, 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.
Obligations and Prohibitions
Obligation to provide assistance
35. (1) A debtor company shall provide to the monitor the assistance that is necessary to enable the monitor to adequately carry out the monitor’s functions.
Obligation to duties set out in section 158 of the Bankruptcy and Insolvency Act
(2) A debtor company shall perform the duties set out in section 158 of the Bankruptcy and Insolvency Act that are appropriate and applicable in the circumstances
Restriction on disposal of certain business assets
36. (1) A debtor company in respect of which an order has been made under this Act may not sell or dispose of any of its assets outside the ordinary course of its business unless authorized to do so by a court.
Notice to creditors
(2) A company that applies to the court for the authorization must give notice of the application to all secured creditors who are likely to be affected by the proposed sale or disposal of the assets to which the application relates.
Factors to be considered
(3) In deciding whether to grant the authorization, the court must consider, among other things,
(a) whether the process leading to the proposed sale or disposal of the assets to which the application relates was reasonable in the circumstances;
(b) whether the monitor approved the process leading to the proposed sale or disposal of the assets;
(c) whether the monitor has filed with the court a report stating that in his or her opinion the sale or disposal of the assets would be more beneficial to the creditors than if the sale or disposal took place under the Bankruptcy and Insolvency Act;
(d) the extent to which the creditors were consulted in respect of the proposed sale or disposal of the assets;
(e) the effects of the proposed sale or disposal 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 the market value of the assets.
Additional factors
(4) In addition to taking the factors referred to in subsection (3) into account, if the proposed sale or disposal of the assets is to a person who is related to the company, the court may grant the authorization only if it is satisfied that
(a) good faith efforts were made to sell or dispose of the assets to persons who are not related to the company or who are neither directors or officers of the company nor individuals who control it; and
(b) the consideration to be received is superior to the consideration that would be received under all other offers actually received in respect of the assets.
Direction that assets may be sold free of charges, etc.
(5) In granting an authorization for the sale or disposal of assets, the court may order that the assets may be sold or disposed of free and clear of any security, charge or other restriction, but if it so orders, it shall also order that the proceeds realized from the sale or disposal of the assets are subject to a security, charge or other restriction in favour of the creditors whose security, charges or other restrictions are affected by the order.
Related persons
(6) For the purpose of this section, a person who is related to the debtor company includes a person who controls the company, a director or an officer of the company and a person who is related to a director or an officer of the company.
Her Majesty
Deemed trusts
37. (1) Subject to subsection (2), despite 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 debtor company shall not be regarded as being held in trust for Her Majesty unless it would be so regarded in the absence of that statutory provision.
Exceptions
(2) Subsection (1) 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 does it apply 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 if
(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, despite 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.
Status of Crown claims
38. (1) In relation to a proceeding under this Act, all claims, including secured claims, of Her Majesty in right of Canada or a province or any body under an enactment respecting workers’ compensation, in this section and in section 39 called a “workers’ compensation body”, rank as unsecured claims.
Exceptions
(2) Subsection (1) does not apply
(a) in respect of claims that are secured by a security or charge of a kind that can be obtained by persons other than Her Majesty or a workers’ compensation body
(i) pursuant to any law, or
(ii) pursuant to provisions of federal or provincial legislation if those provisions do not have as their sole or principal purpose the establishment of a means of securing claims of Her Majesty or a workers’ compensation body; and
(b) to the extent provided in subsection 39(2), to claims that are secured by a security referred to in subsection 39(1), if the security is registered in accordance with subsection 39(1).
Operation of similar legislation
(3) Subsection (1) does not affect the operation of
(a) subsections 224(1.2) and (1.3) of the Income Tax Act,
(b) any provision of the Canada Pension Plan or of the Employment Insurance Act that refers to subsection 224(1.2) of the Income Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, or an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, and of any related interest, penalties or other amounts, or
(c) any provision of provincial legislation that has a purpose similar to subsection 224(1.2) of the Income Tax Act, or that refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts if the sum
(i) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or
(ii) is of the same nature as a contribution under the Canada Pension Plan if the province is a “province providing a comprehensive pension plan” as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a “provincial pension plan” as defined in that subsection,
and, for the purpose of paragraph (c), the provision of provincial legislation is, despite 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 subsection 224(1.2) of the Income Tax Act in respect of a sum referred to in subparagraph (c)(i), or as subsection 23(2) of the Canada Pension Plan in respect of a sum referred to in subparagraph (c)(ii), and in respect of any related interest, penalties or other amounts.
Statutory Crown securities
39. (1) In relation to a proceeding 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 the security is registered before the date of the filing of the initial application in respect of the company under any 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.
Effect of security
(2) A security referred to in subsection (1) that is registered in accordance with that subsection
(a) is subordinate to securities in respect of which all steps necessary to setting them up against other creditors were taken before that registration; and
(b) is valid only in respect of amounts owing to Her Majesty or a workers’ compensation body at the time of that registration, plus any interest subsequently accruing on those amounts.
Act binding on Her Majesty
40. This Act is binding on Her Majesty in right of Canada or a province.
Miscellaneous
Certain sections of Winding-up and Restructuring Act do not apply
41. Sections 65 and 66 of the Winding-up and Restructuring Act do not apply to any compromise or arrangement to which this Act applies.
Act to be applied conjointly with other Acts
42. The provisions of this Act may be applied together with the provisions of any Act of Parliament, or of the legislature of any province, that authorizes or makes provision for the sanction of compromises or arrangements between a company and its shareholders or any class of them.
Claims in foreign currency
43. If a compromise or an arrangement is proposed in respect of a debtor company, a claim for a debt that is payable in a currency other than Canadian currency is to be converted to Canadian currency as of the date of the initial application in respect of the company unless otherwise provided in the proposed compromise or arrangement.
PART IV
CROSS-BORDER INSOLVENCIES
Purpose
Purpose
44. The purpose of this Part is to provide mechanisms for dealing with cases of cross-border insolvencies and to promote
(a) cooperation between the courts and other competent authorities in Canada with those of foreign jurisdictions in cases of cross-border insolvencies;
(b) greater legal certainty for trade and investment;
(c) the fair and efficient administration of cross-border insolvencies that protects the interests of creditors and other interested persons, and those of debtor companies;
(d) the protection and the maximization of the value of debtor company’s property; and
(e) the rescue of financially troubled businesses to protect investment and preserve employment.
Interpretation
Definitions
45. (1) The following definitions apply in this Part.
“foreign court”« tribunal étranger »
“foreign court” means a judicial or other authority competent to control or supervise a foreign proceeding.
“foreign main proceeding”« principale »
“foreign main proceeding” means a foreign proceeding in a jurisdiction where the debtor company has the centre of its main interests.
“foreign non-main proceeding”« secondaire »
“foreign non-main proceeding” means a foreign proceeding, other than a foreign main proceeding.
“foreign proceeding”« instance étrangère »
“foreign proceeding” means a judicial or an administrative proceeding, including an interim proceeding, in a jurisdiction outside Canada dealing with creditors’ collective interests generally under any law relating to bankruptcy or insolvency in which a debtor company’s business and financial affairs are subject to control or supervision by a foreign court for the purpose of reorganization.
“foreign representative”« représentant étranger »
“foreign representative” means a person or body, including one appointed on an interim basis, who is authorized, in a foreign proceeding respect of a debtor company, to
(a) monitor the debtor company’s business and financial affairs for the purpose of reorganization; or
(b) act as a representative in respect of the foreign proceeding.
Centre of debtor company’s main interests
(2) For the purposes of this Part, in the absence of proof to the contrary, a debtor company’s registered office is deemed to be the centre of its main interests.
Recognition of Foreign Proceeding
Application for recognition of a foreign proceeding
46. (1) A foreign representative may apply to the court for recognition of the foreign proceeding in respect of which he or she is a foreign representative.
Documents that must accompany application
(2) Subject to subsection (3), the application must be accompanied by
(a) a certified copy of the instrument, however designated, that commenced the foreign proceeding or a certificate from the foreign court affirming the existence of the foreign proceeding;
(b) a certified copy of the instrument, however designated, authorizing the foreign representative to act in that capacity or a certificate from the foreign court affirming the foreign representative’s authority to act in that capacity; and
(c) a statement identifying all foreign proceedings in respect of the debtor company that are known to the foreign representative.
Documents may be considered as proof
(3) The court may, without further proof, accept the documents referred to in paragraphs (2)(a) and (b) as evidence that the proceeding to which they relate is a foreign proceeding and that the applicant is a foreign representative in respect of the foreign proceeding.
Other evidence
(4) In the absence of the documents referred to in paragraphs (2)(a) and (b), the court may accept any other evidence of the existence of the foreign proceeding and of the foreign represent­ative’s authority that it considers appropriate.
Translation
(5) The court may require a translation of any document accompanying the application.
Order recognizing foreign proceeding
47. (1) If the court is satisfied that the application for the recognition of a foreign proceeding relates to a foreign proceeding and that the applicant is a foreign representative in respect of that foreign proceeding, the court shall make an order recognizing the foreign proceeding.
Nature of foreign proceeding to be specified
(2) The court shall specify in the order whether the foreign proceeding is a foreign main proceeding or a foreign non-main proceeding.
Order relating to recognition of a foreign main proceeding
48. (1) Subject to subsections (2) to (4), on the making of an order recognizing a foreign proceeding that is specified to be a foreign main proceeding, the court shall make an order, subject to any terms and conditions it considers appropriate,
(a) staying, until otherwise ordered by the court, for any period that the court considers necessary, all proceedings taken or that might be taken against the debtor company under the Bankruptcy and Insolvency Act or the Winding-up and Restructuring Act;
(b) restraining, until otherwise ordered by the court, further proceedings in any action, suit or proceeding against the debtor company;
(c) prohibiting, until otherwise ordered by the court, the commencement of any action, suit or proceeding against the debtor company; and
(d) prohibiting the debtor company from selling or otherwise disposing of, outside the ordinary course of its business, any of the debtor company’s property in Canada that relates to the business and prohibiting the debtor company from selling or otherwise disposing of any of its other property in Canada.
Scope of order
(2) The order made under subsection (1) must be consistent with any order that may be made under this Act.
When subsec- tion (1) does not apply
(3) Subsection (1) does not apply if any proceedings under this Act have been commenced in respect of the debtor company at the time the order recognizing the foreign proceeding is made.
Application of this and other Acts
(4) Nothing in subsection (1) precludes the debtor company from commencing or continuing proceedings under this Act, the Bankruptcy and Insolvency Act or the Winding-up and Restructuring Act in respect of the debtor company.
Other orders
49. (1) If an order recognizing a foreign proceeding is made, the court may, on application by the foreign representative who applied for the order, if the court is satisfied that it is necessary for the protection of the debtor company’s property or the interests of a creditor or creditors, make any order that it considers appropriate, including an order
(a) if the foreign proceeding is a foreign non-main proceeding, referred to in subsection 48(1);
(b) respecting the examination of witnesses, the taking of evidence or the delivery of information concerning the debtor company’s property, business and financial affairs, debts, liabilities and obligations; and
(c) authorizing the foreign representative to monitor the debtor company’s business and financial affairs in Canada for the purpose of reorganization.
Restriction
(2) If any proceedings under this Act have been commenced in respect of the debtor company at the time an order recognizing the foreign proceeding is made, an order made under subsection (1) must be consistent with any order that may be made in any proceedings under this Act.
Application of this and other Acts
(3) The making of an order under paragraph (1)(a) does not preclude the commencement or the continuation of proceedings under this Act, the Bankruptcy and Insolvency Act or the Winding-up and Restructuring Act in respect of the debtor company.
Terms and conditions of orders
50. An order under this Part may be made on any terms and conditions that the court considers appropriate in the circumstances.
Commencement or continuation of proceedings
51. If an order is made recognizing a foreign proceeding, the foreign representative may commence and continue proceedings under this Act in respect of a debtor company as if the foreign representative were a creditor of the debtor company, or the debtor company, as the case may be.
Obligations
Cooperation — court
52. (1) If an order recognizing a foreign proceeding is made, the court shall cooperate, to the maximum extent possible, with the foreign representative and the foreign court involved in the foreign proceeding.
Cooperation — other authorities in Canada
(2) If any proceedings under this Act have been commenced in respect of a debtor company and an order recognizing a foreign proceeding is made in respect of the debtor company, every person who exercises powers or performs duties and functions under the proceedings under this Act shall cooperate, to the maximum extent possible, with the foreign representative and the foreign court involved in the foreign proceeding.
Obligations of foreign representative
53. If an order recognizing a foreign proceeding is made, the foreign representative who applied for the order shall
(a) without delay, inform the court of
(i) any substantial change in the status of the recognized foreign proceeding,
(ii) any substantial change in the status of the foreign representative’s authority to act in that capacity, and
(iii) any other foreign proceeding in respect of the same debtor company that becomes known to the foreign representa­tive; and
(b) publish, without delay after the order is made, once a week for two consecutive weeks, or as otherwise directed by the court, in one or more newspapers in Canada specified by the court, a notice containing the prescribed information.
Multiple Proceedings
Concurrent proceedings
54. If any proceedings under this Act in respect of a debtor company are commenced at any time after an order recognizing the foreign proceeding is made, the court shall review any order made under section 49 and, if it determines that the order is inconsistent with any orders made in the proceedings under this Act, the court shall amend or revoke the order.
Multiple foreign proceedings
55. (1) If, at any time after an order is made in respect of a foreign non-main proceeding in respect of a debtor company, an order recognizing a foreign main proceeding is made in respect of the debtor company, the court shall review any order made under section 49 in respect of the foreign non-main proceeding and, if it determines that the order is inconsistent with any orders made under that section in respect of the foreign main proceedings, the court shall amend or revoke the order.
Multiple foreign proceedings
(2) If, at any time after an order is made in respect of a foreign non-main proceeding in respect of the debtor company, an order recognizing another foreign non-main proceeding is made in respect of the debtor company, the court shall, for the purpose of facilitating the coordination of the foreign non-main proceedings, review any order made under section 49 in respect of the first recognized proceeding and amend or revoke the order if it considers it appropriate.
Miscellaneous Provisions
Authorization to act as representative of proceeding under this Act
56. The court may authorize any person or body to act as a representative in respect of any proceeding under this Act for the purpose of having them recognized in a jurisdiction outside Canada.
Foreign representative status
57. An application by a foreign representa­tive for any order under this Part does not submit the foreign representative to the jurisdiction of the court for any other purpose except with regard to the costs of the proceedings, but the court may make any order under this Part conditional on the compliance by the foreign representative with any other order of the court.
Foreign proceeding appeal
58. A foreign representative is not prevented from making an application to the court under this Part by reason only that proceedings by way of appeal or review have been taken in a foreign proceeding, and the court may, on an application if such proceedings have been taken, grant relief as if the proceedings had not been taken.
Presumption of insolvency
59. For the purposes of this Part, if an insolvency or a reorganization or a similar order has been made in respect of a debtor company in a foreign proceeding, a certified copy of the order is, in the absence of evidence to the contrary, proof that the debtor company is insolvent and proof of the appointment of the foreign representative made by the order.
Credit for recovery in other jurisdictions
60. (1) In making a compromise or an arrangement of a debtor company, the following shall be taken into account in the distribution of dividends to the company’s creditors in Canada as if they were a part of that distribution:
(a) the amount that a creditor receives or is entitled to receive outside Canada by way of a dividend in a foreign proceeding in respect of the company; and
(b) the value of any property of the company that the creditor acquires outside Canada on account of a provable claim of the creditor or that the creditor acquires outside Canada by way of a transfer that, if it were subject to this Act, would be a preference over other creditors or a transfer at undervalue.
Restriction
(2) Despite subsection (1), the creditor is not entitled to receive a dividend from the distribution in Canada until every other creditor who has a claim of equal rank in the order of priority established under this Act has received a dividend whose amount is the same percentage of that other creditor’s claim as the aggregate of the amount referred to in paragraph (1)(a) and the value referred to in paragraph (1)(b) is of that creditor’s claim.
Court not prevented from applying certain rules
61. (1) Nothing in this Part prevents the court, on the application of a foreign represent­ative or any other interested person, from applying any legal or equitable rules governing the recognition of foreign insolvency orders and assistance to foreign representatives that are not inconsistent with the provisions of this Act.
Court not compelled to give effect to certain orders
(2) Nothing in this Part requires the court to make any order that is not in compliance with the laws of Canada or to enforce any order made by a foreign court.
PART V
ADMINISTRATION
Regulations
62. The Minister may make regulations for carrying out the purposes and provisions of this Act, including regulations
(a) specifying documents for the purpose of paragraph 23(1)(f); and
(b) prescribing anything that by this Act is to be prescribed.
Review of Act
63. (1) Within five years after the coming into force of this section, the Minister shall cause to be laid before both Houses of Parliament a report on the provisions and operation of this Act, including any recommendations for amendments to those provisions.
Reference to parliamentary committee
(2) The report stands referred to the committee of the Senate, the House of Commons or both Houses of Parliament that is designated or established for that purpose, which shall
(a) as soon as possible after the laying of the report, review the report; and
(b) report to the Senate, the House of Commons or both Houses of Parliament, as the case may be, within one year after the laying of the report of the Minister, or any further time authorized by the Senate, the House of Commons or both Houses of Parliament.
TRANSITIONAL PROVISIONS
Transitional
132. The Wage Earner Protection Program Act, as enacted by section 1, applies
(a) in respect of wages owing to an individual by an employer who becomes bankrupt after the coming into force of that section; and
(b) in respect of wages owing to an individual by an employer any of whose property comes under the possession or control of a receiver within the meaning of subsection 243(2) of the Bankruptcy and Insolvency Act after the coming into force of that section.
Transitional
133. The amendments to the Bankruptcy and Insolvency Act, as enacted by any of sections 2 to 123, other than section 6, apply in respect of a person
(a) who becomes bankrupt after the coming into force of that section;
(b) who files a notice of intention after the coming into force of that section;
(c) who files a proposal after the coming into force of that section without having filed a notice of intention;
(d) in respect of whom a proposal is made after the coming into force of that section without the person having filed a notice of intention;
(e) any of whose property comes under the possession or control of an interim receiver who is appointed as such after the coming into force of that section; and
(f) any of whose property comes under the possession or control of a receiver within the meaning of subsection 243(2) of the Bankruptcy and Insolvency Act after the coming into force of that section.
Transitional
134. The amendments to the Companies’ Creditors Arrangement Act, as enacted by sections 124 to 131, apply in respect of a debtor company in respect of whom proceedings are commenced under that Act after the coming into force of those sections.
Transitional
135. The person who holds office as Superintendent of Bankruptcy immediately before the day on which subsection 5(1) of the Bankruptcy and Insolvency Act, as enacted by subsection 6(1), comes into force continues to hold office for the remainder of the person’s term as though the person had been appointed under that subsection 5(1).
CONSEQUENTIAL AMENDMENTS
Canada Labour Code
136. Section 67 of the Canada Labour Code is amended by adding the following after subsection (6):
Revision of term
(7) Despite subsection (2), if a notice to bargain referred to in subsection 65.12(1) of the Bankruptcy and Insolvency Act has been served, the parties may agree to revise the term of the collective agreement without approval of the Board.
Revision of term
(8) Despite subsection (2), if a notice to bargain referred to in subsection 33(2) of the Companies’ Creditors Arrangement Act has been served, the parties may agree to revise the term of the collective agreement without approval of the Board.
Canada Pension Plan
137. Paragraph 23(2)(b) of the Canada Pension Plan is replaced by the following:
(b) subsection 224(1.2) of the Income Tax Act shall apply to employer’s contributions, employee’s contributions, and related interest, penalties or other amounts, subject to subsections 69(1), 69.1(1) and 69.2(1) of the Bankruptcy and Insolvency Act and section 11.09 of the Companies’ Creditors Arrangement Act.
Employment Insurance Act
138. Paragraph 99(b) of the Employment Insurance Act is replaced by the following:
(b) subsection 224(1.2) of the Income Tax Act shall apply to employer’s premiums, employee’s premiums, and related interest, penalties or other amounts, subject to subsections 69(1), 69.1(1) and 69.2(1) of the Bankruptcy and Insolvency Act and section 11.09 of the Companies’ Creditors Arrangement Act.
Income Tax Act
139. The portion of subsection 224(1.2) of the Income Tax Act before paragraph (a) is replaced by the following:
Garnishment
(1.2) Notwithstanding any other provision of this Act, the Bankruptcy and Insolvency Act, any other enactment of Canada, any enactment of a province or any law, but subject to subsections 69(1), 69.1(1) and 69.2(1) of the Bankruptcy and Insolvency Act and section 11.09 of the Companies’ Creditors Arrangement Act, if the Minister has knowledge or suspects that a particular person is, or will become within one year, liable to make a payment
COORDINATING AMENDMENT
Bill C-23
140. (1) Subsections (2) and (3) apply if Bill C-23, introduced in the 1st session of the 38th Parliament and entitled the Department of Human Resources and Skills Development Act (in this section, the “other Act”), receives royal assent.
(2) On the later of the day on which the other Act comes into force and the day on which this Act receives royal assent, section 27 of the Wage Earner Protection Program Act, as enacted by section 1, is replaced by the following:
Information to be made available to Minister
27. Despite subsection 139(5) of the Employment Insurance Act, personal information relating to an applicant that is collected or obtained by the Canada Employment Insurance Commission must, if requested by the Minister, be made available to the Minister to determine the applicant’s eligibility to receive a payment under this Act.
(3) On the later of the day on which the other Act comes into force and the day on which this Act receives royal assent, section 28 of the Wage Earner Protection Program Act, as enacted by section 1, is repealed.
COMING INTO FORCE
Order in council
141. (1) Sections 1, 67 and 88 come into force on a day to be fixed by order of the Governor in Council.
Order in council
(2) Sections 2 to 66, 68 to 87, 89 to 123 and 136 to 139 come into force on a day or days to be fixed by order of the Governor in Council.
Order in council
(3) Sections 124 to 131 come into force on a day to be fixed by order of the Governor in Council.
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