Bankruptcy and Insolvency Act

This Act may be cited as the Bankruptcy and Insolvency Act.

In this Act,

affidavit includes statutory declaration and solemn affirmation; (affidavit)

aircraft objects[Repealed, 2012, c. 31, s. 414]

application, with respect to a bankruptcy application filed in a court in the Province of Quebec, means a motion; (Version anglaise seulement)

assignment means an assignment filed with the official receiver; (cession)

bank means

every bank and every authorized foreign bank within the meaning of section 2 of the Bank Act,

every other member of the Canadian Payments Association established by the Canadian Payments Act, and

every local cooperative credit society, as defined in subsection 2(1) of the Act referred to in paragraph (b), that is a member of a central cooperative credit society, as defined in that subsection, that is a member of that Association; (banque)

bankrupt means a person who has made an assignment or against whom a bankruptcy order has been made or the legal status of that person; (failli)

bankruptcy means the state of being bankrupt or the fact of becoming bankrupt; (faillite)

bargaining agent means any trade union that has entered into a collective agreement on behalf of the employees of a person; (agent négociateur)

child[Repealed, 2000, c. 12, s. 8]

claim provable in bankruptcy, provable claim or claim provable includes any claim or liability provable in proceedings under this Act by a creditor; (réclamation prouvable en matière de faillite ou réclamation prouvable)

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; (convention collective)

common-law partner, in relation to an individual, means a person who is cohabiting with the individual in a conjugal relationship, having so cohabited for a period of at least one year; (conjoint de fait)

common-law partnership means the relationship between two persons who are common-law partners of each other; (union de fait)

corporation means a company or legal person that is incorporated by or under an Act of Parliament or of the legislature of a province, an incorporated company, wherever incorporated, that is authorized to carry on business in Canada or has an office or property in Canada or an income trust, but does not include banks, authorized foreign banks within the meaning of section 2 of the Bank Act, insurance companies, trust companies or loan companies; (personne morale)

court, except in paragraphs 178(1)(a) and (a.1) and sections 204.1 to 204.3, means a court referred to in subsection 183(1) or (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; (tribunal)

creditor means a person having a claim provable as a claim under this Act; (créancier)

current assets means cash, cash equivalents — including negotiable instruments and demand deposits — inventory or accounts receivable, or the proceeds from any dealing with those assets; (actif à court terme)

date of the bankruptcy, in respect of a person, means the date of

the granting of a bankruptcy order against the person,

the filing of an assignment in respect of the person, or

the event that causes an assignment by the person to be deemed; (date de la faillite)

date of the initial bankruptcy event, in respect of a person, means the earliest of the day on which any one of the following is made, filed or commenced, as the case may be:

an assignment by or in respect of the person,

a proposal by or in respect of the person,

a notice of intention by the person,

the first application for a bankruptcy order against the person, in any case

referred to in paragraph 50.4(8)(a) or 57(a) or subsection 61(2), or

in which a notice of intention to make a proposal has been filed under section 50.4 or a proposal has been filed under section 62 in respect of the person and the person files an assignment before the court has approved the proposal,

the application in respect of which a bankruptcy order is made, in the case of an application other than one referred to in paragraph (d), or

proceedings under the Companies’ Creditors Arrangement Act; (ouverture de la faillite)

debtor includes an insolvent person and any person who, at the time an act of bankruptcy was committed by him, resided or carried on business in Canada and, where the context requires, includes a bankrupt; (débiteur)

director in respect of a corporation other than an income trust, means a person occupying the position of director by whatever name called and, in the case of an income trust, a person occupying the position of trustee by whatever name called; (administrateur)

eligible financial contract means an agreement of a prescribed kind; (contrat financier admissible)

equity claim means a claim that is in respect of an equity interest, including a claim for, among others,

a dividend or similar payment,

a return of capital,

a redemption or retraction obligation,

a monetary loss resulting from the ownership, purchase or sale of an equity interest or from the rescission, or, in Quebec, the annulment, of a purchase or sale of an equity interest, or

contribution or indemnity in respect of a claim referred to in any of paragraphs (a) to (d); (réclamation relative à des capitaux propres)

equity interest means

in the case of a corporation other than an income trust, a share in the corporation — or a warrant or option or another right to acquire a share in the corporation — other than one that is derived from a convertible debt, and

in the case of an income trust, a unit in the income trust — or a warrant or option or another right to acquire a unit in the income trust — other than one that is derived from a convertible debt; (intérêt relatif à des capitaux propres)

executing officer includes a sheriff, a bailiff and any officer charged with the execution of a writ or other process under this Act or any other Act or proceeding with respect to any property of a debtor; (huissier- exécutant)

financial collateral means any of the following that is subject to an interest, or in the Province of Quebec a right, that secures payment or performance of an obligation in respect of an eligible financial contract or that is subject to a title transfer credit support agreement:

cash or cash equivalents, including negotiable instruments and demand deposits,

securities, a securities account, a securities entitlement or a right to acquire securities, or

a futures agreement or a futures account; (garantie financière)

General Rules means the General Rules referred to in section 209; (Règles générales)

income trust means a trust that has assets in Canada if

its units are listed on a prescribed stock exchange on the date of the initial bankruptcy event, or

the majority of its units are held by a trust whose units are listed on a prescribed stock exchange on the date of the initial bankruptcy event; (fiducie de revenu)

insolvent person means a person who is not bankrupt and who resides, carries on business or has property in Canada, whose liabilities to creditors provable as claims under this Act amount to one thousand dollars, and

who is for any reason unable to meet his obligations as they generally become due,

who has ceased paying his current obligations in the ordinary course of business as they generally become due, or

the aggregate of whose property is not, at a fair valuation, sufficient, or, if disposed of at a fairly conducted sale under legal process, would not be sufficient to enable payment of all his obligations, due and accruing due; (personne insolvable)

legal counsel means any person qualified, in accordance with the laws of a province, to give legal advice; (conseiller juridique)

locality of a debtor means the principal place

where the debtor has carried on business during the year immediately preceding the date of the initial bankruptcy event,

where the debtor has resided during the year immediately preceding the date of the initial bankruptcy event, or

in cases not coming within paragraph (a) or (b), where the greater portion of the property of the debtor is situated; (localité)

Minister means the Minister of Industry; (ministre)

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

official receiver means an officer appointed under subsection 12(2); (séquestre officiel)

person includes a partnership, an unincorporated association, a corporation, a cooperative society or a cooperative organization, the successors of a partnership, of an association, of a corporation, of a society or of an organization and the heirs, executors, liquidators of the succession, administrators or other legal representatives of a person; (personne)

prescribed

in the case of the form of a document that is by this Act to be prescribed and the information to be given therein, means prescribed by directive issued by the Superintendent under paragraph 5(4)(e), and

in any other case, means prescribed by the General Rules; (prescrit)

property means any type of property, whether situated in Canada or elsewhere, and includes money, goods, things in action, land and every description of property, whether real or personal, legal or equitable, as well as obligations, easements and every description of estate, interest and profit, present or future, vested or contingent, in, arising out of or incident to property; (bien)

proposal means and includes a proposal or consumer proposal, as the case may be, for a composition, for an extension of time or for a scheme or arrangement; (proposition concordataire ou proposition)

in any provision of Division I of Part III, a proposal made under that Division, and

in any other provision, a proposal made under Division I of Part III or a consumer proposal made under Division II of Part III

public utility includes a person or body who supplies fuel, water or electricity, or supplies telecommunications, garbage collection, pollution control or postal services; (entreprise de service public)

resolution or ordinary resolution means a resolution carried in the manner provided by section 115; (résolution ou résolution ordinaire)

secured creditor means a person holding a mortgage, hypothec, pledge, charge or lien on or against the property of the debtor or any part of that property as security for a debt due or accruing due to the person from the debtor, or a person whose claim is based on, or secured by, a negotiable instrument held as collateral security and on which the debtor is only indirectly or secondarily liable, and includes

a person who has a right of retention or a prior claim constituting a real right, within the meaning of the Civil Code of Québec or any other statute of the Province of Quebec, on or against the property of the debtor or any part of that property, or

any of if the exercise of the person’s rights is subject to the provisions of Book Six of the Civil Code of Québec entitled Prior Claims and Hypothecs that deal with the exercise of hypothecary rights; (créancier garanti)

the vendor of any property sold to the debtor under a conditional or instalment sale,

the purchaser of any property from the debtor subject to a right of redemption, or

the trustee of a trust constituted by the debtor to secure the performance of an obligation,

settlement[Repealed, 2005, c. 47, s. 2]

shareholder includes a member of a corporation — and, in the case of an income trust, a holder of a unit in an income trust — to which this Act applies; (actionnaire)

sheriff[Repealed, 2004, c. 25, s. 7]

special resolution means a resolution decided by a majority in number and three-fourths in value of the creditors with proven claims present, personally or by proxy, at a meeting of creditors and voting on the resolution; (résolution spéciale)

Superintendent means the Superintendent of Bankruptcy appointed under subsection 5(1); (surintendant)

Superintendent of Financial Institutions means the Superintendent of Financial Institutions appointed under subsection 5(1) of the Office of the Superintendent of Financial Institutions Act; (surintendant des institutions financières)

time of the bankruptcy, in respect of a person, means the time of

the granting of a bankruptcy order against the person,

the filing of an assignment by or in respect of the person, or

the event that causes an assignment by the person to be deemed; (moment de la faillite)

title transfer credit support agreement means an agreement under which an insolvent person or a bankrupt has provided title to property for the purpose of securing the payment or performance of an obligation of the insolvent person or bankrupt in respect of an eligible financial contract; (accord de transfert de titres pour obtention de crédit)

transfer at undervalue means a disposition of property or provision of services for which no consideration is received by the debtor or for which the consideration received by the debtor is conspicuously less than the fair market value of the consideration given by the debtor; (opération sous-évaluée)

trustee or licensed trustee means a person who is licensed or appointed under this Act. (syndic ou syndic autorisé)

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.

Any notification, document or other information that is required by this Act to be given, forwarded, mailed, sent or otherwise provided to the Superintendent, other than an application for a licence under subsection 13(1), shall be given, forwarded, mailed, sent or otherwise provided to the Superintendent at the Superintendent’s division office as specified in directives of the Superintendent.

[Repealed, 2005, c. 47, s. 4]

In this section,

entity means a person other than an individual; (entité)

related group means a group of persons each member of which is related to every other member of the group; (groupe lié)

unrelated group means a group of persons that is not a related group. (groupe non lié)

For the purposes of this Act, persons are related to each other and are related persons if they are

individuals connected by blood relationship, marriage, common-law partnership or adoption;

an entity and

a person who controls the entity, if it is controlled by one person,

a person who is a member of a related group that controls the entity, or

any person connected in the manner set out in paragraph (a) to a person described in subparagraph (i) or (ii); or

two entities

both controlled by the same person or group of persons,

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,

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,

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,

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

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.

For the purposes of this section,

if two entities are related to the same entity within the meaning of subsection (2), they are deemed to be related to each other;

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;

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;

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;

persons are connected by blood relationship if one is the child or other descendant of the other or one is the brother or sister of the other;

persons are connected by marriage if one is married to the other or to a person who is connected by blood relationship or adoption to the other;

persons are connected by common-law partnership if one is in a common-law partnership with the other or with a person who is connected by blood relationship or adoption to the other; and

persons are connected by adoption if one has been adopted, either legally or in fact, as the child of the other or as the child of a person who is connected by blood relationship, otherwise than as a brother or sister, to the other.

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.

Persons who are related to each other are deemed not to deal with each other at arm’s length while so related. For the purpose of paragraph 95(1)(b) or 96(1)(b), the persons are, in the absence of evidence to the contrary, deemed not to deal with each other at arm’s length.

This Act is binding on Her Majesty in right of Canada or a province.

Any interested person in any proceedings under this Act shall act in good faith with respect to those proceedings.

If the court is satisfied that an interested person fails to act in good faith, on application by any interested person, the court may make any order that it considers appropriate in the circumstances.

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.

The Superintendent shall be paid the salary that the Governor in Council may fix.

The Superintendent shall supervise the administration of all estates and matters to which this Act applies.

The Superintendent shall, without limiting the authority conferred by subsection (2),

receive applications for licences to act as trustees under this Act and issue licences to persons whose applications have been approved;

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;

where not otherwise provided for, require the deposit of one or more continuing guaranty bonds or continuing suretyships as security for the due accounting of all property received by trustees and for the due and faithful performance by them of their duties in the administration of estates to which they are appointed, in any amount that the Superintendent may determine, which amount may be increased or decreased as the Superintendent may deem expedient, and the security shall be in a form satisfactory to the Superintendent and may be enforced by the Superintendent for the benefit of the creditors;

[Repealed, 1992, c. 27, s. 5]

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;

receive and keep a record of all complaints from any creditor or other person interested in any estate and make such specific investigations with regard to such complaints as the Superintendent may determine; and

examine trustees’ accounts of receipts and disbursements and final statements.

The Superintendent may

intervene in any matter or proceeding in court, where the Superintendent considers it expedient to do so, as if the Superintendent were a party thereto;

issue, to official receivers, trustees, administrators of consumer proposals made under Division II of Part III and persons who provide counselling pursuant to this Act, directives with respect to the administration of this Act and, without restricting the generality of the foregoing, directives requiring them

to keep such records as the Superintendent may require, and

to provide the Superintendent with such information as the Superintendent may require;

issue such directives as may be necessary to give effect to any decision made by the Superintendent pursuant to this Act or to facilitate the carrying out of the purposes and provisions of this Act and the General Rules, including, without limiting the generality of the foregoing, directives relating to the powers, duties and functions of trustees, of receivers and of administrators as defined in section 66.11;

issue directives governing the criteria to be applied by the Superintendent in determining whether a trustee licence is to be issued to a person and governing the qualifications and activities of trustees;

issue directives respecting the rules governing hearings for the purposes of section 14.02; and

issue directives prescribing the form of any document that is by this Act to be prescribed and the information to be given therein.

Every person to whom a directive is issued by the Superintendent under paragraph (4)(b) or (c) shall comply with the directive in the manner and within the time specified therein.

A directive issued by the Superintendent under this section shall be deemed not to be a statutory instrument within the meaning and for the purposes of the Statutory Instruments Act.

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.

The Superintendent, or any one duly authorized by him in writing on his behalf, is entitled to have access to and to examine and make copies of the banking accounts of a trustee in which estate funds may have been deposited, and, when required, all deposit slips, cancelled cheques or other documents relating thereto in the custody of the bank or the trustee shall be produced for examination.

The Superintendent, or anyone duly authorized in writing by or on behalf of the Superintendent, may with the leave of the court granted on an ex parte application examine the books, records, documents and deposit accounts of a trustee or any other person designated in the order granting that leave for the purpose of tracing or discovering the property or funds of an estate when there are reasonable grounds to believe or suspect that the property or funds of an estate have not been properly disclosed or dealt with and for that purpose may under a warrant from the court enter on and search any premises.

Where the Superintendent, on ex parte application, satisfies the court that it is necessary and in the public interest to do so, the court may issue an order directing a deposit-taking institution that holds a deposit account of a trustee or such other person as is designated in the order not to make payments out of the account until such time as the court otherwise directs.

[Repealed, 1992, c. 27, s. 6]

Such employees as are required to assist the Superintendent to perform his functions under this Act shall be appointed in accordance with the Public Service Employment Act.

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.

[Repealed, 1992, c. 27, s. 7]

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, re…

A person being examined pursuant to this section is bound to answer all questions relating to the conduct, dealings and transactions of the debtor, the causes of the debtor’s bankruptcy or insolvency and the disposition of the debtor’s property.

Where a person being examined pursuant to this section objects to answering any question on the ground that his answer may tend to criminate him or may tend to establish his liability to a civil proceeding at the instance of the Crown or of any person and if, but for this section or section 5 of the Canada Evidence Act, he would have been excused from answering that question, the answer so given shall not be used or admitted in evidence against him in any proceeding, civil or criminal, thereafter taking place other than a prosecution for perjury in the giving of that evidence.

No person shall hinder, molest or interfere with any person doing anything that he is authorized by or pursuant to this section to do, or prevent or attempt to prevent any person doing any such thing, and, notwithstanding any other Act or law, every person shall, unless he is unable to do so, do everything he is required by or pursuant to this section to do.

Where any book, record, paper or other document is examined or produced in accordance with this section, the person by whom it is examined or to whom it is produced or the Superintendent may make or cause to be made one or more copies thereof, and a document purporting to be certified by the Superintendent or a person thereunto authorized by him to be a copy made pursuant to this section is admissible in evidence and has the same probative force as the original document would have if it were proven in the ordinary way.

Where after an investigation pursuant to section 10 or otherwise the Superintendent has obtained evidence of an offence having been committed in connection with an estate or matter to which this Act applies, the Superintendent shall report the alleged offence to the deputy attorney general of the province concerned or to such person as is duly designated by that deputy attorney general for that purpose.

Notwithstanding section 136, a recovery made as the result of any inquiries or investigation made or caused to be made pursuant to section 10 shall be applied to the reimbursement of any costs and expenses incurred by the Superintendent thereon, not being ordinary costs or expenses of the office of the Superintendent, and the balance thereafter remaining in respect of the recovery shall be made available for the benefit of the creditors of the debtor.

The Superintendent shall keep, or cause to be kept, in such form as the Superintendent deems appropriate and for the prescribed period, a public record of and, on request therefor and on payment of such fee as may be prescribed, shall provide, or cause to be provided, any information contained in that public record.

proposals,

bankruptcies,

licences issued to trustees by the Superintendent, and appointments or designations of administrators made by the Superintendent, and

notices sent to the Superintendent by receivers pursuant to subsection 245(1)

The Superintendent shall keep, or cause to be kept, in such form as the Superintendent deems appropriate and for the prescribed period, such other records relating to the administration of this Act as the Superintendent deems advisable.

The Superintendent may enter into an agreement to provide a compilation of all or part of the information that is contained in the public record.

Each of the provinces constitutes one bankruptcy district for the purposes of this Act but the Governor in Council may divide any bankruptcy district into two or more bankruptcy divisions and name or number them.

The Governor in Council shall appoint one or more official receivers in each bankruptcy division who shall be deemed to be officers of the court and shall have and perform the duties and responsibilities specified by this Act and the General Rules.

The official receiver shall make a report to the Superintendent, in the prescribed form, of every bankruptcy originating in his division, and he shall also notify the Superintendent of any subsequent increase or decrease in the security filed by the trustee.

In the absence or illness of the official receiver or pending the appointment of a successor when the office is vacant, the registrar of the court shall perform the duties of the official receiver.

A person who wishes to obtain a licence to act as a trustee shall file with the Superintendent an application for a licence in the prescribed form.

The Superintendent, after such investigation concerning an applicant for a licence to act as a trustee as the Superintendent considers necessary, may issue the licence if the Superintendent is satisfied, having regard to the criteria referred to in paragraph 5(4)(d), that the applicant is qualified to obtain the licence.

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.

A licence shall

be in the prescribed form;

specify the bankruptcy district or part thereof in which the trustee is entitled to act; and

be subject to such conditions and limitations as the Superintendent considers appropriate and may specify therein.

Prior to the issue of a licence, the applicant shall pay such fees as may be prescribed.

Each year, starting with the year in which a licence is issued to a trustee, the trustee shall pay the prescribed fees on or before the prescribed date or, if there is no prescribed date, on or before December 31.

A licence ceases to be valid on the failure of the trustee to pay a fee in accordance with subsection (2) or if the trustee becomes bankrupt.

Where a licence has ceased to be valid by reason of