Bankruptcy Flashcards

Question

Where is the assignment filed?

Answer 1

The assignment is filed with the Official Receiver.

Answer 2

The Official Receiver reviews the documents to ensure they are in the prescribed form and accompanied by a sworn declaration.

Answer 3

The Official Receiver issues a Certificate of Appointment of Trustee to the trustee.

Answer 4

The property of the bankrupt (excluding exempt assets) passes to the trustee at the time of appointment, including property located outside Canada.

Answer 5

The term "property" includes all property of the bankrupt at the date of bankruptcy and property acquired by or that may pass to the bankrupt before the date of discharge.

Answer 6

The following types of property are not divisible among the creditors of a bankrupt: 1. Property held by the bankrupt in trust for another person. 1. Property that is exempt from execution or seizure under applicable federal or provincial statutes in the province where the assets are located and where the bankrupt resides. 1. Goods and services tax credit payments in prescribed circumstances. 1. Prescribed payments relating to the essential needs of an individual, in prescribed circumstances. 1. Property that is not otherwise unseizable by virtue of provincial or federal laws and constitutes a fund contributed to a registered retirement income fund, registered retirement savings plan, or registered disability savings plan more than one year before the bankruptcy.

Answer 7

Proceedings under the BIA are primarily commenced for the following purposes: 1. Providing for the orderly and fair distribution of property among the creditors of a bankrupt. 1. Investigating the affairs of the bankrupt. 1. Setting aside preference payments, settlements, and other fraudulent transactions. 1. Rehabilitation. 1. Permitting an honest but unfortunate debtor to obtain a discharge from his debts.

Answer 8

An insolvent person can make an assignment in bankruptcy voluntarily.

Answer 9

The executor or administrator of the estate or the liquidator of the succession, if deceased, can make an assignment in bankruptcy with the leave of the court.

Answer 10

An "insolvent person" is defined under the BIA as a person who: 1. Is not bankrupt. 1. Resides or carries on business or has property in Canada. 1. Has liabilities to creditors provable as claims under the BIA amounting to at least $1,000. 1. Meets one of the following three conditions: * Is unable to meet obligations as they generally become due for any reason. * Has ceased paying current obligations in the ordinary course of business as they generally become due. * Has obligations exceeding the fair value of his property.

Answer 11

Yes, a person can make a valid assignment in bankruptcy even if they do not have assets, as long as they satisfy the BIA definition of an insolvent person.

Answer 12

The term "person" includes: * A partnership. * An unincorporated association. * A corporation. * A cooperative society or organization. * The successors of any of the above. * The heirs, executors, liquidators of the succession, administrators, or other legal representatives of a person.

Answer 13

Yes, a corporation can file an assignment in bankruptcy if it is properly authorized to do so, typically through a resolution passed by the board of directors at a properly constituted meeting or as provided for in the corporation's articles.

Answer 14

When a corporation makes an assignment in bankruptcy, it divests itself of all its assets to the Licensed Insolvency Trustee.

Answer 15

Yes, the BIA definition of "corporation" includes an income trust but excludes incorporated banks governed by the Bank Act, savings banks, insurance companies, trust companies, loan companies, and railway companies.

Answer 16

Yes, the courts have held that a provisional liquidator appointed by the court to wind up a company can file an assignment in bankruptcy on behalf of that corporation.

Answer 17

No, the courts have ruled both for and against an assignment by the receiver of a company.

Answer 18

No, a partner of a partnership may not make a valid assignment of the partnership's property for the benefit of all creditors without unanimous authorization from the other partners.

Answer 19

No, bankruptcy proceedings initiated by a partner for the partnership are not considered to be "in the ordinary course of business," and therefore require unanimous authorization from all partners.

Answer 20

If the assignment in bankruptcy is made by only some of the partners, it would only affect the personal assets of the bankrupt partners and their share of the partnership, not the partnership's property.

Answer 21

Yes, assignments in bankruptcy made by all partners in a partnership operate as an assignment of the partnership's property as well, according to Section 85 of the BIA.

Answer 22

Yes, the BIA applies to limited partnerships as if they were ordinary partnerships.

Answer 23

Individuals file an assignment in bankruptcy to obtain a fresh financial start.

Answer 24

Some factors that can lead to the bankruptcy of a debtor are: * When debts exceed the income and assets the debtor can support. * Inability to pay off total debts when due or within a reasonable time. * Having a large number of creditors, making informal proposals difficult. * Salary garnishment or attachment by one or more creditors. * Harassment by creditors. * Other proceedings initiated by creditors.

Answer 25

Individuals, including spouses, can file a joint assignment in bankruptcy if their debts are substantially the same and their individual estates would qualify as summary bankruptcy estates. In such cases, the otherwise individual estates may be administered as one.

Answer 26

No, an insolvent debtor cannot withdraw an assignment after filing it.

Answer 27

An assignment or bankruptcy order can be annulled by a court order in certain situations.

Answer 28

Examples of situations where a court can issue an order annulling an assignment or bankruptcy order include: 1. When, in the opinion of the court, the assignment or bankruptcy order should not have been made. 1. If the bankrupt has a restraining order under a provincial family law act and has not provided notice to his or her spouse. 1. If it is shown that the debtor was not insolvent when the assignment was made.

Answer 29

An assignment or bankruptcy order will be automatically annulled if the bankrupt makes a proposal that is subsequently accepted by the creditors and approved by the court. The approval of the proposal annuls the assignment or bankruptcy order.

Answer 30

When an order is made annulling an assignment or bankruptcy order, all payments made and acts done by the trustee remain valid. The property of the bankrupt reverts to the bankrupt, or it vests in some other person appointed by the court.

Answer 31

A bankruptcy application is an application to the court made by one or more creditors, seeking a bankruptcy order that adjudges the debtor bankrupt.

Answer 32

The creditor(s) must allege and be prepared to prove to the court's satisfaction that the debtor owes at least $1,000 and that the debtor has committed an act of bankruptcy within six months prior to filing the application.

Answer 33

The purpose of a bankruptcy application is to seek a court order that declares the debtor bankrupt.

Answer 34

One or more unsecured creditors can apply for a bankruptcy order.

Answer 35

A bankruptcy order is made by the court and declares that an individual, corporation, or partnership is adjudged bankrupt.

Answer 36

The court appoints a licensed trustee to administer the estate of the bankrupt. Usually, a trustee nominated by the applicant creditor(s) and who has consented to act is appointed by the court and named in the bankruptcy order.

Answer 37

The making of a bankruptcy order is sometimes referred to as an "involuntary bankruptcy".

Answer 38

A secured creditor can file an application if: * The creditor states in its application that it is willing to give up its security for the benefit of the creditors of the estate if a bankruptcy order is made, or * The creditor gives an estimate of the value of its security, and the debt exceeds the value of the security by at least $1,000. The valuation of the security must be reasonable.

Answer 39

Yes, in practice, the court has allowed a secured creditor to file an application for a bankruptcy order even if it undertakes to abandon only part of its security, as long as the remaining unsecured debt is at least $1,000.

Answer 40

A creditor can file an application against a debtor.

Answer 41

The BIA defines "debtor" to include an insolvent person and any person who resided or carried on business in Canada at the time an act of bankruptcy was committed.

Answer 42

An application can be made against any corporation that is incorporated in Canada or has an office or property in, or carries on business within, Canada.

Answer 43

Yes, it is possible to file an application for a bankruptcy order against a partnership without involving all of the partners or even a single individual partner becoming bankrupt.

Answer 44

While it is not necessary to mention all of the partners in the petition, it is common practice to name each of the partners in the partnership, as well as the partnership itself, when filing.

Answer 45

In such a case, the other application should be filed in or transferred to the same court so that the court may consolidate the proceedings.

Answer 46

Limited partnerships are treated as ordinary partnerships, and therefore an application for a bankruptcy order can be filed against the limited partnership. The application would also be filed against the general partner(s) since they are fully liable for the debts of the limited partnership. Typically, the application would not be filed against the limited partners, as they do not have an obligation for the debts of the limited partnership beyond their investment.

Answer 47

An application against a sole proprietorship should be made against the individual who operated the business and not against the proprietorship itself.

Answer 48

An application against a sole proprietorship should be made against the individual who operated the business and not against the proprietorship itself.

Answer 49

An application for a bankruptcy order can be filed against an individual debtor or the estate or succession of a deceased debtor.

Answer 50

Yes, individuals who have their principal occupation and means of livelihood in fishing, farming, or the tillage of soil, or who work for wages, salary, commission, or hire at a rate of compensation not exceeding $2,500 per year and do not carry on business on their own account, are exempt from having an application for a bankruptcy order filed against them.

Answer 51

Yes, although an application for a bankruptcy order cannot be filed against these individuals, they can still make a voluntary assignment.

Answer 52

The creditors must establish the following: 1. The debts owing to them are at least $1,000. 1. The debtor has committed an act of bankruptcy. 1. The act of bankruptcy was committed within the six months preceding the filing of the application.

Answer 53

The date of filing the application serves as the reference date for determining the act of bankruptcy within the six months preceding the filing.

Answer 54

The applicant creditor must be owed $1,000 or more. If there are multiple applicant creditors, the total debts must amount to a minimum of $1,000.

Answer 55

Before making a bankruptcy order, the court must be satisfied that the debt due to the applicant creditor is actually owed. If the debt has not been clearly established, the application may be dismissed.

Answer 56

No, as long as the court is satisfied that the debtor is indebted to the applicant for at least $1,000, it is not necessary for the court to determine the precise amount owed to the applicant creditor.

Answer 57

No, a dispute regarding the state of the account of an applicant creditor is not grounds for staying an application unless there is doubt that the amount owed is at least $1,000.

Answer 58

The grounds for filing an application for a bankruptcy order against a debtor include having a debt of at least $1,000 and proving that one or more acts of bankruptcy have been committed within the six-month period preceding the application.

Answer 59

The most commonly cited act of bankruptcy in applications is ceasing to meet liabilities generally as they become due.

Answer 60

When alleging that the debtor has ceased to meet its liabilities generally as they become due, the applicant must establish that there is debt other than their own as proof of the act of bankruptcy, unless special circumstances exist.

Answer 61

The courts have recognized special circumstances in the following situations: 1. When the creditor is the only creditor, or a significantly large creditor, of a debtor who has failed to meet repeated demands for payment. 1. When there is fraud on the part of the debtor, making it imperative to set in motion the processes of the BIA immediately for the protection of the whole class of creditors. 1. When the debtor admits that they are generally unable to pay their creditors.

Answer 62

The question of whether or not there has been a failure to meet liabilities generally is a matter of fact.

Answer 63

The allegations in an application must be verified by an affidavit of the applicant or by someone duly authorized on his behalf who has personal knowledge of the facts alleged in the application.

Answer 64

If an application is not verified by an affidavit, the court will reject the application.

Answer 65

The applicant or someone duly authorized on his behalf, who has personal knowledge of the facts alleged in the application, can provide the affidavit to verify the allegations.

Answer 66

At the hearing of the application, the court will require proof of the facts alleged in the application and proof of the service of the application.

Answer 67

If satisfied with the proof of the facts alleged in the application and the service of the application, the court will make a bankruptcy order.

Answer 68

The courts have repeatedly stressed that creditors seeking to take advantage of bankruptcy proceedings must strictly comply with the statute. Bankruptcy proceedings are considered quasi-criminal in nature, and therefore, strict adherence to the statutory requirements is required.

Answer 69

The "locality of a debtor" is defined under the Bankruptcy and Insolvency Act (BIA) as the principal place where the debtor has carried on business or resided during the year immediately preceding the bankruptcy. If the debtor has not carried on business or resided in Canada during that year, the locality is determined by where the greater portion of the debtor's property is situated.

Answer 70

The onus or burden of proof falls on the applicant creditor to demonstrate that the application has been presented in the locality of the debtor.

Answer 71

The locality of a debtor is determined based on where the debtor has carried on business or resided during the year immediately preceding the bankruptcy. If neither of these conditions applies, the locality is determined by the location of the greater portion of the debtor's property.

Answer 72

The court can consolidate proceedings when two or more applications are filed against the same debtor or against joint debtors.

Answer 73

1. The court is not satisfied with the proof of the facts alleged in the application. 1. The court is not satisfied with the service of the application. 1. The debtor is able to demonstrate that they are capable of paying their debts. 1. The court is satisfied that there is sufficient cause not to make an order.

Answer 74

When there are multiple debtors named in the application, the court has the discretion to dismiss the application with respect to one or more of the debtors without affecting the application's effect against the other debtors named in the application.

Answer 75

Dismissing an application "without prejudice" means that it does not prevent or hinder future applications or legal actions. It allows for the possibility of pursuing the matter again in the future if circumstances change or new evidence emerges.

Answer 76

If a debtor intends to dispute an application, they must file in court: 1. A notice specifying the statements in the application they intend to dispute. 1. The grounds of their dispute. 1. Their address for service.

Answer 77

The debtor must serve a copy of the notice to the applicant creditor or its solicitor at least two full days before the date of the hearing stated in the application.

Answer 78

No, a disputed application must be heard by a judge. Registrars can only hear applications that are not disputed.

Answer 79

If the debtor intends to dispute an application, they must either dispute the debt claimed or establish that they have not committed an act of bankruptcy. Challenging the amount of the debt alone is not sufficient unless it reduces the debt below the $1,000 minimum required to file an application.

Answer 80

Some proper reasons for a creditor to file an application against a debtor include: * Allowing a trustee to review preferences or fraudulent transactions, even if the rights of action may be statute-barred. * Preventing the squandering or dissipation of assets and ensuring an equitable distribution of the debtor's property among creditors. * Determining the amount of loss for insurance or other purposes. * Allowing creditors to take advantage of provisions in the Bankruptcy and Insolvency Act (BIA) that may provide certain priorities they would not otherwise have.

Answer 81

Filing an application to review preferences or fraudulent transactions allows creditors to potentially uncover transactions that may have been conducted to give certain creditors preferential treatment or to defraud creditors. It helps protect the rights and interests of all creditors involved.

Answer 82

The court can stay proceedings on an application if the debtor denies the facts alleged in the application and there is a need to resolve the disputed facts at trial. The court can also stay proceedings for other sufficient reasons as determined by the court.

Answer 83

During the stay of proceedings, the court may impose conditions on the debtor to prevent disposition of their property, ensuring the assets are preserved during the period of the stay.

Answer 84

The proceedings under the application can be resumed as soon as the trial to resolve the disputed facts is concluded.

Answer 85

Yes, even if the facts are not disputed, the court has the authority to stay proceedings under an application, either altogether or for a limited time. However, in such cases, the debtor must provide the court with sufficient reasons to justify the stay.

Answer 86

An applicant residing outside Canada may be ordered to give security for costs. Proceedings may be stayed until the security is provided.

Answer 87

No, a creditor who resides in a province other than the province of the debtor's locality is not required to give security for costs.

Answer 88

When a bankruptcy order is made, the costs of the applicant creditor are to be taxed and paid out of the bankrupt estate, unless the court orders otherwise.

Answer 89

In such a scenario, the court may order the costs to be paid by the applicant creditor. This means the creditor may be responsible for covering some of the trustee's fees and expenses if the assets in the bankrupt estate are not enough to cover them.

Answer 90

No, an application for a bankruptcy order cannot be withdrawn without leave of the court, as it is considered a proceeding for the benefit of all creditors.

Answer 91

"Leave of the court" refers to obtaining permission or approval from the court to withdraw the bankruptcy order application. It cannot be done unilaterally by the applicant.

Answer 92

The historical rationale behind this prohibition was that a bankruptcy order had a retroactive effect to the date of the application filing. Allowing debtors to make an assignment after the application could be perceived as enabling the debtor to assign assets after being declared bankrupt, which was considered impossible.

Answer 93

The 1997 BIA amendments eliminated the retroactive effect of bankruptcy orders. However, the practice of disallowing debtors from making assignments after filing an application continued, and the court in the case of Re Archibald (2003) upheld this practice, setting aside an assignment in favor of a bankruptcy order made after the assignment.

Answer 94

Yes, an application for a bankruptcy order can be filed against the estate or succession of a deceased debtor.

Answer 95

The application should be served on the executor or administrator of the deceased debtor's estate, or on the liquidator of the succession. The representative should refrain from making any payments or transferring any property of the deceased debtor, except for funeral and testamentary expenses, until the application has been dealt with. The representative can be personally liable for any payments, property transfers, or penalties incurred if they act contrary to this requirement.

Answer 96

The trustee must advise the creditors and the Official Receiver within 60 days after the first day the default occurs, unless the default is waived by the inspectors or creditors, or remedied by the debtor within 30 days after the default.

Answer 97

An interested party, such as the trustee or a creditor, can make an application to the court for an order annulling the proposal and declaring the debtor bankrupt due to the default. However, there is no requirement that any party file such an application, and the debtor may not become bankrupt even if there is a default.

Answer 98

The court may make an order annulling the proposal if it appears that the proposal cannot continue without injustice or undue delay, or if the court's approval of the proposal was obtained through fraud.

Answer 99

Within five days of the court order annulling the proposal, the trustee must send a notice calling the first meeting of creditors in the bankruptcy. The meeting must be held within 21 days of the trustee's appointment, but this time period can be extended by the Official Receiver or the court under specific circumstances.

Answer 100

When the creditors reject a Division I proposal or the court refuses to approve it, the insolvent person is deemed to have made an assignment in bankruptcy. A trustee must file a report with the Official Receiver, who will issue a Certificate of Assignment, and the first meeting of creditors in the bankruptcy will proceed.

Answer 101

If the creditors reject the proposal at a meeting to vote on it, the trustee will call and hold a meeting of creditors present. If no quorum exists, the trustee will send a notice pursuant to BIA s. 102, calling the first meeting of creditors. In the case of non-approval by the court, the trustee will send a similar notice calling the first meeting of creditors.

Answer 102

Yes, the court can decide, upon application, at any time before the meeting of creditors, that the creditors are deemed to have refused the proposal. In this case, the debtor is deemed to have made an assignment, and the process continues the same way as if the creditors had voted against the proposal at a meeting.

Answer 103

At the first meeting of creditors, the creditors may affirm the appointment of the trustee or appoint another trustee by ordinary resolution, regardless of the requirement for a special resolution under BIA s. 14 to appoint another trustee.

Answer 104

According to the BIA, a trustee is either a natural person or a corporation holding a licence issued by the Superintendent of Bankruptcy. If the trustee is a corporation, an officer of the corporation who personally holds a trustee licence must be designated as the person responsible for the administration of the bankrupt estate.

Answer 105

The conduct of licensed trustees is subject to the regulations and rules of the Bankruptcy and Insolvency Act (BIA) and the CAIRP (Canadian Association of Insolvency and Restructuring Professionals) Rules of Professional Conduct and Interpretations.

Answer 106

If the trustee of a bankrupt estate is a corporation, an officer of the corporation who personally holds a trustee licence must be designated as the person responsible for the administration of that estate.

Answer 107

The trustee is not the agent of the bankrupt or the creditors. Instead, the trustee acts as an officer of the court, and as such, has responsibilities to both the bankrupt and the creditors.

Answer 108

A trustee may need permission from the court to act if, at any time during the two preceding years, they were involved in any of the following roles or relationships with the debtor or related parties: * A director or officer of the debtor * An employer or employee of the debtor or its directors/officers * Related to the debtor or any of its directors/officers * The auditor, accountant, or legal counsel, or a partner or employee of the auditor, accountant, or legal counsel of the debtor * The trustee under a trust indenture issued by the debtor or any related person * The holder of a power of attorney under a hypothec within the meaning of the Civil Code of Québec granted by the debtor or any related person * Related to the trustee under a trust indenture.

Answer 109

The BIA and the CAIRP Rule of Professional Conduct impose restrictions on trustees to prevent conflicts of interest. The BIA sets out specific roles and relationships that may disqualify a trustee from acting without court permission, and the CAIRP Rule of Professional Conduct 4 further emphasizes the trustee's ethical obligations in managing conflicts of interest.

Answer 110

A trustee cannot act as a trustee of the estate of a debtor unless they make full disclosure of any potential conflict of interest. This disclosure must be made at the time of appointment as trustee of the estate of the debtor and at the first meeting of creditors if the trustee is already involved as a trustee, receiver, or liquidator of the property of any person related to the debtor.

Answer 111

A dual mandate occurs when the same licensed insolvency trustee acts as both a receiver or agent for a secured creditor to realize encumbered assets and as a trustee in a bankruptcy proceeding simultaneously. This approach aims to reduce costs associated with separate appointments.

Answer 112

A dual appointment can potentially lead to conflicts of interest. Therefore, the trustee must disclose this dual role to all interested parties. Any interested party has the right to oppose the dual appointment, which could result in the termination of either one of the appointments.

Answer 113

If the trustee believes that the dual appointment creates a conflict, they should voluntarily resign as a receiver since a trustee providing services in a bankruptcy cannot resign from their duties. This ensures transparency and ethical conduct in the bankruptcy proceedings.

Answer 114

A trustee can act for a secured creditor as an agent or receiver while also serving as the trustee of the bankrupt estate if they obtain a written opinion from a legal counsel who does not represent the secured creditor. This opinion must confirm the validity and enforceability of the security against the bankrupt's estate.

Answer 115

Upon commencing to act for or assist a secured creditor, the trustee must notify the Superintendent of Bankruptcy and the creditors or inspectors. The notification must include details that the trustee is acting for the secured creditor, the basis of any remuneration received from the secured creditor, and the independent legal opinion regarding the validity of the security.

Answer 116

The trustee is required to provide the Superintendent of Bankruptcy with a copy of the independent legal opinion within two days after receiving a request, and they must also provide a copy to any creditor who requests one. This ensures transparency and accountability in the trustee's actions while acting on behalf of the secured creditor.

Answer 117

The key requirements for a LIT acting for a secured creditor in a bankruptcy are: 1. Maintain a written record of the capacity and terms under which they operate on behalf of the secured creditor. 1. Obtain an independent legal opinion confirming the validity and enforceability of the security instrument. 1. Maintain adequate accounting records to segregate costs and activities for the benefit of the secured creditor.

Answer 118

If a trustee fails to redeem the security instrument as required by the secured creditor, the only exception to the rule that no creditor can receive more than 100 cents on the dollar plus interest under the BIA is applicable. In such a case, the secured creditor is entitled to retain the full realized value of the assets, even if it exceeds the creditor's claim.

Answer 119

A trustee can disallow the claim of a secured creditor if the trustee determines that the security held by the creditor is invalid. This means that the trustee has reason to believe that the security instrument is not legally enforceable or does not meet the necessary requirements.

Answer 120

When acting for a secured creditor, a trustee must maintain adequate accounting records that segregate costs and activities specifically for the benefit of the secured creditor. This ensures transparency and helps in accurately tracking the financial transactions related to the secured assets.

Answer 121

Yes, there is an exception where a secured creditor can receive more than 100 cents on the dollar plus interest. This occurs when the trustee fails to redeem the security instrument as required by the secured creditor. In such a scenario, the secured creditor is entitled to retain the full realized value of the assets, even if it exceeds the creditor's claim.

Answer 122

The trustee can be substituted in a bankruptcy proceeding either by the creditors or by the court. Creditors can appoint or substitute another Licensed Insolvency Trustee (LIT) for the trustee named in the assignment by passing a special resolution at a general meeting of creditors. The court, on the other hand, has the authority to remove a trustee for cause and appoint another LIT in their place, upon the application of any interested party.

Answer 123

For creditors to substitute the trustee in a bankruptcy case, they must pass a special resolution at a general meeting of creditors. This special resolution is required to appoint or replace the existing Licensed Insolvency Trustee (LIT) with another LIT chosen by the creditors.

Answer 124

To remove a trustee "for cause" means that there are very compelling reasons why the current trustee should be replaced. The term "for cause" indicates that there are serious issues or circumstances that warrant the removal of the trustee from their position, as determined by the court.

Answer 125

Subject to the rights of secured creditors, all property of the bankrupt, regardless of its location, automatically vests in the trustee providing services in the bankruptcy. The trustee holds this property for the benefit of the creditors.

Answer 126

Yes, there are exceptions to the property that vests in the trustee. The property divisible amongst the creditors does not include: * Property held by the bankrupt in trust for others. * Property that is exempt from seizure under any federal or provincial law applicable in the province where the bankrupt resides and where the property is situated. * Goods and services tax credit payments not required for payment of the trustee's fees. * Certain prescribed payments relating to the essential needs of an individual. * Contributions made to RRSP, RRIF, RDSP, or other prescribed plans that were made more than 12 months before the bankruptcy.

Answer 127

"After-acquired" assets refer to any assets that the bankrupt acquires or that come into their possession between the date of bankruptcy and the date of the bankrupt's discharge. If the trustee intervenes to obtain these assets, they can also vest in the estate and become part of the bankruptcy proceedings.

Answer 128

In a bankruptcy proceeding, the trustee plays a crucial role in managing the property of the bankrupt individual or entity. Specifically, the trustee is authorized, under the Bankruptcy and Insolvency Act (BIA) section 16, to act in a manner similar to a court-appointed receiver. This means that the trustee has the power to acquire or retain possession of the property that belongs to the bankrupt.

Answer 129

The trustee is granted the authority, under the Bankruptcy and Insolvency Act (BIA), to enter any premises where the books, records, or property of the bankrupt can be found. This authority allows the trustee to access relevant information and assets that are crucial for conducting a thorough inventory and managing the bankruptcy estate.

Answer 130

Under sections 16 and 17 of the Bankruptcy and Insolvency Act (BIA), if a person possesses or has control over any property that belongs to the bankrupt, and they are not entitled to legally retain that property, they are obligated to deliver the property to the trustee appointed in the bankruptcy case.

Answer 131

The trustee has a duty, under sections 16 and 23 of the BIA, to take possession of the deeds, books, records, and documents of the bankrupt. This includes all relevant financial and business-related documents necessary to understand and evaluate the affairs of the bankrupt. The trustee must also maintain their own documentation of the administration of the estate.

Answer 132

The trustee should obtain various documents from the bankrupt, including but not limited to bank statements, cancelled cheques, contracts, leases, tax returns, notices of assessment, supplier invoices, and payroll records. Accounting journals, whether in hard copy or on computer disks, must also be obtained. It is crucial for the trustee to have access to all relevant financial information and documents to carry out their duties effectively.

Answer 133

The trustee should make an inventory of the records in the bankrupt's possession and identify any significant missing documents. They must obtain an explanation from the bankrupt about the missing documents. This process is essential to ensure that the trustee has a comprehensive understanding of the bankrupt's financial situation and can take appropriate actions during the bankruptcy process.

Answer 134

The trustee must have access to the records no matter where they are located, including records in the possession of third parties such as the bankrupt's accountant or solicitor. The BIA grants the trustee the authority to obtain a warrant to enter and seize records located on premises that do not belong to the bankrupt if the third party does not consent to releasing the information. Even if the records are subject to a solicitor's lien, the trustee is entitled to review them, but they must be returned to the solicitor upon completion of the estate administration.

Answer 135

1. Undisclosed assets: Assets that were not initially disclosed by the bankrupt may be identified during the inspection. 1. Undisclosed liabilities, including deemed trust claims: The trustee may uncover undisclosed debts or liabilities, including claims that are subject to deemed trust provisions. 1. Unpaid goods delivered within 30 days of bankruptcy: The inspection may reveal unpaid goods or services delivered to the bankrupt within 30 days before the bankruptcy filing. 1. Settlements or preferences: The trustee may find evidence of settlements or preferences made by the bankrupt, potentially impacting the equitable distribution of assets among creditors. 1. Payments of dividends or share redemptions when the debtor was insolvent: The inspection might reveal payments made by the debtor, such as dividends or share redemptions, during a period when the debtor was insolvent. 1. Other reviewable transactions: The trustee may come across other transactions that require further investigation due to their nature or potential impact on the bankruptcy process.

Answer 136

Under section 17 of the Bankruptcy and Insolvency Act (BIA), a trustee has the power to act anywhere for the purpose of obtaining possession of and realizing on the property of the bankrupt. This means that the trustee's authority is not limited to a specific geographic location, and they have the jurisdiction to carry out their duties in various locations as needed.

Answer 137

Yes, when a trustee intends to act outside of Canada, there are practical considerations to keep in mind. While the trustee has the power to act anywhere under the BIA, they may encounter challenges and complexities when dealing with assets or proceedings in foreign jurisdictions. In such cases, the trustee is likely to require assistance or orders from a foreign court to act effectively and legally in that foreign jurisdiction.

Answer 138

Prior to the first meeting of creditors, if necessary to protect the interests of the estate, the trustee has the authority to take several actions: 1. Take conservatory measures and summarily dispose of property that is perishable or likely to decline in value rapidly. 1. Carry on the business of the bankrupt until the first meeting of creditors. 1. Obtain legal advice and institute court proceedings for the recovery or protection of the property of the bankrupt.

Answer 139

Conservatory measures refer to precautionary actions taken by the trustee to protect assets or property of the bankrupt estate from potential loss or decline in value. This may involve securing, safeguarding, or taking temporary possession of certain assets to prevent their deterioration or loss during the early stages of the bankruptcy process.

Answer 140

In case of an emergency where the necessary approvals or inspector's approval cannot be obtained in time to take appropriate action, the trustee is authorized to take immediate steps in the best interests of the estate of the bankrupt. To do so, the trustee can seek legal advice and institute legal proceedings to address the emergency situation promptly.

Answer 141

The trustee can initiate criminal proceedings against a person believed to have committed an offence under the Bankruptcy and Insolvency Act (BIA) when authorized by the creditors, the inspectors, or the court. This authorization is necessary before the trustee can pursue criminal charges against an individual or entity suspected of violating the provisions of the BIA.

Answer 142

The trustee is responsible for filing all statutory returns that the bankrupt should have filed before the bankruptcy, such as income tax returns and any other required tax filings. Additionally, the trustee must file returns for the year of the bankruptcy and for the activities of the estate during the bankruptcy process.

Answer 143

Under section 24 of the Bankruptcy and Insolvency Act (BIA), the trustee is mandated to insure all the insurable property of the bankrupt. The trustee is responsible for determining the appropriate amount of insurance coverage and the hazards to be covered until the inspectors are appointed.

Answer 144

Under section 25 of the Bankruptcy and Insolvency Act (BIA), the trustee is obligated to deposit all moneys received for an estate in a separate trust account. This means that the trustee must maintain a distinct and separate bank account for each estate they are administering, where all funds related to that specific estate are held.

Answer 145

According to section 25 of the Bankruptcy and Insolvency Act (BIA) and Directive 5R, the trustee is not allowed to withdraw any money from the trust account of an estate without obtaining written permission from the inspectors or approval from the court. There are specific exceptions, allowing the trustee to withdraw money to pay dividends and charges incidental to the administration of the estate.

Answer 146

Under section 26 of the Bankruptcy and Insolvency Act (BIA) and Directive 16, the trustee is obligated to keep proper books and records of the administration of each bankruptcy estate. These books and records should include: 1. A record of all monies received or disbursed during the administration of the estate. 1. A list of all creditors who have filed claims, along with the amount and disposition of these claims. 1. Copies of all notices sent out by the trustee during the course of the bankruptcy proceedings. 1. Signed copies of all minutes, proceedings, and resolutions passed at any meeting of creditors or inspectors, as well as court orders related to the estate. 1. Any other matters or proceedings necessary to provide a comprehensive account of the trustee's administration of the estate.

Answer 147

According to section 26 of the Bankruptcy and Insolvency Act (BIA), the books, records, and documents relating to the administration of a bankruptcy estate are considered the property of the estate. This means that these records are assets of the estate and are owned collectively by the creditors and stakeholders involved in the bankruptcy process.

Answer 148

Under section 27 of the Bankruptcy and Insolvency Act (BIA), the trustee is required to provide reports on the condition of the bankrupt's estate, the available funds, and details of any unrealized property. The trustee must issue these reports to various parties as follows: Whenever required by the inspectors, the trustee must report to every creditor. Upon request, the trustee must provide a report to any creditor who requests it. The trustee is also obligated to submit reports to the Superintendent or the creditors when demanded by the Superintendent.

Answer 149

When given prior approval by the inspectors, the trustee in a bankruptcy case can exercise the following powers: * Sell or dispose of any or all of the bankrupt's property, including goodwill and book debts, except when selling to a related party, which requires court authorization. * Lease real property or immovable assets. * Carry on the bankrupt's business as necessary for the beneficial administration of the estate. * Initiate or defend legal proceedings related to the bankrupt's property. * Employ legal representatives, such as barristers, solicitors, or lawyers, to take any approved actions on behalf of the estate. * Accept future payments as consideration for property sales, subject to inspectors' stipulations and appropriate security. * Incur obligations, borrow money, and provide security on the bankrupt's property, with repayment prioritized over creditor claims. * Settle debts owed to the bankrupt or compromise claims made against the estate.

Answer 150

The trustee, with approval from the inspectors, can divide among creditors any property of a peculiar nature or other special circumstances that cannot be readily or advantageously sold. This option allows for the distribution of unique or difficult-to-sell assets among the creditors directly, ensuring equitable treatment and maximum benefit for the estate.

Answer 151

The trustee, with the direction of the inspectors, has the authority to appoint the bankrupt to aid in administering the estate. This appointment allows the bankrupt to play a role in managing certain aspects of the bankruptcy process, subject to specific terms set by the inspectors. The intention is to utilize the bankrupt's knowledge and cooperation in achieving efficient estate administration.

Answer 152

According to the Bankruptcy and Insolvency Act (BIA) sections 30 and 155, the trustee cannot sell assets without obtaining permission from the inspectors. The requirement for inspector approval is typically in place to ensure proper oversight and accountability in the administration of the estate.

Answer 153

If no inspector is appointed in a bankruptcy case, recent amendments to the BIA provide a simplification to the administration process. In such cases, the trustee is granted the authority to perform all the actions specified in section 30 of the BIA, as if inspector approval had been obtained. This simplifies the decision-making process for the trustee, allowing them to carry out necessary tasks without awaiting specific approvals.

Answer 154

Yes, there is an exception. In a summary administration, if the creditors determine that authorization is required, the trustee must seek court approval before selling property to a related party of the bankrupt. This additional requirement ensures a higher level of scrutiny and protection of the estate's interests when dealing with transactions involving related parties.

Answer 155

The BIA mandates that court approval must be sought and obtained before assets can be sold to a related party (as defined in sections 4 and 30(5) of the BIA) in the context of a bankrupt estate. This requirement applies regardless of whether inspectors have been appointed in the case.

Answer 156

In considering the approval of the sale of assets to a related party, the court evaluates various factors, including: * The reasonableness of the process leading to the proposed sale. * The extent of consultation with creditors. * The potential impact of the proposed sale on creditors and other interested parties. * The fairness of the proposed consideration, considering the fair market value of the property. * Efforts made to find a prospective purchaser who is not a related party. * Whether the consideration offered is superior to other offers made during the sale process.

Answer 157

Under BIA s. 31, the court can authorize the trustee to make necessary advances, incur obligations, borrow money, and give security on the property of the debtor.

Answer 158

According to BIA s. 32, the trustee is not obliged to carry on the business of the bankrupt if the realizable value of the property is insufficient to protect the trustee fully against possible loss and if the creditors or inspectors neglect or refuse to secure the trustee against any possible loss.

Answer 159

Under BIA s. 34, the court provides direction on any matter affecting the administration of the estate. The trustee, being an officer of the court, can apply to the court for such directions.

Answer 160

As per BIA s. 34, if an estate has not been fully administered within three years after the bankruptcy, the Superintendent of Bankruptcy can require the trustee to report that fact to the court.

Answer 161

According to BIA s. 81.3, WEPPA s.21, 23, and WEPPR s. 15 and 16, a trustee of a bankrupt employer must: * Determine the amount of wages owed to each employee for the period beginning six months preceding the initial bankruptcy event and ending on the date of bankruptcy. * Determine the amount of eligible wages owed to each employee under the provisions of WEPPA. * Advise the employees of their rights and requirements under the WEPPA. * Report to the Minister under the WEPPA legislation providing a list of the employees and their respective claims. * Provide each employee with a copy of the information provided to the Minister, as it relates to the employee. * Comply with any directions of the Minister relating to the administration of the WEPPA. * Advise the Minister of the discharge of the trustee.

Answer 162

According to BIA s. 36, when a substituted trustee is appointed, the former trustee is required to: * Apply to the court for taxation of his accounts and his discharge. * Deliver to the substituted trustee all the property of the estate, including books, records, and documents of the bankrupt and of the administration.

Answer 163

As per BIA s. 36, a substituted trustee is required to: * File with the court a copy of the minutes of the meeting of creditors that substituted him as trustee. * Notify the Superintendent of his appointment. * If required by the inspectors, register a notice of the appointment in the land register of any land titles or registry office where the assignment or bankruptcy order has been registered. * As soon as funds are available, pay the former trustee his remuneration and disbursements as approved by the court.

Answer 164

According to these statutes and directives, a trustee: * Must deposit all receipts of an estate into a separate trust account for each estate. * Must deposit funds received from third parties to guarantee the trustee’s fees and expenses into the individual estate trust account or a separate trust account maintained specifically for third party funds. * Is allowed, with the approval of the Division Assistant Superintendent, to operate a consolidated bank account for all estates under summary administration. * Is prohibited from depositing estate funds into his general operating account or his personal account. * Must open estate trust accounts only in deposit-taking institutions where deposits are insured by the Canada Deposit Insurance Corporation or provincial insurance corporations. * Must keep proper books and records accounting for all estate funds.

Answer 165

As per BIA and the Directives: * Inspectors are required to periodically examine the trustee's accounts and verify the bank balance, ensuring funds are used correctly and all disbursements are properly made. * The Superintendent of Bankruptcy has issued directives establishing strict standards for the operation and control of estate trust accounts, including aspects of internal control systems, banking and accounting records, treatment of estate funds and third party deposits, delegation of tasks, and operation of consolidated trust accounts.

Answer 166

According to OSB programs, a trustee is required to notify the Superintendent of Bankruptcy of any changes to a banking or accounting system. The Superintendent of Bankruptcy has introduced a monitoring program, which includes a review of the trustee's estate trust bank accounts. The aim of this monitoring program is to ensure uniform assessment of estate administration and maintain high standards of administration.

Answer 167

The trustee is not permitted to withdraw any funds from the estate as an advance of his remuneration without obtaining written permission from the inspectors, a resolution passed at a meeting of creditors, or a court order. However, the trustee is allowed to pay disbursements in the ordinary course of the administration of the estate. The provisions for summary administration estates specify the amounts and timing of withdrawals for fees and costs.

Answer 168

The Superintendent of Bankruptcy requires trustees to deposit one or more continuing guaranty bonds or suretyships. These act as security for the due accounting of all property received by trustees and for the due and faithful performance of their duties in the administration of estates. The Superintendent sets the amount and form of the security. Besides, trustees may be required to provide individual estate security, satisfactory to the Official Receiver, usually in the form of an estate bond or surety-ship of a guaranty company, for the benefit of the creditors.

Answer 169

The estate bond is set at the time of filing of the assignment with the Official Receiver. The amount is determined based on several factors such as risk to creditors, costs to the estate, insurance coverage and the general bond that the trustee has in force. Generally, the bond is set in relation to the anticipated realization available for distribution to preferred and unsecured creditors, after the trustee's administration costs. The bond shouldn't exceed the largest amount of assets to be on hand at any one time. Normally, a bond isn't required if the estimated amount available to unsecured and preferred creditors is less than $3,000. If a bond is considered in excess of $25,000, the Official Receiver will review other controls to possibly reduce the bond and lessen costs to the estate.

Answer 170

The trustee and the inspectors are expected to periodically review the adequacy of the estate bond or security. If circumstances warrant a change in the estate bond, the trustee is expected to notify the Official Receiver of the change in expected realization and request an adjustment of the bond amount.

Answer 171

The first meeting of creditors is a crucial event as it sets the stage for creditor involvement and allows creditors to give direction to the trustee. This is often the trustee's first opportunity to meet with the creditors, so it's important to establish a good working relationship. It's crucial for the trustee to be properly prepared with all relevant information. This meeting allows creditors, who have suffered a financial loss, to be informed of their rights and options to mitigate this loss.

Answer 172

It is the duty of the trustee to send a notice of the first meeting of creditors within five days after their appointment. This notice must be sent to every known creditor, the Superintendent, and the bankrupt individual.

Answer 173

The first meeting of creditors must be held within 21 days following the trustee's appointment. The Official Receiver can extend this period by 10 days. For special circumstances, the period can be extended up to 30 days if it won't be detrimental to the creditors and is in the interest of the estate's administration. Longer extensions require court approval.

Answer 174

The purpose of the first meeting of creditors is to: 1. Consider the affairs of the bankrupt individual, 1. Affirm the appointment of the trustee or substitute another in their place, 1. Appoint inspectors, and 1. Give directions to the trustee regarding the administration of the estate as the creditors see fit

Answer 175

The first meeting of creditors is typically held at the office of the Official Receiver, nearest to the bankrupt individual. However, the Official Receiver can authorize another location. The chosen facility must be large enough to accommodate the meeting. To estimate the size needed, several factors should be considered: 1. The number of creditors listed by the debtor in the Statement of Affairs. 1. The number of claims filed prior to the meeting. 1. The number of claims filed appointing a proxy other than the trustee. 1. The complexity of the administration. 1. The number and nature of contentious issues that have arisen. 1. The anticipated distribution to creditors, if available.

Answer 176

The trustee is required to publish a notice of the first meeting of creditors in a local newspaper. This is done to notify creditors who may not have received a notice of the bankruptcy and to inform the general public. The notice must be published as soon as possible and no later than five days before the first meeting of creditors. Exceptions are made for estates under summary administration, and in special circumstances, with prior court approval. However, if a principal creditor wasn't notified, the court might not excuse the irregularity. The Superintendent of Bankruptcy issued Directive 23 to establish standards for the type of newspaper to be used.

Answer 177

The procedures at the first meeting of creditors are as follows: 1. Ensure creditors attending the meeting have filed a provable claim and are entitled to vote. 1. Table essential documents like proofs of claim, the assignment, the Statement of Affairs, etc. 1. Appoint a secretary to take minutes of the meeting. 1. Start the meeting with a presentation by the trustee about the administration of the bankrupt's estate. 1. Allow creditors to ask the trustee questions about the administration. 1. Allow creditors to ask the bankrupt questions regarding their affairs and transactions before bankruptcy. 1. Call for a resolution affirming the appointment of the trustee or the appointment of a new trustee. 1. Call for a resolution for the appointment of inspectors. 1. Allow creditors to give instructions to the trustee by resolution. All these are conducted under the guidance of the Official Receiver or trustee acting as the chair of the meeting.

Answer 178

Subsequent meetings of creditors can be called at any time by the trustee, but they are required in the following situations: 1. When directed by the court. 1. When requested in writing by a majority of the inspectors. 1. When requested in writing by 25% in number of the creditors holding 25% in value of the proved claims. If the trustee is unavailable or neglects to call a meeting, a meeting can be convened by a majority of the inspectors. These meetings can be called by sending a notice of the time and place not less than five days before the meeting to each creditor at the address given in the creditor’s proof of claim. Notices of subsequent meetings need only be given to those creditors who have proved their claims.

Answer 179

The chair of the meeting of creditors holds several key responsibilities: 1. The first meeting of creditors is chaired by the Official Receiver or their nominee, often the trustee. For all subsequent meetings, the trustee is usually the chair unless someone else is appointed by resolution at the meeting. 1. The chair is responsible for resolving any questions or disputes arising at the meeting. Creditors have the right to appeal these decisions to the court. 1. In situations that cannot be immediately resolved, the chair can adjourn the meeting with the consent of those present. 1. In the event of a tie vote by creditors, including proxy holders, the chair can cast the deciding vote. Subsequent meetings of creditors are rare. Regular meetings of inspectors are held instead when ongoing creditor involvement is needed.

Answer 180

A quorum exists for a creditors' meeting when at least one creditor, entitled to vote, is present at the meeting. This attendance can be in person, through electronic or digital means, or by proxy. If the meeting is held electronically, the creditor will be considered in attendance if the chair is satisfied that the person or a proxyholder is present. In certain situations, a proxy alone can constitute a quorum. When no quorum exists at the first meeting of creditors, the appointment of the trustee is deemed affirmed. The chair has the option of adjourning the meeting. In summary administration estates, a meeting is held only at the request of the creditors. If no quorum is achieved, the trustee continues the administration of the estate as per their appointment under BIA s. 14.06. For adjourned meetings, all proofs of claim filed with the trustee before the time of the first meeting are considered for establishing the quorum and determining voting rights. If no quorum is established at the adjourned meeting, the trustee will continue the administration of the estate without inspectors.

Answer 181

A person who has filed a claim provable in the bankruptcy before the time appointed for the meeting is entitled to vote as a creditor. (BIA s. 108)

Answer 182

The chair of any meeting has the power to admit or reject a proof of claim for the purpose of voting. (BIA s. 109)

Answer 183

The claimant has the right to appeal to the court if their claim is rejected by the chair. (BIA s. 109)

Answer 184

A creditor with an unliquidated claim is not entitled to vote until the claim is determined to be a provable claim and valued by the trustee. (BIA s. 110)

Answer 185

The "non-arm’s length" creditor can vote, but the vote is recorded and not counted if it affects the result. The court may decide to count this vote if an application is made within 10 days, and the court deems it appropriate. (BIA s. 111)

Answer 186

No person is entitled to vote on a claim acquired after the bankruptcy unless the entire claim is acquired. (BIA s. 112)

Answer 187

The creditor must estimate the liability value of every other non-bankrupt person liable for payment before the debtor. This estimated value is treated as security and must be deducted from his claim for voting purposes. (BIA s. 113)

Answer 188

A secured creditor is entitled to vote only on the unsecured portion of his debt and must value his security to vote. (BIA s. 121)

Answer 189

No, to be entitled to vote, one must be a creditor or hold a properly executed proxy. (BIA s. 135)

Answer 190

During the meeting, creditors can vote on any matter that requires the decision of the creditors. (BIA s. 109)

Answer 191

Most voting is done by ordinary resolution requiring a majority of votes. Votes are calculated by counting one vote for each dollar of every claim of the creditor. (BIA s. 115)

Answer 192

A creditor with a claim of $8,000 would be able to out-vote the three different creditors whose individual claims collectively total $7,000. (BIA s. 115)

Answer 193

A special resolution is defined as a majority in number and ¾ in value of the creditors with proven claims present, personally or by proxy, at a meeting of creditors and voting on the resolution. It's significant because some decisions, like substituting the trustee named in the bankruptcy order, require a special resolution to pass. (BIA s. 116)

Answer 194

No, they could not pass any vote by special resolution without the support of the 4th creditor. (BIA s. 116)

Answer 195

Voting may be required when a creditor objects to the affirmation of the appointment of the trustee named in the bankruptcy order or appointed by the Official Receiver and proposes that the trustee be substituted. To replace the trustee, a special resolution is required. If not successful, an ordinary resolution affirming the trustee's appointment is needed. (BIA s. 14)

Answer 196

The BIA provides for the appointment of up to five inspectors, unless creditors agree not to appoint any. An ordinary resolution is required to decide on the appointment and number of inspectors. (BIA s. 115)

Answer 197

The matter is put to a vote by ordinary resolution of the meeting. (BIA s. 115)

Answer 198

In the context of a proposal, a meeting of creditors must be held within 21 days after the filing of the proposal. (BIA s. 50)

Answer 199

A notice must be sent in the prescribed manner at least 10 days before the meeting. (BIA s. 50.4)

Answer 200

There is no discretion built into the BIA for the Official Receiver to extend the deadline to hold the meeting of creditors. Any extension required must be requested from the court. (BIA s. 50.4)

Answer 201

The decision to accept a proposal requires a positive vote of a majority in number and 2/3 in value of all classes of unsecured creditors. (BIA s. 54, 56)

Answer 202

A meeting of creditors in the context of a consumer proposal is held only if directed by the Official Receiver or requested by creditors holding at least 25% in value of proven claims. (BIA s. 66.15, 66.16)

Answer 203

If there's no requirement for a meeting of creditors, or if a required meeting has no quorum, the consumer proposal will be deemed to be accepted by the creditors. (BIA s. 66.18)

Answer 204

The decision to accept a consumer proposal requires an ordinary resolution of the creditors, unlike the standard proposal which requires a majority in number and 2/3 in value of all classes of unsecured creditors. (BIA s. 66.18, 66.19)

Answer 205

They can be adjourned to further investigate the affairs of the insolvent person and can be used as a forum to appoint inspectors or members of a creditors’ committee. (BIA s. 57, 61, 66.21)

Answer 206

At the first meeting of creditors, the following actions are taken: Affirming the appointment of the trustee. Appointing a board of inspectors. Giving direction to the trustee with respect to the administration of the assets of the estate.

Answer 207

Inspectors are the primary governing authority in the practical administration of the estate of the bankrupt. They are practical men named by the creditors. Unless they are shown to be acting fraudulently or not for the good benefit of the estate, the administration of the affairs of the estate is to be governed according to their direction.

Answer 208

The primary governing authority should be the inspectors, and not the court.

Answer 209

The court can intervene if it's shown that the inspectors are acting fraudulently or not for the good benefit of the estate.

Answer 210

The court is not the primary governing authority in the practical administration of the bankrupt's estate; the inspectors are, unless they act in a manner that is fraudulent or not in the estate's best interest.

Answer 211

Creditors can appoint a maximum of five inspectors.

Answer 212

Anyone who is a party to any contested action or proceeding by or against the estate is not eligible to be appointed or act as an inspector.

Answer 213

The duties and responsibilities of inspectors can be divided into three main areas: Action Authorization Supervision

Answer 214

No, it is not proper to appoint either a corporation or a partnership as inspectors. An inspector acts in a personal capacity and cannot delegate responsibilities to another party.

Answer 215

The trustee has the power to decide the matter.

Answer 216

The opinion of any absent inspectors must be sought to resolve the difference.

Answer 217

The directions of the creditors will prevail.

Answer 218

No, since the employment of a solicitor is not a matter in the administration or distribution of the property of the bankrupt, creditors cannot instruct the trustee and the inspectors to employ a specific solicitor.

Answer 219

No, the trustee must follow the directions of the creditors, and further instructions from the inspectors are unnecessary.

Answer 220

The trustee or other interested person has the right to apply to the court for a review of the matter.

Answer 221

Inspectors are barred from purchasing or acquiring, for themselves or for another person, any of the property of the estate without prior approval from the court.

Answer 222

An inspector should seek prior approval from the court before participating in a public tender of the assets of a company.

Answer 223

The inspector should notify the trustee in writing, indicating the reasons for his disapproval of the statement.

Answer 224

The bankrupt, a creditor, or any other person aggrieved by the act or decision.

Answer 225

The creditor can apply to the court for an order authorizing him to take the proceeding in his own name and at his own expense and risk.

Answer 226

The trustee will be directed to assign and transfer all his right, title, and interest in the proceeding to the creditor.

Answer 227

The creditor is required to notify and invite other creditors to participate in the contemplated proceeding.

Answer 228

Directive 27R.

Answer 229

The trustee is entitled to be paid remuneration equal to 7½% of the net receipts in the estate.

Answer 230

The trustee can ask the creditors or apply to the court for approval of a greater amount.

Answer 231

The inspectors can authorize the trustee to draw funds from his trust account as an advance or the trustee could request advances from the court through an interim taxation of the trustee’s accounts.

Answer 232

The trustee must ensure that sufficient funds remain in the estate to complete the administration.

Answer 233

The trustee’s remuneration in summary administration estates is subject to the prescribed tariff.

Answer 234

It is calculated based on the total hours of service provided multiplied by an hourly rate appropriate to the skill and experience of the individuals involved.

Answer 235

The preparation is triggered when the trustee, administrator, interim receiver, or receiver/receiver-manager has realized all the property of the debtor and has settled the claims of all creditors.

Answer 236

The trustee should report on the status of the bankrupt’s application for discharge.

Answer 237

The statement should be submitted to the inspectors for their approval. | Ordinary Administration Estates

Answer 238

It is sent to the Superintendent for his comments. | Ordinary Administration Estates

Answer 239

The trustee places the comments before the registrar at the taxation of the trustee’s accounts. | Ordinary Administration Estates

Answer 240

The trustee must apply to the taxing officer within 30 days for a taxation hearing date. | Ordinary Administration Estates

Answer 241

The Office of the Superintendent of Bankruptcy. | Ordinary Administration Estates

Answer 242

1. A copy of the Final Statement of Receipts and Disbursement taxed by the court. 1. A copy of the Dividend Sheet. 1. The notice of his intention to pay the final dividend and apply for his discharge. | Ordinary Administration Estates

Answer 243

At least 30 days. | Ordinary Administration Estates

Answer 244

If no objection is received and no particular problem has surfaced. | Ordinary Administration Estates

Answer 245

Within 15 days. | Ordinary Administration Estates

Answer 246

The distribution of the final dividend should be delayed pending the court ruling on the objection.

Answer 247

The discharge releases any security provided to the Official Receiver, terminates the stay of proceedings, and discharges the trustee of any liability concerning his conduct as the trustee of the estate under administration, subject to BIA s. 41.

Answer 248

In Re: Ballad Cartage Ltd. These questions cover the various aspects of the appointments and processes under the BIA, ensuring that the test taker comprehends the details and can apply them in practice

Answer 249

The trustee is required to make interim distributions to creditors when instructed by the inspectors and when the funds in the estate exceed the estimated costs to finalize the administration of the estate. | Ordinary Administration Estates

Answer 250

Payment of the ordinary unsecured claims is not usually made until all the claims have been settled and the assets of the bankrupt realized. | Ordinary Administration Estates

Answer 251

Directive 10R. | Ordinary Administration Estates

Answer 252

The rate is 5% for the amount up to $1 million, 1¼% for the excess between $1 million and $2 million, and ¼% for any amount above $2 million. | Ordinary Administration Estates

Answer 253

The levy would be: (5% of $1 million) + (1¼% of $500,000) = $50,000 + $6,250 = $56,250. | Ordinary Administration Estates

Answer 254

The trustee prepares and sends the Final Statement of Receipts and Disbursements and the Dividend Sheet to the Official Receiver.

Answer 255

The Superintendent examines the documentation and issues a Letter of Comment, stating whether or not the trustee’s accounts must be taxed by the registrar.

Answer 256

The trustee sends a notice along with the Final Statement of Receipts and Disbursements and the Dividend Sheet. This notice informs creditors about their right to object and the procedure if no objections are made.

Answer 257

A creditor can file an objection within 30 days of the date of the notice sent by the trustee. | Summary Administration

Answer 258

The trustee withdraws their fees, pays the dividends, remits unclaimed dividends and the levy to the Superintendent, closes the bank account, and sends a Certificate of Compliance to the Superintendent. | Summary Administration

Answer 259

The trustee notifies the creditors of the hearing and provides them with the Final Statement of Receipts and Disbursements and the Dividend Sheet. | Summary Administration

Answer 260

The trustee arranges for a hearing date and notifies the objecting creditors. At the hearing, the registrar considers the comments of the Superintendent and the representations of the objecting creditors to tax the trustee’s accounts. | Summary Administration

Answer 261

The trustee proceeds with the final steps of their administration, which include paying dividends, withdrawing their fees, and closing the file. | Summary Administration

Answer 262

The levy is calculated as 100% of the amount available for distribution to creditors.

Answer 263

The levy amount is $200.

Answer 264

The interest rate is 5% per annum.

Answer 265

The interest is calculated from the date of bankruptcy to the date of payment of the claims in full.

Answer 266

The bankrupt is entitled to any remaining surplus funds.

Answer 267

Under BIA s. 40, the trustee is required to return the property to the bankrupt.

Answer 268

When inspectors are appointed, as stated in BIA s. 40, their authorization is necessary to return the property. They must ensure that the property is genuinely of little or no value or is otherwise unrealizable.

Answer 269

Under BIA s. 40, if the trustee cannot return the property to the bankrupt, the court has the power to make any order it deems necessary to address the situation with the property.

Answer 270

No, according to BIA s. 40, the provision doesn't contemplate a "blanket" return of property that isn't clearly defined. Instead, it's limited to the return of property disclosed in the Statement of Affairs or otherwise disclosed to the trustee before their application for discharge.

Answer 271

As per BIA s. 154, before his discharge, the trustee is required to remit any undistributed funds to the Superintendent of Bankruptcy.

Answer 272

Undistributed funds can arise from additional proceeds received that were not anticipated on the Final Statement of Receipts and Disbursements, or from additional interest earned between the preparation of the final statement and the date of payment of a dividend.

Answer 273

Based on Directive 18, the guidelines are: One creditor: distribute if the amount exceeds $5. Two to five creditors: distribute if the amount exceeds $50. Five or more creditors: distribute if the average dividend will exceed $10.

Answer 274

Per Directive 18, the Superintendent expects trustees to make an effort to ensure that creditors receive their share of a dividend distribution. This includes giving creditors ample time to cash their dividend cheques before the trustee's discharge and making a reasonable effort to trace certain creditors.

Answer 275

Trustees should make a reasonable effort to trace creditors who are financial institutions or nationally known businesses.

Answer 276

The unclaimed dividends for creditors who cannot be found should be remitted to the Superintendent of Bankruptcy, along with a list of the names, last known addresses, and the amount payable to each of these creditors.

Answer 277

The Superintendent will forward the dividends directly to the creditors upon request.

Answer 278

The discharge of the trustee is under BIA s. 41 and BIA Rule 55.

Answer 279

The trustee must apply to the court for a discharge when he has completed the duties required of him with respect to the administration of the property of the bankrupt.

Answer 280

An estate is considered to be fully administered when the trustee’s accounts have been approved by the inspectors, taxed by the court, all objections and related matters have been settled or disposed of, and all dividends have been paid.

Answer 281

The discharge of the trustee releases him from all liability: in respect of any act done or default made by him in the administration of the property of the bankrupt; and in relation to his conduct as trustee.

Answer 282

The discharge can be revoked by the court on proof that it was obtained by fraud or by suppression or concealment of any material fact.

Answer 283

Even after discharge, the trustee remains the trustee of the estate for the performance of any duties incidental to the full administration of the estate. If there are unrevealed or undistributed assets, the court can appoint a trustee to complete the estate's administration.

Answer 284

A trustee appointed (or re-appointed) pursuant to BIA s. 41 must notify the Superintendent of Bankruptcy, in writing, of the appointment within 10 days of the making of the Order.

Answer 285

No, the BIA does not make a value judgment on the commercial merit of the transaction. An arm’s length transaction could be unfavorable for the debtor, and a non-arm’s length transaction could be at fair market value.

Answer 286

Transactions between the insolvent person (or bankrupt) and persons that are related to the insolvent person (or bankrupt) as defined in s. 4 of the BIA are deemed to be non-arm’s length.

Answer 287

The BIA defines a “Person” in s. 2 as including individuals, corporations, income trusts, associations, and partnerships.

Answer 288

Two individuals are related if they are connected by blood, marriage, common law relationship, or adoption. This includes relationships such as grandparent/parent/child, sibling, or spouses/partners.

Answer 289

For purposes of relationships between entities, the BIA views control as effective control, which includes a right to control the voting rights.

Answer 290

Creditors are primarily described as secured, preferred, or ordinary unsecured creditors.

Answer 291

A secured creditor holds a right to property due to a security instrument, contract, or law over movable or immovable property, or on personal or real property.

Answer 292

They include creditors with a right to property because of a trust or similar relationship, a deemed trust (where permitted), or creditors of recently delivered merchandise who may have a right to recover the same.

Answer 293

1. Claims of farmers, fishermen, and aquaculturists 2. Claims of employees for certain unpaid wages, remuneration, and expenses 3. Claims of pension plans for unremitted amounts withheld and unpaid contributions.

Answer 294

This includes creditors whose claim is contingent or unliquidated.

Answer 295

Debts such as student loans related to studies completed or terminated less than seven years ago, or an award of damage related to bodily harm intentionally inflicted.

Answer 296

The postponement or deferral may be partial or complete, referring to creditors whose rights might be postponed only in terms of being treated as a preferred creditor, or it might be a complete postponement until all unsecured creditors have been paid.

Answer 297

They are described as preferred creditors.

Answer 298

A secured creditor is a person holding a mortgage, hypothec, pledge, charge, or lien on, or against, the debtor's property as security for a debt due. In Québec, it also includes those with a right of retention or a prior claim as real rights on the debtor's property. Source: Bankruptcy and Insolvency Act (BIA) s. 2

Answer 299

It emphasized the principle of priority, noting the PPSA replaced common law concepts. The lessor's interest in a vehicle was treated essentially as a secured creditor.

Answer 300

The failure to comply may result in the loss of the security. Source: Bankruptcy and Insolvency Act (BIA) General provisions

Answer 301

The trustee can require any person to file a proof of security. Source: Bankruptcy and Insolvency Act (BIA) General provisions

Answer 302

1. Requirement to file proof of security interest. 1. Temporary halt or restriction on their rights. 1. Potential disposal of property without security if no proof of security is filed within 30 days. Source: Bankruptcy and Insolvency Act (BIA) s. 69.3, s. 244

Answer 303

The court can do so if it finds it just or convenient, particularly if a notice under BIA s. 244 is given by the secured creditor, or if the debtor consents to early appointment.

Answer 304

Attempts by provincial governments to become secured creditors through legislation have generally been unsuccessful. Such claims are typically considered Crown claims and rank as unsecured claims. Source: Bankruptcy and Insolvency Act (BIA) amendments 1997

Answer 305

Yes, secured creditors can claim as unsecured creditors for the amount of debt that exceeds the value of their security. Source: Bankruptcy and Insolvency Act (BIA) general provisions

Answer 306

Merchandise must be delivered within 30 days before the bankruptcy or receivership. Source: BIA s. 81.1

Answer 307

A written demand must be presented within 15 days after the bankruptcy or receivership, unless this delay is extended by agreement with the trustee or receiver, or by order of the court. Source: BIA s. 81.1

Answer 308

1. The merchandise must still exist. 1. It must be in the possession of the trustee, receiver, or bankrupt. 1. It should be identifiable and in the same state as when delivered. 1. It must not have been sold or be the object of a promise of sale in an arm's length transaction. 1. The merchandise must not have been paid for. Source: BIA s. 81.1

Answer 309

Either recover only part of the merchandise (consistent with what remains unpaid), or return the payment to recover all of the merchandise. Source: BIA s. 81.1

Answer 310

The right cannot be exercised during a proposal unless there's a concurrent receivership. However, if the debtor later goes bankrupt or into receivership, the right would apply to merchandise delivered within 30 days before the notice of intention. Source: BIA s. 81.1

Answer 311

No, there isn't an equivalent provision in the CCAA. Suppliers of recently delivered merchandise have limited protection in CCAA proceedings. Source: CCAA and BIA s. 81.1

Answer 312

The court may "freeze" the possibility that the right to recover merchandise may expire due to the passage of time through the initial order made in CCAA proceedings. Some model orders approved for use under the CCAA also include this provision. Source: CCAA and BIA s. 81.1

Answer 313

* Farmers, fishermen, and aquaculturists have an additional right under BIA s. 81.2. * They can be entitled to a payment in priority from the proceeds of inventory realization. * They are considered to have a first-ranking security interest over the inventories without tracing their specific delivery. Source: BIA s. 81.2

Answer 314

* They must file a claim in the prescribed form within 30 days after bankruptcy or receivership. * The claim must concern products of agriculture; products of sea, lakes, or rivers; or aquaculture products delivered within 15 days before bankruptcy or receivership. * The products must not have been fully paid for. Source: BIA s. 81.2

Answer 315

A priority exists for growers or producers if: * The purchaser of the goods is bankrupt. * Goods were supplied within 6 months prior to bankruptcy. * The bank has acted upon its security as per s. 427 of the Bank Act. Source: Bank Act, s. 427(7)

Answer 316

The BIA offers protection for employees concerning wages, salaries, commissions, compensation, and some expenses of a travelling salesperson. An employee can utilize this protection by submitting a proof of claim form to the trustee or receiver. Source: BIA s. 81.3 and 81.4

Answer 317

The criteria include: * An employer-employee relationship must exist. * The services should have been provided within six months before the bankruptcy. * The claim cannot exceed $2,000. Source: BIA s. 81.3 and 81.4

Answer 318

For a travelling salesperson, an additional amount (up to $1,000) might be added to the claim for disbursements associated with the bankrupt’s business. Source: BIA s. 81.3

Answer 319

Typically, claims for severance, termination, or similar matters aren't claims for services rendered but are seen as breaches of the employment agreement. Thus, such claims should not form the basis of a wage claim entitled to priority under sections 81.3 or 81.4 of the BIA. Source: BIA s. 81.3 and 81.4

Answer 320

Wage claims have a security interest that's prioritized above claims of secured creditors on current assets. They're only subject to the rights of unpaid vendors, security of farmers, fishermen, aquaculturists, and the deemed trust of the Crown for unremitted source deductions. Source: BIA s. 81.1, 81.2, 81.3, and 81.4

Answer 321

They must pay the wage claims of the employees up to the proceeds of realization. It's unclear if the proceeds should be net of realization costs, but logic suggests reasonable costs and fees to convert assets to cash should be considered. Source: BIA s. 81.3 and 81.4

Answer 322

Yes, directors and officers can't benefit from this priority. Non-arm's length individuals can only benefit if the trustee or receiver confirms that employment terms are in line with an arm's length transaction. Source: BIA s. 81.3 and 81.4

Answer 323

The concept of an employer-employee relationship can be multifaceted and might not always be straightforward. While there are clear-cut situations, such as individuals working a regular work week at a specific location for a particular employer, there are also less clear scenarios. Houlden, Morawetz, and Sarra highlight the complex aspects of exclusive employment and the degree of control. Historical legal cases also demonstrate this ambiguity: Re: Kenny & Davison Lumber Co. (1922) - A physician, generally regarded as self-employed, was deemed an employee. Re: Kellerman (1933) - An accountant who catered to specific clients for set fees was recognized as an employee. Even though these cases are dated, they underscore the importance of analyzing the nature of the employer-employee relationship to decide if a claim qualifies for the priority or statutory protection as per the BIA.

Answer 324

The BIA safeguards unremitted pension contributions, including those withheld at source and the employer's contributions. However, it doesn't cater to actuarial or solvency deficits. Source: BIA s. 81.5 and 81.6

Answer 325

Pension claims have a priority over most secured creditors. However, they come after the rights of unpaid vendors [BIA s. 81.1], the securities of farmers and fishermen [BIA s. 81.2], wage claims of employees [BIA s. 81.3 and 81.4], and certain Crown deemed trusts. Source: BIA s. 81.5 and 81.6

Answer 326

In receiverships without a concurrent bankruptcy, additional deemed trusts might take precedence over the BIA's security for pension claims. When assets are seized or sold, trustees or receivers are obliged to address pension claims based on the proceeds from these assets. Source: BIA s. 81.5 and 81.6

Answer 327

Preferred creditors are those who have a priority in receiving payment from the bankrupt's unencumbered property over unsecured creditors and those with postponed claims. Source: BIA s. 81.3 – 81.6 and 136 – 147, Directive 10R

Answer 328

The BIA lays out the distribution order for preferred creditors in sections 136 to 147. This order is fixed and can only be modified by Parliament. Source: BIA s. 136 – 147, Directive 10R

Answer 329

No, provincial legislation cannot alter the BIA's distribution scheme by introducing new priorities or modifying their ranking. Courts have consistently upheld this principle. However, provinces can create their own distribution orders outside a bankruptcy context. Source: BIA s. 136 – 147, Directive 10R

Answer 330

The primary order of priority in bankruptcy is established by Section 136 of the BIA. This section doesn't just list preferred creditors; it provides a sequence for fund distribution while considering the preceding rights of secured creditors and specific non-creditor claimants. Source: BIA s. 136, Directive 10R

Answer 331

The topmost priority in the event of bankruptcy, subject to the rights of secured creditors, is the coverage of funeral and testamentary expenses for the representatives, successors, or heirs of a deceased bankrupt. Source: BIA s. 136

Answer 332

The costs associated with the administration of the bankrupt estate come second in line after funeral and testamentary expenses. Source: BIA s.136

Answer 333

The levy payable to the Superintendent of Bankruptcy related to payments made to creditors is the third priority. Source: BIA s. 136 and 147

Answer 334

Wages and salaries that were not settled by the trustee or receiver through the priority wage claims in sections 81.3 and 81.4 of the BIA are the fourth priority. Source: BIA s. 81.3 and 81.4

Answer 335

Any shortfall experienced by a secured creditor because of precedence given to wage claims in sections 81.3 and 81.4 of the BIA takes the fifth position in the priority list. Source: BIA s. 81.3 and 81.4

Answer 336

Secured creditors facing a shortfall due to priority given to pension plan claims, as outlined in sections 81.5 and 81.6 of the BIA, are given the sixth priority. Source: BIA s. 81.5 and 81.6

Answer 337

Alimony or alimentary pensions are the seventh priority. Source: BIA s. 121, 136 and 178

Answer 338

Municipal taxes are the eighth in line when it comes to the order of priority during bankruptcy. Source: BIA s. 136

Answer 339

Rents are given the ninth priority in the list. Source: BIA s. 136 and 146

Answer 340

Bills for legal fees have been assigned the tenth spot in the order of priority. Source: BIA s. 136

Answer 341

Debts pertaining to physical injuries experienced by employees are the eleventh priority in bankruptcy distributions. Source: BIA s. 136

Answer 342

According to BIA s. 136, the first priority in the distribution order is for reasonable funeral and testamentary expenses incurred by the legal representatives, successors, or heirs of the bankrupt.

Answer 343

The BIA does not clearly distinguish between a situation where an individual dies and then the estate becomes bankrupt and one where a bankrupt individual dies post-bankruptcy but pre-discharge. An interpretation from the Ontario court suggests the provision might apply to both cases, but there's no consensus.

Answer 344

The costs of administration include the expenses and fees of anyone working under the Superintendent's direction as per s. 14.03 of the BIA. This encompasses the trustee's expenses and fees, as well as associated legal costs. Source: BIA (Bankruptcy and Insolvency Act) Section 136.

Answer 345

According to BIA s.136, the Superintendent’s levy, as outlined in s. 147, holds the third position in the distribution priorities during bankruptcy. Source: BIA (Bankruptcy and Insolvency Act) Sections 136 and 147.

Answer 346

Based on BIA sections 81.3, 81.4, and 136, preferred claims of employees hold the fourth position in the distribution priorities during bankruptcy. Source: BIA (Bankruptcy and Insolvency Act) Sections 81.3, 81.4, and 136.

Answer 347

Employee wages are safeguarded in two stages. Initially, the protection arises from the priority set in sections 81.3 and 81.4 of the BIA, which provides a statutory security. If the wage claim is not fully settled through these sections and there are available unencumbered assets, the remaining wage claim would be paid as a preferred claim. Source: BIA Sections 81.3 and 81.4.

Answer 348

A wage claim is designated as a preferred claim if it meets the criteria for statutory security as per sections 81.3 and 81.4 of the BIA. However, it can only be treated as such if there aren't adequate assets to cover these claims in the first place. Source: BIA Sections 81.3 and 81.4.

Answer 349

Any wage amounts that surpass the $2,000 threshold or that were incurred more than six months prior are treated as an unsecured claim in the bankruptcy process. Source: BIA Section 81.3 and 81.4.

Answer 350

The guarantor acquires a "right of subrogation", allowing them to claim against the bankruptcy estate on behalf of the employees. Source: BIA s. 81.3, 81.4 and 136

Answer 351

Employees can receive an indemnification through the Wage Earner Protection Program Act (WEPPA). If the Crown makes a payment under WEPPA, it is subrogated in the employees' rights, allowing recovery against both the estate and the bankrupt company's directors. Source: Wage Earner Protection Program Act (WEPPA)

Answer 352

Yes, employees can have a priority right against a secured creditor that holds security under s. 427 of the Bank Act. If a bank becomes liable for the debt and settles it, they gain the right of subrogation to claim against the estate. Source: Bank Act s. 427(7)

Answer 353

Employees can claim against the directors under specific conditions. If the directors are legally responsible for the debt and they pay it, they acquire a right of subrogation, allowing them to claim against the estate in the place of the employees. Source: Canada Business Corporations Act s. 119

Answer 354

Currently, WEPPA's protections apply when the employer is bankrupt or in receivership. However, provisions that aren't yet in force may extend these protections to other insolvency proceedings based on specific criteria, including proceedings where assets are sold but don't result in bankruptcy or receivership. Source: WEPPA s. 1 – 42

Answer 355

Wages are broadly defined under WEPPA. If an employee has unpaid wages and the employer meets WEPPA's conditions, the employee can claim against the program up to a certain limit. Service Canada, managing WEPPA for ESDC, reviews claims, comparing information from employees and trustees or receivers, and issues payments if eligible. Source: WEPPA s. 1 – 42

Answer 356

There's significant interaction between the two. For instance, the maximum payout from WEPPA considers any amounts received by employees under BIA sections 81.3 or 81.4. Also, the Crown can be subrogated to employees' rights concerning payments from trustees or receivers. Moreover, the Crown gains rights against directors for benefits paid under WEPPA. Source: BIA s. 81.3 and 81.4 & WEPPA s. 1 – 42

Answer 357

Section 427 of the Bank Act provides that if a borrower is bankrupt and the bank has security under s. 427, when the bank takes possession and realizes the security, the claims for wages of employees for the three months before the bankruptcy date take priority over the bank's security. Source: Bank Act s. 427

Answer 358

The protection is seen as less effective because banks often secure themselves using provincial personal property security legislation, which allows them to bypass the wage claim priority scheme provided in the Bank Act. Source: Bank Act s. 427

Answer 359

Under the BIA (specifically sections 81.3 and 81.4), there's an elevated priority for employee wage claims over securities on assets like inventories. This priority often overshadows the Bank Act's (s. 427) wage claim priority. While the Bank Act grants wage claim priority in certain conditions, it becomes largely secondary due to the BIA's stipulations. Still, the Bank Act's priority could become applicable in situations where wage claims surpass the BIA's set maximums because, unlike the BIA's provisions, the Bank Act's priority isn't capped by amount but is restricted by time. Source: BIA (sections 81.3 & 81.4) & Bank Act (s. 427)

Answer 360

Directors can be held liable for unpaid employee wages under specific corporate laws and, in some provinces, under employment standards legislation. Source: Canada Business Corporations Act, Ontario Business Corporations Act, Québec Business Corporations Act

Answer 361

No, employees do not need to exhaust all their recourse options or wait for dividend distributions before making a claim against directors. Source: Canada Business Corporations Act (s. 119)

Answer 362

If a director settles an employee wage claim they're held liable for, and later an amount from the estate becomes payable for the same claim, the director can claim that dividend through subrogation. Source: Canada Business Corporations Act (s. 119)

Answer 363

Yes, one such provision creating liability for directors in respect of wages is found in s. 119 of the Canada Business Corporations Act. Other examples include the Ontario Business Corporations Act (s. 131) and the Québec Business Corporations Act (s. 154). Source: Canada Business Corporations Act (s. 119), Ontario Business Corporations Act (s. 131), Québec Business Corporations Act (s. 154)

Answer 364

No, director’s liability usually relates to unpaid remuneration for services rendered. Severance is more like damages than compensation for services. However, in specific circumstances, an amount due for severance can be considered as part of an employee’s remuneration, which might lead to potential directors’ liability. Source: BIA s. 81.3, 81.4 and 136

Answer 365

A bankruptcy might terminate employment contracts, leading to claims for severance or pay in lieu of notice, regardless of whether the bankruptcy is voluntary (an assignment) or involuntary (a bankruptcy order). The exact impact of bankruptcy on employment contracts is debatable due to contradictory conclusions in various Supreme Court of Canada judgments. Source: BIA s. 81.3, 81.4 and 136; Annual Review of Insolvency Law (Janis Sarra, ed.)

Answer 366

It's not definitive. Some Supreme Court judgments, like Rizzo & Rizzo Shoes, have found that bankruptcy does terminate employment contracts. But subsequent judgments suggest the employment contract may survive or be "suspended" in some cases. The BIA does not necessarily extinguish rights from employment agreements unless they conflict with the BIA itself. Source: BIA s. 81.3, 81.4 and 136; Rizzo & Rizzo Shoes

Answer 367

No, the claim for severance doesn't benefit from this priority. For a claim to have a preferred status, it should relate to services rendered in the 6-month period before the bankruptcy. Severance claims arise from a breach of the employment agreement and not for services rendered, so they rank as ordinary unsecured claims. Source: BIA s. 81.3, 81.4 and 136

Answer 368

They rank fifth and sixth, to the extent of the funds paid out. Source: BIA s. 81.3 – 81.6

Answer 369

They rank seventh, and they pertain to debts or liabilities under support, maintenance, or affiliation orders or agreements for maintenance and support of a spouse, former spouse, former common-law partner, or child living apart from the bankrupt. Source: BIA s. 121, 136, and 178

Answer 370

Alimony and alimentary pension or maintenance arrears that arise under a judicial decision or agreement made before the date of the initial bankruptcy event (while the spouses were living apart) are provable claims against the estate of the bankrupt payer. Individuals with such claims are fully participating creditors under the BIA. Source: BIA s. 2 and 121

Answer 371

The claims have priority ranking in bankruptcy up to the amount of periodic payments accrued plus any lump sum payable in the year before the bankruptcy date. Source: BIA s. 121 and 136

Answer 372

While such claims are provable in bankruptcy, they are partly exempt from the stay of proceedings. The prosecution and enforcement of these claims can proceed during and after bankruptcy. However, the enforcement cannot continue against the bankrupt's property that has vested in the trustee or the portion of surplus income that the bankrupt must pay to the trustee. Source: BIA s. 68 and 69.41

Answer 373

The debt remains after bankruptcy and isn't discharged to the extent of any unpaid portion after all dividends from the bankrupt estate have been received. This applies if the debt is for alimony or alimentary pension, is owed under a support/maintenance/affiliation judicial decision, or is owed under an agreement for maintenance and support of a spouse, former spouse, former common-law partner, or child living separately from the bankrupt. Source: BIA s. 178

Answer 374

The BIA offers limited protection, but courts often prioritize spouse and children's rights over creditor recovery rights. Source: BIA s. 95, 97, and 137

Answer 375

Courts typically support these agreements, noting that marital separations involve many negotiated issues. Source: BIA s. 95 and 97

Answer 376

If they're intended to defraud or delay creditors, but protections exist for spouses acting in good faith. Source: BIA s. 95 and 97

Answer 377

It offers relief for spouses able to prove they dealt at arm’s length, ensuring they're not automatically deemed otherwise. Source: BIA s. 95 and 97

Answer 378

Conflicts can arise affecting both the bankrupt and family member creditors, often needing expert consultation, as seen in Schreyer v. Schreyer. Source: Schreyer v. Schreyer59

Answer 379

They rank eighth, specific to claims from the two years before bankruptcy, excluding those secured against real or immovable property. Source: BIA s. 136

Answer 380

The priority is constrained to the bankrupt's rights in the property and the amount gained from its sale after deductions. Source: BIA s. 136

Answer 381

Yes, for example, in Québec and Ontario, property taxes from municipalities create a charge against the property, making them secured under the BIA. Source: Civil Code of Québec (CCQ) a. 2654.1

Answer 382

The owner (lessor) has a priority for unpaid rent, but it's limited to the arrears from the three months right before the bankruptcy. Source: BIA s. 136

Answer 383

If a lease has an acceleration clause, up to three months of accelerated rent post-bankruptcy is a preferred claim. Charges like insurance aren't included unless defined as "rent" in the lease. If the lease was terminated pre-bankruptcy, no accelerated rent claim is valid. The lease wording determines specifics.

Answer 384

Occupation rent applies when a trustee uses a bankrupt's leased property. In Québec, trustees are initially liable up to the estate's asset value. After the first creditor meeting, it becomes personal. Occupation and accelerated rents should not overlap; if both are paid, they offset to prevent double payment.

Answer 385

The lessor's claim is tied to the trustee's sale of property on the leased site. If the property is fully encumbered, the lessor gets no preferred dividend. If the lessor has seized the property but hasn't sold it by bankruptcy, the trustee sells it. Any proceeds from these sales go to the trustee. Source: BIA s. 136

Answer 386

The lessor’s claim must consider any compensation paid during the proposal regarding the disclaimed or resiliated lease. The claim isn't precluded but must account for what was previously paid. Source: BIA s. 65.2

Answer 387

The landlord's preferred claim is often non-existent as it's linked to the property value in the now-vacant leased premises. This is because premises are usually vacated when a lease is disclaimed or resiliated. Source: BIA s. 65.2

Answer 388

They are treated as if the initial bankruptcy never happened. Source: BIA

Answer 389

It's similar to a bankruptcy scenario, but landlords can't terminate leases using an "insolvency" clause, and can only claim beyond due arrears if the lease ends. If the lease is disclaimed or resiliated, landlords can claim as ordinary unsecured creditors based on either a set formula or actual damages, with the choice belonging to the debtor. Source: BIA sections s. 65.1, 65.2, 65.21, 65.22

Answer 390

The claim arising from injuries to the bankrupt's employees has the eleventh priority. Source: BIA s. 136

Answer 391

Yes, the claim is prioritized only if the estate has received money from a third party, like an insurer, that had guaranteed the bankrupt against such events. Source: BIA s. 136

Answer 392

The insurer would pay the trustee instead of the injured employee. The former employee can then file a claim against the estate and claim priority under BIA s. 136. Source: BIA s. 136

Answer 393

Claims ranking higher in priority must be paid in full before any funds can be disbursed for the employee's injury claim. Source: BIA s. 136

Answer 394

After the amendments in 1992, Crown claims are considered unsecured. Source: BIA s. 136

Answer 395

Preferred creditors are paid based on the order of priority in section 136 of the BIA. Source: BIA s. 136

Answer 396

Yes, part of a claim may be "preferred", with the remaining balance ranking as an ordinary claim. Source: BIA s. 136

Answer 397

If a landlord claims $2,800 for the 3 months preceding bankruptcy, and the assets' value in the premises is only $2,000, the landlord will have a preferred claim of $2,000 and an ordinary claim of $800. Source: BIA s. 136

Answer 398

Yes, the trustee can contest a priority if it appears dubious or invalid and can settle or initiate a proceeding to disallow it under the BIA. Source: BIA s. 136

Answer 399

The trustee must provide a notice to the creditor outlining the reasons for disallowing the claim. Source: BIA s. 136

Answer 400

Yes, the creditor can contest the trustee's decision by appealing to the court within 30 days. Source: BIA s. 136

Answer 401

Unsecured creditors are those that aren't secured and can be classified as preferred creditors, deferred creditors, or ordinary creditors. Source: BIA s. 38, 69.4, and 141

Answer 402

Distinctions are based on priority for receiving a dividend, loss of privilege for priority dividend, or relegation to the lowest rank, but they're all unsecured relative to secured creditors. Source: BIA s. 38 and 141

Answer 403

Ordinary creditors are paid according to the concept of pari passu payment (equal rate) based on their claim and the available dividends for distribution. If dividends don't cover the full claim, they're paid rateably. Source: BIA s. 141

Answer 404

Unsecured creditors’ remedies are stayed (halted) due to the bankruptcy unless the court grants leave. Source: BIA s. 69.4

Answer 405

The unsecured creditor can get a court order to initiate the proceedings in their name at their own risk and expense. They must notify other creditors to join. Any recovery from the action belongs exclusively to the creditors who initiated it, up to the amount of their claims, with any balance going to the estate. Source: BIA s. 38

Answer 406

All ordinary creditors are treated equally and are entitled to receive a proportional share of the dividends. Their claims in the bankruptcy are discharged rateably based on their respective claims. Source: BIA s. 141

Answer 407

Only after the claims of preferred and ordinary creditors have been fully satisfied. Source: BIA s. 137, 139, and 140.1

Answer 408

1. Those who dealt with the bankrupt other than at arm’s length, unless the transaction was proper. 1. Lenders advancing money with interest varying by profits or receiving a share of profits. 1. Claims arising from an equity interest. Source: BIA s. 137, 139, and 140.1

Answer 409

The trustee assesses if the transaction was at arm’s length and if it was a proper transaction. However, the creditor can appeal to the court for a proper transaction determination. Source: BIA s. 137

Answer 410

The key is the manner of repayment. If there's a relationship between repayment and business profit, the claim should be deferred. Source: BIA s. 139

Answer 411

An equity claim refers to an ownership position in the capital of an insolvent person or rights related to such a position. Examples include unpaid declared dividends, return of capital, or a claim based on a loss due to equity interest. Source: Bankruptcy and Insolvency Act (BIA)

Answer 412

In the context of a proposal, equity claim holders cannot vote unless the court orders otherwise. However, this prohibition does not apply in a bankruptcy scenario. Source: Bankruptcy and Insolvency Act (BIA)

Answer 413

These claims do not receive the priority outlined in s. 136 of the BIA. Thus, officers or directors are treated on par with ordinary creditors in the distribution of dividends. Source: Bankruptcy and Insolvency Act (BIA) s. 140

Answer 414

A contingent claim may become a debt depending on a future event, while an unliquidated claim exists at the date of bankruptcy but isn't easily quantifiable (e.g., general damage claim). Source: Bankruptcy and Insolvency Act (BIA) s. 121 and 135

Answer 415

These claims aren't provable unless the trustee determines they are and assigns a value to them. If a claim is disallowed by the trustee, it's final unless the creditor appeals to the court within 30 days of the notice of disallowance or within a timeframe set by the court. Source: Bankruptcy and Insolvency Act (BIA) s. 121 and 135

Answer 416

The Order of Discharge or the Certificate of Discharge releases the bankrupt from all provable claims, except for specific debts outlined in s. 178 of the BIA. However, it does not release other individuals who might be liable for the same debt. Source: Bankruptcy and Insolvency Act (BIA) s. 169

Answer 417

1. Court-imposed fines or penalties. 1. Damages awarded in civil proceedings for intentionally inflicted bodily harm, sexual assault, or wrongful death. 1. Alimony or alimentary pension obligations. 1. Debts arising from fraud or embezzlement in fiduciary capacities. 1. Debts from obtaining property through false pretenses or fraudulent misrepresentation. 1. Liabilities for undisclosed dividends to creditors. 1. Student loans if bankruptcy occurred before the bankrupt stopped being a student or within seven years after. (Note: Discharge can be declared in cases of hardship after five years.) 1. Interest on the above-mentioned debts. 1. A corporation's claims unless satisfied in full by its creditors. Source: Bankruptcy and Insolvency Act (BIA) s. 178

Answer 418

A creditor must file a proof of claim with the trustee, ensuring it is properly filled and supported by evidence of the debt. The claim can be for debts either present or future, as long as the obligation was made prior to the bankruptcy. Source: BIA s. 30, 121 – 126, 135, 143, 201 and 215.1

Answer 419

The trustee determines if such claims are provable and then assigns a value to them. Creditors have a right to appeal the trustee's valuation within 30 days or within a time set by the court. Source: BIA s. 30, 121 – 126, 135, 143, 201 and 215.1

Answer 420

Such claims are provable but must be adjusted to account for an interest factor. Often this involves a "present value" calculation using a 5% discount rate. Source: BIA s. 30, 121 – 126, 135, 143, 201 and 215.1

Answer 421

Claims in foreign currencies are converted to the Canadian dollar based on rates from the date of bankruptcy or the date of the restructuring proceeding. Source: BIA s. 30, 121 – 126, 135, 143, 201 and 215.1

Answer 422

Interest can be claimed up to the bankruptcy date if the bankrupt had agreed to pay it. If all creditors are paid in full, post-bankruptcy interest can be at 5% p.a. on unsecured claims. Source: BIA s. 30, 121 – 126, 135, 143, 201 and 215.1

Answer 423

Yes. For instance, interest from secured creditors is claimable if the security's value exceeds the debt. However, interest based on invalid or illegal rates, as per s. 347 of the Criminal Code, is disallowed. Source: BIA s. 30, 121 – 126, 135, 143, 201 and 215.1

Answer 424

Filing a fraudulent claim can lead to fines, imprisonment, or both, as it's considered a bankruptcy offence under the BIA. Source: BIA s. 30, 121 – 126, 135, 143, 201 and 215.1

Answer 425

A person with property in the possession of the bankrupt at the bankruptcy's date must file a Proof of Claim of Property, which should be verified by an affidavit, detailing the basis for their property claim. The trustee is then obligated to either acknowledge the claim and give back the property or contest the claim. This decision must be made within 15 days of receiving the claim or 15 days following the initial creditors' meeting, depending on which comes later. Source: BIA s. 81.

Answer 426

The supplier sends a written demand to the trustee or receiver, requesting the return of the merchandise. Source: BIA s. 81.1

Answer 427

15 days. However, this can be extended by the court or the trustee/receiver. Source: BIA s. 81.1

Answer 428

1) Release the goods to the claimant. 2) Pay for the goods to retain them. Source: BIA s. 81.1.

Answer 429

Yes, the trustee or receiver is bound to return whatever fraction of the claimed goods is available. Source: BIA s. 81.1

Answer 430

The claim remains valid for the unpaid portion of the merchandise or for the entire delivery if the supplier decides to refund the amount that was paid. Source: BIA s. 81.1

Answer 431

The trustee or receiver will pay the amount of the claim up to the net realized value of the inventories, as the right under s. 81.2 of the BIA establishes a prior ranking security interest over the inventories. Source: BIA s. 81.2.

Answer 432

No, there is no special form specific to the employees. The required form is a standard proof of claim form, indicating the parts of the claim for which priorities and preferences are sought. Source: BIA s. 81.3 and 81.4.

Answer 433

Under WEPPA, trustees and receivers have obligations such as identifying each individual owed eligible wages, determining the amount owed, informing each individual of the program, and providing specific information to the Minister and the individual. Source: WEPPA s. 21 and 35.

Answer 434

The trustee or receiver examines the claim, determines its validity considering the requirements of BIA s. 81.3 or 81.4, and if valid, pays the claim up to the net realized value of CURRENT assets. Source: BIA s. 81.3 and 81.4.

Answer 435

If an indemnity is paid to an employee under WEPPA, there is a right of subrogation in favor of the Crown, which may result in the payment of the claim being directed to the government. This occurs if the trustee or receiver receives a notification from the Crown that a payment was made under the program, leading to an assignment and subrogation of the claim under WEPPA provisions. Source: WEPPA s. 21 and 35.

Answer 436

No, there isn't a specific form for pension plans. The required form is a standard proof of claim form, indicating the part of the claim for which a priority is sought. Source: BIA s. 81.5 and 81.6.

Answer 437

The trustee or receiver evaluates the claim, determines its validity considering the requirements of BIA s. 81.5 or 81.6, and if valid, pays the claim up to the net realized value of the assets. Source: BIA s. 81.5 and 81.6.

Answer 438

If the trustee or receiver determines the claim is valid, they will pay the claim amount up to the net realized value of the assets. This is because BIA s. 81.5 and 81.6 create a prior ranking security interest over all assets. Source: BIA s. 81.5 and 81.6.

Answer 439

The trustee has a duty to examine every proof of claim filed by both secured and unsecured creditors. Each claim should include a statement of account and be signed and witnessed. Source: BIA s. 81 and 135

Answer 440

If the trustee is not satisfied with the provided information, he can require additional documentation in support of the proof of claim. Source: BIA Rule 112.

Answer 441

No, there is no stipulated time for a decision on a proof of claim filed under s. 135 of the BIA. However, for a Proof of Property claim under s. 81, a decision must be made within the later of 15 days from its receipt by the trustee or 15 days after the first meeting of creditors. Source: BIA s. 81 and 135.

Answer 442

If the trustee is satisfied with the proof of claim, a notice of dividend is provided to the creditor, indicating the claim's admission. Upon satisfaction, the trustee admits and records the claim in the claims register for distribution of the estate's proceeds. Source: BIA Rule 112.

Answer 443

The trustee must disallow the claim, either in whole or in part, and send a notice in the prescribed form to the creditor. Source: BIA s. 135 and 148.

Answer 444

The disallowance is final and conclusive unless the claimant appeals the trustee’s decision to the court within thirty days, or 15 days for a Proof of Property claim under s. 81. This can be extended by the court. Source: BIA s. 81 and 135.

Answer 445

If the trustee has any doubts or difficulties determining a claim's validity, they should seek directions from a meeting of creditors or inspectors. Source: BIA s. 135.

Answer 446

The trustee should retain sufficient funds in the estate for the payment of any disputed or disallowed claims until they are settled or a final disposition of the disallowance has occurred. Source: BIA s. 148.

Answer 447

The definition is broad, encompassing all types of property, irrespective of its location, and includes assets owned at the date of bankruptcy and those acquired up to the date of discharge. It also covers rights and powers over property. Source: BIA s. 2 and 67.

Answer 448

No, the bankrupt’s property includes assets irrespective of their location, even outside of Canada. Source: BIA s. 2.

Answer 449

No, it also encompasses rights and powers over property that might have been exercised by the bankrupt. Source: BIA s. 2.

Answer 450

Exempt property refers to specific assets that a bankrupt can retain, making them unavailable to the trustee. They vary depending on provincial statutes but generally include household furniture, clothing, and tools of the trade. Some federal statutes may also grant exempt status to certain properties. Source: BIA s. 67.

Answer 451

First, a federal or provincial statute applicable in the province where the assets are located must grant exempt status to the property. Second, the bankrupt must reside in that same province. Source: BIA s. 67.

Answer 452

The Federal Indian Act exempts the property of a bankrupt status Indian if it is located on a reserve. Source: Federal Indian Act.

Answer 453

The Federal Pension Act exempts pension benefits from seizure. Source: Federal Pension Act.

Answer 454

It exempts specific insurance policies and also certain RRSPs that are structured as an insurance contract between the bankrupt and a life insurance company. Source: Provincial Insurance Act.

Answer 455

The Québec Civil Code exempts benefits from insurance contracts and from annuity contracts in certain situations. Source: Québec Civil Code.

Answer 456

Trust property is regarded as property that beneficially belongs to someone other than the bankrupt, given that the trust is valid. Source: BIA s. 67.

Answer 457

No, the trustee is not entitled to any goods and services tax credits received by a bankrupt after bankruptcy, except in prescribed circumstances. Source: BIA s. 67; BIA Rule 59.

Answer 458

The GST credits can be seized if they are needed to cover the trustee's fees and expenses, but only up to a maximum threshold determined by the summary administration tariff. Source: BIA Rule 59.

Answer 459

GST credits received beyond the threshold must be returned to the bankrupt and cannot be distributed to the creditors. Source: BIA Rule 59.

Answer 460

No, certain RRSPs, RRIFs, and RDSPs are excluded. However, contributions made to these plans in the 12 months preceding the date of bankruptcy are not exempt. Source: BIA s. 67.

Answer 461

The entire RRSP, RRIF, or RDSP, including contributions made in the 12 months preceding the bankruptcy, might be exempt if the plan is considered exempt property due to provincial legislation. Source: BIA s. 67.

Answer 462

Property related to prescribed payments, which relate to the essential needs of an individual and are not trust property or exempt property, are excluded from the property of the bankrupt available to creditors. However, the specific rules regarding this are not yet addressed in the general rules. Source: BIA s. 67.

Answer 463

No, property held in trust for a third party doesn't belong to the bankrupt and thus doesn't vest with the trustee. Source: BIA s. 67.

Answer 464

Common law sees a trust as an equitable instrument with shared and divided titles. It requires certainty of intent, subject matter, and object. Civil law, especially under Québec Civil Code, views a trust as a specific instrument provided by statute and requires an agreement, a settler, a transfer of property to a distinct patrimony, a purpose, and a trustee.

Answer 465

For a trust to be valid under common law, there must be certainty of intent, subject matter, and object.

Answer 466

A valid trust under Québec Civil Code needs an agreement, a settler, a transfer of property to a distinct patrimony, a purpose, and a trustee. The trust must be documented, and one trustee must neither be the settler nor the beneficiary.

Answer 467

Yes, the agreement by which the trust is created can arise from a contract, a will, or in certain instances, by operation of law.

Answer 468

A real trust must have a specific item held for a specific person for a specific purpose.

Answer 469

1. Express trust: Clearly and specifically states that property is held in trust. 1. Implied trust: The intent to establish a trust was present, though language was unclear. 1. Resulting trust: Legal title is in one person's name, but they have a duty to return the property to the original owner. 1. Constructive trust: A party benefits unjustly at others' expense.

Answer 470

Examples include a bankrupt solicitor’s bank trust account, a fund set up by grandparents in the name of minor children and administered by a parent, and accounts receivable of a bankrupt contractor in jurisdictions with Builder’s Lien trust provisions when subcontractors are owed for specific projects.

Answer 471

If trust property has been mixed with non-trust property in a way that prevents tracing, it may no longer be considered held in trust, and the trust beneficiary may lose their claim to the property.

Answer 472

A deemed trust is a statutory priority where a debtor's property is considered to be held separate or in trust for specific creditors, making it unavailable for distribution to other creditors. They are established by statute. Source: BIA s. 67; ARMR, s. 20; CPPA s. 23(3) and (4); EIA s. 86(2) and 86(2.1); ITA s. 227(4) and (4.1)

Answer 473

Deemed trusts are created by statute. Provisions deeming property to be held separate and apart can be found in both provincial and federal legislation. For instance, the Income Tax Act, the Canada Pension Plan Act, the Québec Pension Plan Act, and the Employment Insurance Act deem unremitted deductions from employees as being held in trust for the Crown. Source: BIA s. 67; ARMR, s. 20; CPPA s. 23(3) and (4); EIA s. 86(2) and 86(2.1); ITA s. 227(4) and (4.1)

Answer 474

Federal and provincial legislation may establish special rights through statutory liens and trusts. These rights might take precedence over secured creditors' interests. However, these rights can sometimes be negated during BIA proceedings. Source: BIA s. 86

Answer 475

BIA s. 86 addresses the treatment of statutory liens and trusts established under federal and provincial legislation to safeguard the Crown's rights. Except for the outlined exceptions in BIA sections 86 (2) and 86 (3), Crown claims, inclusive of those by a workers’ compensation board, are classified as unsecured claims. Source: BIA s. 86

Answer 476

The trustee must either admit the claim and release the property or dispute it within 15 days of receiving the claim or after the first creditors' meeting, whichever is later. Source: BIA s. 80 and 81

Answer 477

An appeal period of 15 days is granted for the claimant. Source: BIA s. 80 and 81

Answer 478

The BIA protects the trustee from personal liability unless there's negligence on their part. The third party then only receives the sale proceeds. Source: BIA s. 80 and 81

Answer 479

1. Goods must be for use in the purchaser’s business. 1. Goods are unpaid. 1. Purchaser is bankrupt or a receiver is appointed. 1. Written demand for repossession within 15 days of bankruptcy/receivership. 1. Goods delivered within 30 days prior to bankruptcy/receivership. 1. Goods are with the bankrupt, trustee, or receiver. 1. Goods are identifiable and unchanged since delivery. 1. Goods haven't been sold or aren't under a sales agreement in an arms’ length transaction. Source: BIA s. 81.1 and 81.2

Answer 480

They can recover products delivered 15 days before bankruptcy or receivership if claimed within 30 days post-event. They have priority over all other creditors regarding inventories, irrespective of whether their goods remain in the debtor's possession or are identifiable. This right, per BIA s. 81.2, is subject only to the BIA s. 81.1 right of suppliers to recover recently delivered merchandise. Source: BIA s. 81.1 and 81.2

Answer 481

The property may be redeemed by the trustee to recover any equity that the bankrupt may have in the property, but this is only if there's a valid and enforceable security interest. Source: BIA s. 127

Answer 482

The trustee should verify the validity and enforceability of the security. If it's deemed invalid, the trustee should attempt to recover the property for the benefit of the estate. A legal opinion from a solicitor might be necessary. Source: BIA s. 129 and 130

Answer 483

The goodwill, which could arise from a business's reputation or infrastructure, passes to the trustee. If there's value in the goodwill, the trustee might attempt to preserve the business as a going concern. Otherwise, the physical assets may be liquidated. Source: PIPEDA, s. 5

Answer 484

Goodwill can be linked to personal information like customer and supplier lists. The trustee must be aware of privacy issues when dealing with such information to prevent breaches of privacy laws. Source: Act respecting the protection of personal information in the private sector (Québec) s. 1 – 4; PIPEDA, s. 3 and 5

Answer 485

If the trustee sells the intellectual property, the co-contracting party can still use and enforce its rights as long as they meet their contractual obligations. Their protection lasts through the original agreement's term and any legal extensions. Source: BIA s. 72.1

Answer 486

The co-contracting party can still use and enforce the intellectual property. Their rights remain intact for the original contract term and any legal extensions. However, the trustee and the bankrupt aren't bound to the agreement's requirements. Source: BIA s. 72.1

Answer 487

The trustee has the right to sell these intellectual property assets. However, there are specific exceptions and conditions to consider, such as manufacturers and vendors of patented articles having a potential repurchase right and the fact that the sale of published works might involve royalties or profit-sharing agreements. Source: BIA s. 82 and 83

Answer 488

These assets might have specific restrictions on their use, transfer, or sale. For instance, assets of a telecommunications company might have foreign ownership limits, while timber licenses might require regulatory approval before sale. Provincial privacy laws could also affect the sale. A trustee must be well-versed in relevant legislation before making decisions on these types of assets.

Answer 489

These agreements might have provisions that hinder their transfer from the bankrupt entity to a new buyer, limiting the potential realizable value. For instance, a supplier could demand the return or destruction of a product or even seek an injunction against its sale. These scenarios are common in licensing agreements, especially for branded goods like designer clothing.

Answer 490

A trustee may face provisions in franchise agreements or supplier contracts that prevent the asset's transfer from the bankrupt entity to a new buyer, potentially limiting its realizable value. Situations might arise where a supplier demands the return or destruction of a product or seeks an injunction against its sale. This is often seen in licensing agreements for branded items like designer clothing. Source: BIA s. 82, 83 and 84.1

Answer 491

One approach is to obtain the consent of the original contracting party for the intended transfer. Before initiating a sale, it's crucial for a trustee or receiver to consult legal counsel to understand and address the specific provisions that could obstruct the sale. Source: BIA s. 82, 83 and 84.1

Answer 492

Yes, the BIA provides support in such circumstances. Section 82, for instance, allows a trustee to sell patented articles irrespective of any pre-existing contractual constraints. The Act also has provisions that enable a trustee to compel the transfer of an agreement, even if there are termination clauses or transfer prohibitions, with the court's approval after evaluating specific criteria. Source: BIA s. 82, 83 and 84.1

Answer 493

The provisions that cater to such concerns are applicable during the administration of bankrupt estates. These mechanisms also extend to proposals made under the BIA, unless stated differently in the proposal. Moreover, since the BIA's provisions are integrated into the Companies’ Creditors Arrangement Act (CCAA), they similarly apply to plans of compromise or arrangements under the CCAA, barring any deviations mentioned in the plan. Source: BIA s. 50 and 101.1, CCAA s. 23 and 36.1

Answer 494

If a restructuring proceeding under either the BIA or CCAA stipulates that the mentioned recourses don't apply, the trustee or the monitor (based on the specific case) is mandated to draft a report. This report should elucidate the rationale behind excluding these recourses, ensuring the decision's reasonableness is transparently conveyed. Source: BIA s. 50 and 101.1, CCAA s. 23 and 36.1

Answer 495

Relationships between transaction participants play a crucial role in assessing the nature and validity of a transaction. Depending on whether the parties are related or transacted at arm's length, the transaction may be subject to review or even declared void against a trustee. It's essential to distinguish between the concepts of transacting at arm's length and related parties, as they are separate ideas. Source: BIA s. 2, 4

Answer 496

Parties are said to transact at arm's length when they engage in a typical business deal with each looking out for their own best interests. Neither party should have the capacity to unduly influence or exert pressure on the other. On the contrary, if one party controls or influences the other in such a way that free negotiation is inhibited, or if their interests overlap to an extent where it's unclear whose interests are protected, they are not deemed to be acting at arm's length. The characterization of a transaction as either arm's length or non-arm’s length is a depiction of the negotiation dynamics and doesn't necessarily reflect the transaction's propriety. Source: BIA s. 2, 4

Answer 497

The concept of relationships hinges on familial connections between individuals and control dynamics between individuals and corporations. It is determined based on factual circumstances whether individuals are related under the definitions provided by the BIA and CCAA. While unrelated persons can deal either at arm's length or otherwise, related individuals are typically assumed not to transact at arm's length. Nonetheless, there are exceptions, such as sections 95 and 96 of the BIA, where related persons can prove they were genuinely dealing at arm's length to avoid this presumption. Source: BIA s. 2, 4

Answer 498

A fraudulent transfer refers to a transaction in which property, in which the grantor holds a beneficial interest, is transferred, disposed of, or otherwise conveyed with the intent to hinder, delay, defeat, or defraud creditors or others. This includes those holding a guarantee and anyone with a legal or equitable claim against the grantor. While the BIA addresses preferential payments and transfers at undervalue, it still provides means to contest fraudulent transfers, deeming all transactions after the initial bankruptcy event invalid, barring certain exceptions. Source: BIA s. 72, 97 and 98

Answer 499

A trustee can utilize provisions within the BIA or provincial legislation to contest suspected fraudulent transfers. For instance, under the BIA, transactions post the initial bankruptcy event, which don't fall under specific exceptions, can be tackled as fraudulent transfers. Additionally, trustees can refer to provincial statutes like the Assignments and Preferences Act of Ontario or sections 1631 to 1636 of the Québec Civil Code. If a transaction is seen as a sham or isn't a protected transaction per s. 97 of the BIA, the trustee can initiate proceedings to retrieve the bankrupt's property. Source: BIA s. 72, 97 and 98; QCC art. 1631 – 1636

Answer 500

If a person acquires property from a bankrupt in a void or voidable transaction and then re-conveys, re-sells, or re-transfers it, the trustee can reclaim the property or its transaction proceeds from the subsequent recipient. However, an exception exists for transactions carried out in good faith with adequate valuable consideration. In such cases, the trustee can only seek recovery from the person who transacted with the bankrupt, aiming to recover the given or paid consideration's value. Source: BIA s. 72, 97 and 98

Answer 501

The licensed insolvency trustee can approach the court to obtain an order declaring the transfer void against the trustee. In Québec, the order asserts that the transfer cannot be defended against the trustee. If the court's order is granted, the property involved in the transfer is vested back to the trustee. Source: BIA

Answer 502

Yes, the trustee can seek relief even if the transferee has subsequently transferred the property to an innocent third party. In such situations, the trustee can secure a judgment against the original grantee using provincial laws related to fraudulent transfers. Following this, the trustee can use the BIA provisions to reclaim the sale proceeds that the grantee received from the property. Source: BIA

Answer 503

If a transfer from the grantor to the grantee is established as fraudulent, the court can mandate the tracing and retrieval of the property. Any increase in the property's value between its transfer and the court's judgment is allocated to the bankrupt estate. However, the grantee is entitled to deductions for essential expenses like mortgages, taxes, and insurance. Additionally, the court might order the property's sale and the division of the generated proceeds between the grantor and grantee. Source: BIA

Answer 504

The determination of intent to defraud creditors is factual. It's derived from the case's merits, taking into account the circumstances surrounding the transfer. The presence of certain "Badges of Fraud" can hint at an intention to defraud, but it remains the plaintiff's responsibility to illustrate how these badges reasonably indicate intent. Source: Relevant Case Law

Answer 505

"Badges of Fraud" as highlighted in case law include: 1. The grantor being aware of its unstable financial condition. 1. Transfers happening between close relatives or parties not transacting at arm's length. 1. The grantor retaining interest in the transferred property. 1. No immediate alteration in possession or use post-transfer. 1. The grantor still treating the property as their own after the transfer. 1. The debtor continuing to cite the property as part of their net worth for loan purposes. 1. Transactions resulting in the grantor being stripped of most property that would be accessible to creditors. 1. The recipient recognizing the property's value far surpassing the given consideration. 1. Transactions being executed covertly. 1. Unusual urgency in finalizing the transaction. 1. An absence of proper documentation. Source: Relevant Case Law

Answer 506

The trustee must showcase the facts and circumstances hinting that a transfer might be "fraudulent". If the transfer was gratuitous, evidence of intent solely from the grantor is sufficient to overturn the transfer. However, for transfers made for value, there must be mutual intent to delay, hinder, defeat, or defraud proven. Source: Relevant Legislation and Case Law

Answer 507

If there was consideration involved in the transfer, the grantee has the burden to provide evidence that the consideration was valid and that they acted in good faith when accepting the transfer. Source: Relevant Legislation and Case Law

Answer 508

For gratuitous or voluntary transfers where the consideration is either minimal or non-existent, the trustee only needs to demonstrate that the grantor had the intention to defraud creditors and others. The intent of the grantee doesn't need to be proven in these cases. Source: Relevant Legislation and Case Law

Answer 509

If the transfer was conducted for good consideration, the trustee needs to show the fraudulent intent of both the grantor and the grantee. Source: Relevant Legislation and Case Law

Answer 510

The BIA's saving provisions allow parties to defend themselves if: The grantee provided good consideration for the transfer. The transfer from the grantor to the grantee was done in good faith. Source: BIA s. 97

Answer 511

Good consideration doesn't necessarily mean that the value given by the grantee has to equal the value of the property transferred. It's sufficient if the consideration is valuable. While it might not be equivalent, the consideration should be adequate. Source: Relevant Legislation and Case Law

Answer 512

A fraudulent preference happens when an unsecured creditor either sells goods or lends money to a debtor without obtaining security. Before bankruptcy, if the creditor gets payment, obtains security, or receives a property transfer from the insolvent debtor, while other creditors don't get similar treatment, it's considered a preference. Source: Relevant Legislation and Case Law

Answer 513

For a transaction to be a fraudulent preference: 1. It must be executed by an insolvent debtor. 1. It must favor a creditor. 1. It should occur within a suspect period which varies based on the relationship between the debtor and creditor. For arm's length creditors, the suspect period begins three months before the initial bankruptcy event and ends on the bankruptcy date. For non-arm's length creditors, the period is one year before the initial bankruptcy event to the bankruptcy date. 1. Depending on the creditor's characteristics, the transaction should either aim to give the creditor a preference (for arm’s length creditors) or result in the creditor getting a preference (for non-arm’s length creditors). Source: BIA s. 2, 2.1, and 95

Answer 514

To ascertain if a debtor is insolvent, the following criteria should be considered: 1. The debtor was unable to meet obligations as they generally became due for any reason. 1. The debtor ceased to pay current obligations in the ordinary course of business as they generally became due. 1. The total value of the debtor’s assets (on a fair valuation basis) wasn't enough, or wouldn't have been sufficient if sold in a fairly conducted sale under legal process, to settle all obligations, both current and future. Source: BIA s. 2

Answer 515

The insolvency of the debtor must be proven on the date the alleged preference was given. If multiple payments are involved in the evaluation, insolvency must be established for each individual payment's date. Source: BIA s.2

Answer 516

No, the court does not presume insolvency. It must be proven by the asserting party. Source: BIA s.2

Answer 517

The recipient must be a creditor immediately before the transaction takes place. For instance, if a debtor pays a retainer to a solicitor on the eve of bankruptcy, it isn't a preference since the solicitor wasn't a creditor when the payment was received.

Answer 518

The trustee can benefit from a presumption of intent if it can be shown that the transaction had the effect of giving the creditor a preference in fact over other creditors. The intent will be objectively inferred from the debtor's conduct at the time of the event.

Answer 519

For arm's length creditors, intent to prefer must be demonstrated. For non-arm's length creditors, the test is based on the effect rather than intention. If the effect of the transaction was to prefer a non-arm’s length creditor, the payment will be void if all other conditions are met.

Answer 520

For parties at arm’s length, the transaction must have taken place within the three months leading up to the bankruptcy. For those not at arm’s length, it extends to one year. If the transaction did not happen within these timeframes, the trustee cannot use the BIA for recourse but may resort to provincial legislation.

Answer 521

The trustee can use this presumption if: 1. The debtor was insolvent at the time. The transaction took place within the specified period. The effect was to give a creditor a preference. However, this presumption can be rebutted.

Answer 522

A voidable transaction is not automatically void. For the transaction to be void, the trustee must act. The transaction remains in place until bankruptcy occurs and the trustee successfully petitions a court to set the transaction aside.

Answer 523

The burden rests on the creditor who received the preference.

Answer 524

1. The payment was made by the debtor in the ordinary course of business. 1. The debtor made the payment hoping it would allow him to continue business operations and overcome his financial challenges. 1. The payment was made to rectify a wrongful action committed by the debtor. 1. The security was provided for a current advance, even if it was given just before insolvency or if the favored party was already owed money. 1. A binding agreement to provide payment or security was established before the period under scrutiny.

Answer 525

The defendant grantor can argue that their primary intention was to manage their affairs based on what their legal advisor deemed wise, or that they were acting upon the recommendations of their tax consultants when transferring property.

Answer 526

If a creditor refused to perform a specific task until the debtor cleared the bill or offered security, the transaction won't be deemed preferential. This might be the case if the main intent was to facilitate the shipment of goods or to get the tax return processed. To offset the presumption, the creditor should have continued business with the debtor after that transaction on the same credit terms as before.

Answer 527

A transfer at undervalue (TUV) refers to a transaction where property is disposed of or services are provided by a debtor, and the consideration the debtor receives in return is either nonexistent or markedly less than the fair market value of the property or services the debtor provided.

Answer 528

The licensed insolvency trustee can: 1. Seek a court order declaring that a TUV is void. In Québec, the order might state that the TUV may not be set up against the trustee. 1. Petition the court for an order directing a party involved in the transfer (or any other person aware of the transfer, or all such persons) to pay to the estate the difference between the value of the consideration received by the debtor and the value of the consideration the debtor provided.

Answer 529

The main issue with a TUV is that it may indicate an attempt by the debtor to move assets out of the reach of creditors, by either giving them away or selling them for less than their true worth. This can harm the interests of the creditors and disrupt the equitable distribution of assets in insolvency proceedings.

Answer 530

When there is a noticeable difference between the fair market value of the consideration given and received by the debtor in a transaction, the trustee can apply to court for: 1. Annulment of the transaction. 1. A judgment against the party involved in the transfer for the difference in consideration. 1. A judgment against a person who was privy to the transaction.

Answer 531

The trustee must specify their belief regarding: 1. The fair market value of the property or services involved. 1. The actual value of the consideration given or received by the debtor. 1. Unless contrary evidence is presented, the court will rely on the values stated by the trustee.

Answer 532

1. Arm’s length transactions within one year of bankruptcy: The trustee must prove both that the debtor became insolvent due to the transaction and that the debtor aimed to defraud, defeat, or delay its creditors. 1. Non-arm’s length transactions within one year of bankruptcy: Recourse is available if the transaction was at undervalue. There's no need to prove insolvency or intent. 1. Non-arm’s length transactions between one to five years before bankruptcy: Recourse is available if the trustee demonstrates either the debtor's insolvency (caused by the transaction) or the debtor’s intention to defraud, defeat, or delay creditors. For related persons, evidence can be provided to establish that they were dealing at arm’s length, potentially granting them relief.

Answer 533

In case of a dispute on the trustee's valuation: 1. The court may rely on information provided by the respondent. 1. Consider information provided by the trustee. 1. Evaluate corollary evidence.

Answer 534

The trustee must provide opinions on: The fair market value of the property or services involved in the transaction. The actual consideration given or received by the bankrupt in the transaction. 1.

Answer 535

A person is determined to be "privy" to a transfer at undervalue if: 1. They are not dealing at arm’s length with a party involved in the transfer. 1. They either directly or indirectly benefit from the transfer or ensure someone else receives a benefit as a result of the transfer.

Answer 536

Yes, under BIA s. 96, if a person indirectly causes another individual to benefit from the transaction at undervalue, they can be considered "privy" to the transfer.

Answer 537

Yes, as per BIA s. 96, a trustee can seek recourse against anyone who is privy to the transfer, meaning individuals who weren't directly part of the transaction but either directly or indirectly received a benefit from it.

Answer 538

A trustee can inquire into a dividend payment or a redemption of shares that occurred during the period starting one year before the date of the initial bankruptcy event and ending on the date of the actual bankruptcy.

Answer 539

The dividend payment or redemption of shares can be scrutinized if the transaction occurred when the corporation was insolvent or if the said transaction rendered the corporation insolvent.

Answer 540

The BIA aims to protect creditors' rights. Dividends or share redemptions can deplete corporate assets, which should be preserved for the benefit of creditors. The act ensures that assets aren't improperly funneled to shareholders at the expense of creditors.

Answer 541

Corporate assets can be funneled to shareholders through mechanisms like dividend distributions or by redeeming or repurchasing shares, potentially depriving creditors of their rightful claims.

Answer 542

Under BIA s. 101, a licensed insolvency trustee can apply to the court to determine if a transaction occurred when the corporation was insolvent or if that transaction led the corporation to insolvency.

Answer 543

The trustee needs to demonstrate: * The event took place during the period starting one year before the date of the initial bankruptcy event and concluding on the bankruptcy date. * The debtor was insolvent when the event occurred or became insolvent due to the transaction.

Answer 544

The BIA can complement provisions in provincial Business Corporations Acts that restrict dividend payments when the realizable value of corporate assets is below the corporation's total liabilities.

Answer 545

The burden of proof falls on the directors. They must demonstrate: 1. The corporation wasn't insolvent during the transaction, and the transaction didn't lead to insolvency. 1. The directors had valid reasons to believe the transaction was happening when the corporation was solvent and wouldn't lead to insolvency.

Answer 546

Directors need to either show the actual solvency of the corporation or have reasonable grounds for their belief in solvency. Mere ignorance of the corporation's financial status isn't enough. They should have relied on solid sources, like credible experts or audited financial reports. The court will assess if the directors behaved as a diligent, prudent person would have in the same situation.

Answer 547

The court can rule in favor of the trustee for: 1. The entire amount of the dividend. 1. The full amount redeemed or the entire amount used to repurchase shares for cancellation, as long as these amounts haven't already been returned to the corporation, plus interest. Moreover, the judgment can be against both the directors and shareholders related to any of the directors or the corporation.

Answer 548

If the court finds that a director had valid reasons to believe the corporation was not in insolvent conditions during the transaction, the director won't be held liable in their directorial role. However, if that director is also a shareholder, they will be liable as a shareholder for: 1. The dividend they received, or 1. The redemption or repurchase price they obtained. This applies if the amounts haven't been returned to the corporation already, plus interest.

Answer 549

Only those directors who diligently protested against the transaction or demonstrated due diligence in their roles will be exempted from the judgment ordering the recovery of the full dividend amount or the entire redemption price.

Answer 550

A director has multiple avenues of defense: 1. Show that the corporation was neither insolvent nor made insolvent by the dividend payment or share redemption. 1. Prove that they objected to the dividend payment or share repurchase/redemption and that it happened despite their objections. However, this defense doesn't shield them from liability as shareholders if they benefitted from the transaction. 1. Convince the court that they acted diligently, having reasonable grounds to believe the company wasn't and wouldn't become insolvent due to the transaction. They should demonstrate they acted as a careful, responsible individual in similar circumstances. 1. The director's reliance on credible sources like financial statements from officers or auditors, or reports from professionals about the company's affairs can also be used as a defense. 1. If the payment, even if termed a "dividend", was in fact a compensation for services or a role played in the company and not a shareholder entitlement, then it's not deemed a dividend.

Answer 551

The recourse against shareholders is limited. Only those related to directors or the corporation itself can be held liable. To avoid liability: * The shareholder must prove that the corporation wasn't insolvent and wasn't rendered insolvent by the payment. However, even if a director has a valid defence, a related shareholder can still be held liable.

Answer 552

BIA s. 101 outlines the possibility to scrutinize and potentially recoup "Compensation" payments, referring to severance, termination, incentives, and other benefits, made by a bankrupt corporation. These payments are in focus if made within a year before the initial bankruptcy event until the date of bankruptcy. If these payments are deemed inappropriate, directors may be held personally liable.

Answer 553

Under BIA s. 101, a licensed insolvency trustee can: * Initiate court proceedings to determine if the compensation payment was made when the corporation was insolvent or if such payment made the corporation insolvent.

Answer 554

The onus lies on the directors of the corporation. They must show that the conditions leading to the recourse against them are unmet.

Answer 555

Directors need to establish: 1. The corporation was solvent when the payment was made, and the payment did not push the corporation into insolvency. 1. The compensation was not markedly higher than the fair market value of what the corporation got in return. 1. The payment was part of regular business operations. Alternatively, directors must also demonstrate that: 1. They had valid reasons to believe any of the first three criteria was satisfied.

Answer 556

Directors must show: 1. A factual situation proving the corporation’s solvency. 1. A reasonable basis for their belief in the corporation’s solvency at the time of payment. Ignorance of the corporation's financial health won't suffice. Directors must prove they based their beliefs on credible sources, like expert advice or audited financial statements.

Answer 557

The court assesses if the directors acted as a prudent and diligent person would in similar circumstances.

Answer 558

The court can rule in favor of the trustee, requiring repayment of the excessive compensation. This judgment is made against the directors, except those who protested the payment.

Answer 559

A director can use several defenses: 1. Show that the company was solvent when the compensation was made, and it didn't lead to insolvency. 1. Prove that the compensation paid was not much higher than the fair value of what the corporation received in return. 1. Argue that the compensation was part of regular business operations. 1. Demonstrate that they protested against the compensation payment and it was done against their objections. 1. Assure the court that they believed, with good reason, that the company was solvent, the payment was fair, or the compensation was standard practice. The director must show they acted prudently and diligently.

Answer 560

The court will review if the director relied in good faith on: 1. Financial statements or other documents given by company officers or auditors. 1. A professional report about the company's status. This report could be from professionals like engineers, appraisers, lawyers, or accountants who were reviewing specific aspects of the business.

Answer 561

A bankrupt individual might not be aware of their rights, duties, or the implications of their bankruptcy status. Source: BIA Directive 26

Answer 562

The trustee has the duty to inform the bankrupt about their rights, duties, and implications of their bankruptcy. Source: BIA Directive 26

Answer 563

The trustee should obtain a written acknowledgment from the bankrupt that they have received, read, and understand their duties and consequences of non-compliance. Source: BIA Directive 26

Answer 564

When a corporation is declared bankrupt, the officer executing the assignment or an individual specified by the Official Receiver must perform all the duties imposed on a bankrupt. Source: BIA s. 159 and 161

Answer 565

The consequences for failing to perform the necessary duties are the same as for an individual bankrupt. Source: BIA s. 198

Answer 566

The BIA imposes a minimum standard of conduct on all participants involved in a bankrupt estate, including the bankrupt, licensed insolvency trustee, or any other person. Source: BIA s. 10 and 198 – 208

Answer 567

Every officer, director, or agent of the corporation, or anyone who had control and directed or was a party to the commission of an offence, is liable as if they had personally committed the offence. Source: BIA s. 10 and 198 – 208

Answer 568

Investigations could involve: * A search for information by the trustee or people hired by the trustee. * An investigation by the Office of the Superintendent. * A report filed in court outlining the evidence suggesting an offence. * The court authorizing the trustee to initiate proceedings. * Inspectors or creditors directing the trustee to start proceedings against a suspected person. Source: BIA s. 10 and 198 – 208

Answer 569

Bankruptcy offences are classified as criminal offences and can result in fines, imprisonment, or both. Source: BIA s. 10 and 198 – 208

Answer 570

If a bankrupt commits any offence related to their property under the BIA or any other statute, their discharge can be refused, suspended, or granted conditionally. Source: BIA s. 170, 173, and 198 – 201

Answer 571

If a bankrupt fails to perform any duties under the BIA without a reasonable cause, they are guilty of a bankruptcy offence. This can result in a fine, imprisonment, or impact their discharge. Source: BIA s. 170, 173, and 198 – 201

Answer 572

A creditor is guilty if, intending to defraud, they make a materially false claim against the estate. Source: BIA s. 81, 158, 201, and 203

Answer 573

It's the trustee's duty to explain to the bankrupt the severity of the consequences of these provisions. Source: Directive 26

Answer 574

Any person who removes, or tries to remove, property out of the charge or possession of the bankrupt, trustee, or other custodian without the written permission of the trustee. This includes those who have filed a claim for property in the bankrupt's possession or a secured creditor who removes assets from an estate without the trustee's permission. Source: BIA s. 81, 158, 201, and 203

Answer 575

An inspector is guilty if they accept any compensation from the bankrupt or trustee other than the regular fees allowed for inspectors under the BIA or special fees authorized by the court for special services. Source: BIA s. 120 and 201

Answer 576

A person who is not a licensed trustee and does any act as, or represents themselves to be, a licensed trustee is guilty of an offence. Source: BIA s. 16, 203.1, 203.2, 202, and 205–208; Directive 6R

Answer 577

If a trustee acts or exercises trustee powers without providing the required security by BIA s.16, or without having such security in force. Source: BIA s. 16 and 205-208

Answer 578

A trustee is guilty if, intending to defraud or without reasonable cause, fails to comply with the BIA's provisions or any court order. Source: BIA s. 205-208

Answer 579

The trustee must deliver to the substitute trustee all un-administered property, books, records, and administration documents when required. Source: BIA s. 205-208

Answer 580

No, a trustee is prohibited from directly or indirectly soliciting someone to make an assignment or application for a bankruptcy order and from soliciting proxies for creditor meetings. However, they can provide advice on options and encourage creditor participation in meetings. Source: BIA s. 205-208

Answer 581

No, a trustee cannot accept or arrange to receive benefits beyond the remuneration payable from the estate. They also cannot give up or arrange to give up any remuneration part as a receiver or trustee to the bankrupt or any other person. Source: BIA s. 205-208

Answer 582

No, exercising trustee powers or duties after a trustee license has been suspended or cancelled is an offence. Source: BIA s. 205-208

Answer 583

The trustee might not be able to review necessary documentation if it's not made available to him by the bankrupt. Source: BIA s. 158, 161, 163, and 166

Answer 584

The trustee can request the Official Receiver to conduct an examination of the bankrupt under oath. They can also conduct their own examination if authorized by an ordinary resolution by the creditors or by a majority of the inspectors. Source: BIA s. 158, 161, 163, and 166

Answer 585

The examination comprises prescribed questions, but supplemental questions can be added to address specific concerns. The bankrupt is obligated to attend this examination and answer all questions truthfully. Source: BIA s. 158, 161, and 163

Answer 586

Typically, the examination initiated by the trustee is conducted by the trustee's legal representative. Like the Official Receiver's examination, it's also done under oath. Source: BIA s. 163 and 166

Answer 587

A penalty can be imposed on the bankrupt for failing to attend the examination. Source: BIA s. 163 and 166

Answer 588

No, examinations are not limited to just the bankrupt. Any individual reasonably believed to have knowledge of the bankrupt's affairs or any associate of the bankrupt (like an agent, employee, or director) may be ordered for an examination. Source: BIA s. 163 and 166

Answer 589

The persons who can be examined include: * The bankrupt. * Directors and officers of the bankrupt corporation. * Persons believed to have knowledge of the affairs of the bankrupt. * The trustee. Source: BIA s. 161, 164, and 167

Answer 590

The purposes are to: * Confirm possession of books and records. * Validate details related to the bankrupt's dealings and property. * Prove the bankrupt's indebtedness. * Investigate the reasons for the bankruptcy. * Understand the general conduct. * Examine the administration of the bankrupt's estate. Source: BIA s. 161, 164, and 167

Answer 591

The bankrupt may be examined by: * The Official Receiver: Usually based on the Official Receiver's choice, or upon a request from the trustee or a creditor. It's done under oath and leads to a report, held before the bankrupt's discharge. * The trustee: Requires the approval of creditors or inspectors and is held before an authorized person or the Registrar. It can take place even post the bankrupt's discharge. * Any creditor or interested party: With court approval, they can examine the bankrupt under oath before an authorized person or the Registrar. Source: BIA s. 161 and 163

Answer 592

Anyone believed to have knowledge of the bankrupt's affairs can undergo examination. This includes: * Persons believed to possess the bankrupt's property or documents related to the bankrupt. * Persons indebted to the bankrupt. * The trustee himself. Source: BIA s. 163, 164, and 165

Answer 593

The examination processes include: * The trustee conducting the examination if authorized by inspectors or creditors. * A creditor demonstrating sufficient cause to the court for the examination. * The trustee directly examining a person who fails to produce required information or property within five days. * An application to the court for examining the trustee by a creditor or interested party. Source: BIA s. 163, 164, and 165

Answer 594

The trustee can request the court to order the person to hand over the property or pay the owed money to the trustee. Source: BIA s. 165

Answer 595

A warrant can be issued by the court, leading to the person being apprehended and subsequently examined. Source: BIA s. 166

Answer 596

Trustees often require legal counsel to assist them in navigating the complex legal landscapes that arise in the administration of estates. They may face opposition from various stakeholders like lessors, secured parties, dissenting creditors, and even the debtors themselves who might bring legal action against the trustee. Source: Introduction to "Legal Services"

Answer 597

A trustee can: * Retain a lawyer before the first meeting of creditors without any authorization. * Retain one after the first meeting of creditors with the authorization of the inspectors. * In case of emergencies, retain legal counsel if obtaining the inspectors' authorization would cause delays that could jeopardize the appropriate action needed. Source: BIA s. 19 and 30

Answer 598

The trustee might encounter legal proceedings in: * Court applications or motions when matters become contentious. * Registration and discharge of the estate’s interest in real (immovable) property. * Court hearings for a bankrupt’s discharge application. * Court hearings for the approval of a proposal. * Taxation hearings for the trustee’s accounts. * Seeking court directions. * Appeals against lower court or registrar judgments. Source: BIA s. 19 and 3

Answer 599

The trustee is held accountable for the acts and omissions of anyone he/she engages, including the estate solicitor. Source: Last sentence of "Legal Services"

Answer 600

Section 197 of the BIA provides that the costs of proceedings under the BIA are at the court's discretion. Generally, a trustee isn't responsible for these costs unless the court determines otherwise. This section provides a guideline for determining the amount of legal fees and establishes a priority order for different types of legal fees and costs in the context of administering the estate. Source: BIA s. 30 and 197

Answer 601

If a proceeding is being continued in a different court and the trustee or the estate is a party to these proceedings, then the costs will be determined based on the result of the proceedings and the practice of that specific court. In other words, s. 197 of the BIA only applies to proceedings taken under the BIA. Source: BIA s. 30 and 197

Answer 602

The trustee may face exposure to legal costs when: * They do not seek permission from inspectors before initiating or defending a legal action. * They hire legal counsel without inspectors' approval. * They are unsuccessful in litigation, and the estate has no assets or insufficient assets to cover the costs. * The court determines that the trustee should bear the costs personally, for example, if the proceedings were considered frivolous or were unnecessarily delayed by the trustee. Source: BIA s. 30 and 197

Answer 603

Possible outcomes include: * The trustee might be successful and realize a financial gain for the estate beyond the legal costs. * The trustee might lose the case or fail to achieve positive net results, in which case they can be indemnified from the bankrupt estate. * The trustee might lose the case, fail to achieve positive net results, and end up liable for the costs. Source: BIA s. 30 and 197

Answer 604

Control mechanisms include: * Estate inspectors. * Written authorization by the trustee. * Taxation of costs. * Limits on amounts and tariffs. Source: Introduction

Answer 605

If inspectors are appointed: * A meeting with the inspectors is advised immediately after the creditors' meeting to address urgent matters and give directions to the trustee. * Important decisions, such as strategy on asset realization, appointment of an estate solicitor, and reviewing the security of creditors, are made. * If legal proceedings are planned, they should be reviewed thoroughly with the inspectors before action is taken. * Meetings with inspectors might address hiring a solicitor, conducting examinations, discussing legal proceedings in detail, and specifying which proceedings the trustee should initiate. * Solicitors might attend inspector meetings to report on recommended actions. * Legal services should benefit all creditors and the estate, not just some creditors or the trustee. * If no inspector is appointed, the trustee can make decisions independently, including retaining legal counsel. Source: BIA s. 30, 49 and 155; BIA Rule 130

Answer 606

Before initiating legal proceedings: * There should be a detailed review of possible recourses and the likelihood of success. * Urgent matters, such as potential asset loss, should be addressed promptly. * The trustee should discuss potential legal proceedings extensively with estate inspectors. * Any proposed legal actions must be fully discussed and approved by the inspectors. * Inspectors should specify, with clarity, the legal actions the trustee is to initiate. * The solicitor's services should benefit the entire group of creditors and the estate. Source: BIA s. 30, 49 and 155; BIA Rule 130

Answer 607

The BIA stipulates that no costs will be paid from the estate unless: * The services were authorized in writing by the trustee. * Costs have been awarded against the trustee or the estate by the court. Source: BIA s. 197; BIA Rule 20

Answer 608

The trustee must either: 1. Attend or be present during the taxation. 1. Provide a signed declaration to be attached to the bill of costs, confirming: * Services were duly authorized and rendered. * Charges are deemed reasonable by the trustee. Source: BIA s. 197; BIA Rule 20

Answer 609

Taxation here doesn't pertain to fiscal laws. Instead, it indicates: 1. Approval and determination of legal costs by the Registrar. 1. A Certificate of Taxation signed by the Registrar signifies that the bill has been taxed, giving it the power of a court judgment. Source: BIA Rules 18, 25, 27 and 28

Answer 610

Yes, if: 1. Bills of costs don't exceed a set amount (currently $2,500, excluding taxes). 1. If individual bills from an attorney are each below the threshold but cumulatively exceed it, they would still need to be taxed. Source: BIA Rules 18, 25, 27 and 28

Answer 611

The trustee can apply for an ex parte order allowing the trustee to distribute estate funds without considering the bill of costs Source: BIA Rules 18, 25, 27 and 28

Answer 612

The remuneration is usually decided based on: * An agreement with the trustee, as approved by the estate's inspectors. * Different remuneration models, including: * A set fee for a particular mandate. * Charges based on hours worked. * A commission on the amounts collected. * A "contingency fee", depending on the results achieved. * A combination of the above methods.

Answer 613

Yes, the court retains oversight of the remuneration: 1. Even if the trustee and inspectors have commercial agreements with the attorney, the court still has the authority to supervise and control the determination of the fees. 1. If the legal bill of costs seems excessive after taxation, an interested party, including the trustee, can ask for it to be re-taxed. 1. A party challenging the taxation needs to give a 10 days' notice to the opposing party.

Answer 614

Taxed or judicially awarded legal costs generally rank after the trustee's fees and disbursements in priority. There can be exceptions where the court might allocate a personal liability to the trustee for the lawyer's fees, which could then take priority over the trustee's fees. Source: BIA s. 136 overview.

Answer 615

The court might give such a direction if there's a potentially inequitable result or if an order states that the trustee must bear the costs personally. Source: BIA s. 45, 136, and 197 overview.

Answer 616

Some specific circumstances include: * Costs for the first applicant creditor who gets a bankruptcy order are payable from the bankrupt estate's assets. * The trustee can't recover as a preference money paid for the legal fees of a debtor who unsuccessfully defended a bankruptcy application. * Legal work related strictly to an assignment or application is chargeable against the estate. * A solicitor attending a board of directors meeting where an assignment by a company is decided can be compensated from the estate if beneficial to the general body of creditors. * Allowances can be made for negotiations and consultations by counsel to avert bankruptcy or clarify the debtor's affairs for a trustee. Source: BIA s. 45, 136, and 197 overview.

Answer 617

Provisions include: * The court can authorize an advance to the debtor from the insolvent estate to cover their defense costs unless the defense is frivolous. * The court determines a reasonable amount for such an advance, balancing the creditors' and debtor's interests. * An interim receiver won't be compelled by the court to borrow money or face an operational cash shortfall to fund such an advance. * An interim receiver isn't forced to fund the advance from funds under a trust for unremitted deductions, owed taxes, or funds under a security agreement. Source: Overview of provisions for an interim receiver.

Answer 618

The costs of the first seizing creditor have priority in the distribution of available funds to creditors. There's no deduction for the Superintendent’s levy from the payment of this claim. The amount that can be claimed is limited to the value realized by the estate from the assets that were seized. Source: BIA s. 70, 136, and 147 overview.

Answer 619

Legal costs are not payable out of the estate if they were incurred for services rendered: * To the trustee personally. * To a solicitor representing a specific creditor. * To the solicitor of the bankrupt estate if the same individual was also appointed as an inspector of the estate. * To the bankrupt personally after an assignment has been filed or a bankruptcy order has been made.

Answer 620

A summary administration applies when: * The bankrupt is an individual and not a corporation. * The realizable assets of the bankrupt, after accounting for secured creditors' claims, don't exceed the set limit of $15,000. Source: BIA s. 49; BIA Rule 130.

Answer 621

If an estate qualifies under the conditions mentioned for summary administration, it undergoes summary administration. If not, it is treated as an ordinary administration.

Answer 622

While these assets aren't counted when initially determining if the estate should be treated as a summary or ordinary administration, the total receipts from all sources can later influence whether the administration remains a summary administration or if it gets converted to an ordinary administration.

Answer 623

The Official Receiver evaluates the realizable value of the debtor's assets, considering liens, encumbrances, and provincial exemptions. Source: BIA s. 30 and 49.

Answer 624

No, the trustee's role remains the same in both types. They must realize non-exempt assets as effectively and efficiently as possible for the unsecured creditors. Source: Insolvency Circular No. 2R2.

Answer 625

The trustee must notify the Official Receiver. The Receiver can then convert the summary administration to an ordinary administration, applying the BIA's ordinary administration provisions. In such a scenario, the trustee might call a creditors' meeting to appoint inspectors, if none were appointed before. Source: BIA s. 30 and 49.

Answer 626

Yes. If the trustee decides to cap their fees (as per BIA Rule 128) based on total receipts not surpassing $15,000, it can remain a summary administration. “Total receipts” are the funds received into the estate after secured claims' payment and after deducting realization-related disbursements. Source: Insolvency Circular No. 2R2.

Answer 627

If costs expected to be incurred are more than what the trustee would obtain as per the tariff, the trustee can ask the Official Receiver to change the estate to ordinary. This can happen, for example, when legal counsel is needed. Source: Insolvency Circular No. 2R2.

Answer 628

No, unless directed by the Official Receiver. Source: BIA s. 155.

Answer 629

No, such publication is not mandated. Source: BIA Rules 62-67.

Answer 630

Only if requested by the Official Receiver or by creditors who hold at least 25% in value of the proven claims. Source: Directives 2R and 5R.

Answer 631

The trustee can undertake activities that typically require inspector approval, subject to directions given by creditors. Source: BIA s. 155.

Answer 632

Yes, if the debts of individuals are substantially alike, and the trustee believes it benefits both the creditors and debtors. However, the Official Receiver can challenge joint administration if they think the estates aren't substantially the same. Source: BIA Rules 62-67.

Answer 633

Yes, trustees can operate a consolidated trust bank account for all summary administration estates. This needs the Superintendent of Bankruptcy's prior approval. The goal is to reduce charges and maximize bank interest receipts. Source: Directives 2R and 5R.

Answer 634

Yes, the notice of bankruptcy and the notice of impending automatic discharge or an application for discharge can be sent as a single notice. Source: BIA s. 157.

Answer 635

No, court attendance is bypassed unless objections arise. Source: BIA Rules 62-67.

Answer 636

It's only required if creditors decide so. Source: Directives 2R and 5R.

Answer 637

The other provisions of the BIA would govern. Source: Directives 2R and 5R.

Answer 638

The fees are determined by a specific tariff based on the funds received by the estate. Source: BIA s. 131, 132.

Answer 639

The statement must first be sent to the inspectors (if appointed) for approval, and then to the Superintendent of Bankruptcy for comment. Source: BIA s. 156.

Answer 640

They have 30 days to object. Source: BIA Rule128.

Answer 641

The court can determine that the trustee is not entitled to full compensation, and it will decide the fee amount. Source: Insolvency Circular No. 2R.

Answer 642

* 100% on the first $975 or less. * 35% on the next $1,025. * 50% on receipts exceeding $2,000. Source: Directives 1R, 5R.

Answer 643

They can claim: * Counseling fees ($85 for individual sessions, $25 per person in group sessions). * Fee paid to the Official Receiver for filing an assignment. * Fees payable to the Registrar in Bankruptcy to open a court file. * A lump sum of $100 for administrative disbursements. * Applicable federal and provincial taxes on their fees and disbursements. Source: Directives 10R, 16, 19R.

Answer 644

The trustee can withdraw: * $250 after mailing the notice of bankruptcy. * $250 thirty days after the bankruptcy date. * $250 four months after the bankruptcy date. Source: BIA s. 152.

Answer 645

It allows a first-time bankrupt to agree with a trustee to pay for their fees and disbursements if there's no surplus income. This agreement can be enforced post-discharge if the payment doesn't exceed a prescribed amount and doesn't extend beyond 12 months after the discharge. Source: BIA s. 156.1.

Answer 646

In some provinces, trustees have opposed the discharge of the bankrupt due to non-payment, leading to a conditional order of discharge. In others, courts have been hesitant to oppose discharge solely for this reason. Source: Directives 5R, 16.

Answer 647

A licensed trustee is entitled to receive compensation for consultation services to assist individuals in solving their financial problems. Source: Directive 15.

Answer 648

The trustee needs to determine if the payment was a consultation fee separate from the bankruptcy process or if it was part of the process leading to the actual bankruptcy. Source: Directive 15.

Answer 649

If payments for consultation services are received within 60 days prior to the date of bankruptcy, they are considered assets of the estate and must be deposited into the estate bank account. Source: Directive 15.

Answer 650

These funds are included in the receipts used to calculate the trustee’s fees for services rendered. Source: Directive 15.

Answer 651

The first stage involves the trustee conducting a financial appraisal interview, describing available options to the debtor, and discussing the merits and consequences of each option.

Answer 652

They include preparing a statement of the debtor's financial affairs, discussing the debtor’s immediate problems, identifying options for resolving financial difficulties, and explaining credit and insolvency issues applicable to the debtor's situation.

Answer 653

They include wage garnishment after bankruptcy, co-signers of the debtor's liabilities, credit rating after bankruptcy, assets and their status, legal actions post-bankruptcy, payments to creditors, windfalls, tax matters related to bankruptcy, mediation availability, and the discharge process.

Answer 654

The debtor and trustee must review the debtor's perspective on the situation, the pros and cons of available options, the debtor's rights and responsibilities, effects of credit and insolvency issues specific to them, potential outcomes of the discharge process, debts surviving bankruptcy, surplus income contribution responsibilities, and the type of counseling offered for debtor rehabilitation.

Answer 655

The trustee is required to determine the debtor’s capability to file a viable proposal.

Answer 656

The trustee must consider: * Availability of sufficient property for a “lump sum payment” proposal. * Adequacy of surplus income to sustain continued payments for proposal fulfillment. * The family or personal situation of the debtor. * The overall financial situation of the debtor. * The number and type (secured and unsecured) of the debtor's creditors. * The likelihood of creditors accepting the proposal. * Whether the return to creditors in a proposal surpasses the return in a bankruptcy.

Answer 657

The trustee must inform the debtor that they will be obligated to report to the court that a viable proposal could have been filed. This report could potentially impact the bankrupt’s chance of obtaining an automatic discharge.

Answer 658

An individual may qualify for an automatic discharge if: * They are either a first-time bankrupt or have been bankrupt only once before. * They do not have a large income tax debt. * They have attended the required counselling sessions. Source: BIA s. 168.1, 168.2, 170.1, 172.1, 173

Answer 659

The length of time before entitlement to an automatic discharge varies based on: * Whether the individual is a first-time or a second-time bankrupt. * Whether the individual has surplus income or not. Source: BIA s. 168.1, 168.2

Answer 660

If a trustee determines that a viable proposal could have been filed, the trustee should: * Report this fact to the court. * Oppose the automatic discharge. Source: BIA s. 170.1

Answer 661

Yes, a creditor can oppose the bankrupt’s automatic discharge on the grounds that a viable proposal could have been filed but bankruptcy was chosen instead. Source: BIA s. 172.1

Answer 662

If there's an opposition to the automatic discharge: * A mediation process will be initiated. * Following mediation, the bankrupt might be automatically discharged, or the trustee could schedule a hearing regarding the bankrupt’s application for discharge. * Ultimately, the court will decide on the entitlement to a discharge and any conditions attached to it. Source: BIA s. 173

Answer 663

The Assessment Certificate is a document that the trustee and debtor execute at the end of the assessment. It acknowledges that: * An assessment has been provided. * It identifies the statutory option chosen by the debtor to handle their financial situation. * It confirms that the consequences of the debtor's choice have been explained. Source: Directive 6R

Answer 664

The Assessment Certificate should be: 1. Retained in the estate files. 1. A copy of it should be provided to the Official Receiver: * When filing the assignment. * When filing the proposal. * When filing the notice of intention. Source: Directive 6R

Answer 665

No, if during the assessment, the debtor chooses an option that is not available under the BIA, the process stops, and an Assessment Certificate is not needed. Source: Directive 6R

Answer 666

All bankrupt individuals and persons filing a consumer proposal are mandated to undergo counselling. Additionally, a person financially associated with an individual bankrupt can also undergo counselling. Source: BIA s. 66.13 and 157.1, Directive 1R, CAIRP Standards of Professional Practice No. 7

Answer 667

The Licensed Insolvency Trustee (LIT) is responsible for providing or arranging counselling for individual bankrupts in compliance with the Counselling Directive and CAIRP’s Standards of Professional Practice No. 7. Source: Directive 1R, CAIRP Standards of Professional Practice No. 7

Answer 668

The counselling is split into two stages. * The first stage is to be done soon after the initial bankruptcy event (specifically between 10 and 90 days after). * The second stage must be done at least 30 days after the first, but before discharge or the issuance of a certificate of full performance in the case of a consumer proposal. Source: BIA s. 66.13

Answer 669

* Responsibility: Delivery of counselling services falls under the Licensed Insolvency Trustee (LIT), responsible for administering the estate or the consumer proposal. * Qualified Counsellor: Counselling can be given either by the LIT or by a registered BIA Insolvency Counsellor under the LIT's supervision. * Registration & Maintenance: A BIA Insolvency Counsellor must remain registered, complete specific professional development hours, and have their skills attested by the overseeing LIT. * Special Cases: In specific circumstances, like remote locations or address changes, another LIT or their employee who is a registered BIA Insolvency Counsellor can provide counselling. * Accountability: The LIT who filed the insolvency process remains responsible for the quality and completion of the counselling. Source: Directive 1R

Answer 670

The Licensed Insolvency Trustee (LIT) responsible for administering the estate or the consumer proposal is accountable for the delivery of counselling services. Source: Directive 1R

Answer 671

The counselling can be given by a registered BIA Insolvency Counsellor under the LIT's supervision or, in specific cases, another LIT or their employee who is a BIA Insolvency Counsellor. Source: Directive 1R

Answer 672

They must complete specific professional development hours and have the LIT overseeing them attest to their skills, knowledge, and competencies. Source: Directive 1R

Answer 673

Counselling fees are derived from the receipts in a bankrupt's estate or as stipulated in the terms of a proposal. Source: BIA Rule 128 and 131, Directive 1R

Answer 674

The LIT responsible for the administration can take the prescribed counselling fee after the session and forward it to the second LIT who conducted the counselling. The fee cannot exceed the amount specified by the tariff. Source: Directive 1R

Answer 675

The bankrupt estate doesn't cover the fees for any specialized counselling suggested in the second stage. Source: Directive 1R

Answer 676

A report must be made for each counselling session, signed by both the bankrupt/debtor and the counsellor. These reports are sent to the OSB after each session or post the second session. Source: Directive 1R

Answer 677

The first stage counselling occurs: * Between 10 and 90 days post the bankruptcy date or filing of a consumer proposal. * Within 10 days following the first meeting of creditors if creditors refuse a Division I proposal. Source: CAIRP Standards of Professional Practice No. 7, Directive 1R

Answer 678

The second stage occurs 30 days after the first counselling stage but before the bankrupt’s discharge or the issuance of a certificate of full performance in a consumer proposal. Source: CAIRP Standards of Professional Practice No. 7, Directive 1R

Answer 679

By the end of the second session, the debtor should be informed about budgeting, achieving financial goals, spending habits, responsible credit use, and any other relevant information. The content and pacing are adaptable to individual needs, and the two sessions are considered part of a unified process. Source: CAIRP Standards of Professional Practice No. 7, Directive 1R

Answer 680

The first stage aims to educate the bankrupt on money management, spending and shopping habits, recognizing financial difficulty signs, and obtaining and using credit. Source: CAIRP Standards of Professional Practice No. 7

Answer 681

The second stage focuses on: * Identifying budgetary and non-budgetary bankruptcy causes. * Following up on the bankrupt’s money management application from stage one. * Recognizing non-financial contributors like gambling or substance abuse. * Assisting the bankrupt in understanding financial behavior. * Making the bankrupt aware of available resources. * Helping devise an action plan and potentially referring for specialized counselling. Source: CAIRP Standards of Professional Practice No. 7

Answer 682

The counsellor should address identified issues with the debtor, provide information about community resources, and possibly refer them for specialized counselling. It's essential to ask non-threatening questions and avoid making personal judgments. Source: CAIRP Standards of Professional Practice No. 7

Answer 683

The income of the debtor and the family unit, especially focusing on the surplus income calculation. Source: BIA s. 68; BIA Rule 105; Directive 11R

Answer 684

* It assesses the debtor's capability to make a proposal. * It determines the time a bankrupt has to wait before automatic discharge. * It calculates the amount a bankrupt should contribute to his estate from earnings.

Answer 685

The bankrupt must pay 50% of the surplus income until they have been discharged.

Answer 686

The trustee takes into account all household income from all family members, deducts non-discretionary expenses, and then deducts the amount based on a standard to determine the surplus. This surplus is then used to calculate the payment.

Answer 687

The amount to be contributed from earnings will be calculated without considering the income of such non-disclosing family members.

Answer 688

The deduction for total members in the family unit is halved, splitting the responsibility for the deductions between the spouses irrespective of their relative incomes.

Answer 689

If it's another member like a child or a parent, they are not considered part of the family unit for the deduction's purpose.

Answer 690

The total family income is $3,400/month.

Answer 691

Bankrupt’s income of $2,000 minus non-discretionary expenses (medical) of $300 equals an adjusted income of $1,700.

Answer 692

After nine months if a first-time bankrupt, and 24 months if a second-time bankrupt, assuming there is no opposition to the bankrupt’s discharge by the trustee, superintendent, or creditors.

Answer 693

Bankrupts must provide monthly statements of income and expenses detailing the family income and the expenses incurred during the month. They must also give payroll slips for all family members and, if there are non-discretionary expenses, receipts for those costs.

Answer 694

In the 8th month of bankruptcy for a first-time bankrupt and in the 23rd month for a second-time bankrupt.

Answer 695

The trustee and the bankrupt estimate the income. Payments are based on this estimate. Before the automatic/discharge date, the trustee recalculates based on actual income received during bankruptcy, averaging it over that period.

Answer 696

Real estate agents, commissioned salespeople, seasonal workers, and those earning significant fluctuating overtime.

Answer 697

The entire lump sum (100%) should be paid to the estate without averaging, except for specific adjustments. If the bankrupt's regular income is below the standard (excluding the lump sum), they may qualify for a quicker automatic discharge.

Answer 698

* The disposition is made in good faith, referring to the conduct of the person dealing with the bankrupt (not the bankrupt's conduct). * It's made for value concerning the property.

Answer 699

No. For instance, damages received by an undischarged bankrupt for pain, physical injuries, mental suffering, harassment, or injuries to reputation or character do not vest in the trustee.

Answer 700

The bankrupt has a duty to advise the trustee of any after-acquired property. Source: BIA s. 170, 173, and 198

Answer 701

The trustee has a duty to investigate and determine what property is to be delivered to the trustee for the benefit of the creditors. Source: BIA s. 170, 173, and 198

Answer 702

If the bankrupt fails to notify the trustee and disposes of after-acquired property that should have been delivered to the trustee, the trustee should oppose the discharge of the bankrupt and recommend a conditional order of discharge to the extent of the value of the property or the proceeds therefrom. Source: BIA s. 170, 173, and 198

Answer 703

Mediation is a way of resolving conflict between parties where they agree to work with an independent mediator to reach an agreement. It is a flexible and less formal alternative to court intervention.

Answer 704

Mediation, according to BIA Rule 105, is intended to resolve differences between the bankrupt, the trustee, and the creditors concerning the performance of the bankrupt's obligations. It facilitates communication and aims to define points of controversy. Source: BIA Rule 105

Answer 705

Mediation is considered a useful ADR mechanism because it helps accelerate proceedings and reduce legal costs, making it an effective alternative to court intervention.

Answer 706

The mediator's role in insolvency mediation includes helping parties communicate, explaining the mediation process and the possibility of additional meetings, defining each side's wants and needs, and guiding the parties toward an agreement without imposing their will. Source: BIA Rule 105

Answer 707

A mediator in insolvency mediation can be an employee of the Office of the Superintendent of Bankruptcy or any other person with training and experience in mediation, as deemed qualified by the Superintendent. Source: BIA Rule 105

Answer 708

Insolvency mediation must be attended by the bankrupt, the trustee, and any creditor who requested the mediation or their legal representative. The attending parties should have decision-making powers and signing authority. Source: BIA Rule 105

Answer 709

Insolvency mediation sessions can be held at a Division Office of the Superintendent of Bankruptcy or any other location designated by the mediator. The mediator may also choose to conduct the mediation through telephone conferences or other communication facilities that allow all parties to communicate. Source: BIA Rule 105

Answer 710

In insolvency mediation, no mediator or party can disclose to the public any confidential information related to a mediated issue, except when required by law or authorized by the person to whom the confidential information relates. Confidentiality must be maintained from the time the matter is referred to the mediator until the mediation concludes. Source: BIA Rule 105

Answer 711

The Superintendent must keep, or cause to be kept, documents relating to the mediation process in insolvency cases for at least six years. Source: BIA s. 11.1, 68, and 170.1; BIA Rule 122

Answer 712

Mediation can be used in consumer bankruptcy proceedings when there is a disagreement over the amount of surplus income or opposition to the bankrupt's discharge.

Answer 713

Mediation pertaining to surplus income can only be requested if the bankrupt has surplus income as calculated pursuant to the Superintendent’s Standards. Source: BIA s. 68

Answer 714

It is possible in the case of a bankrupt who might otherwise qualify for an automatic discharge and if the opposition to the automatic discharge is based on the bankrupt’s failure regarding contributions from surplus income or the decision to proceed with bankruptcy when a viable proposal could have been made. Source: BIA s. 68 and 170.1

Answer 715

The Superintendent of Bankruptcy regulates the standards. Source: BIA s. 68

Answer 716

When the trustee and the bankrupt cannot agree on the amount of surplus income to be paid, or when a creditor requests it. Source: BIA Rule 105

Answer 717

1. Trustee submits a request with the monthly income and expense statement. 1. Official Receiver refers the matter to a mediator. 1. Mediator sets the time and location. 1. Notice of mediation sent to relevant parties. 1. Rescheduling procedures, if necessary. 1. Mediation takes place, with potential for one adjournment. Source: BIA Rule 105

Answer 718

* Cancellation of the mediation. * Failure to reach an agreement. * Agreement reached by all parties resulting in a mediation settlement agreement. Source: BIA Rule 105

Answer 719

The trustee is required to prepare a report on the bankrupt’s application for discharge, considering the bankrupt’s conduct and ability to make payments. Source: BIA s. 170, 170.1, 172, and 173

Answer 720

Mediation can occur when the trustee or a creditor opposes the discharge due to the bankrupt's failure to pay the surplus income set by the Superintendent’s Standards or when the bankrupt opted for bankruptcy instead of a viable proposal. Source: BIA s. 170, 170.1, 172, and 173

Answer 721

The mediation procedures at the time of discharge are similar to those that could arise early in the bankruptcy file regarding surplus income. Source: BIA Rule 105

Answer 722

A first-time bankrupt natural person in Canada, who has attended the required counseling sessions and who has no surplus income, is automatically discharged nine months after the bankruptcy order. If they have surplus income, the time extends to 21 months. A second-time bankrupt person may also be eligible, requiring 24 months without surplus income and 36 months with surplus income. Source: BIA s. 168.1

Answer 723

Bankrupts with income tax debts exceeding $200,000 and accounting for more than 75% of the total debts are not eligible for an automatic discharge. They will need a hearing for the application for discharge. Source: BIA s. 168.1

Answer 724

It operates as an application for discharge unless the bankrupt files a waiver with the trustee before the trustee’s application to court for a date for the hearing of the discharge application. Source: BIA s. 169

Answer 725

If a waiver is not filed, the trustee must apply before his own discharge. The application must be heard between three months and one year after the bankruptcy. Source: BIA s. 169

Answer 726

A corporate bankrupt can only apply for a discharge if it has satisfied the claims of its creditors in full. Source: BIA s. 169

Answer 727

The trustee must send a report to the Superintendent of Bankruptcy, the court, the bankrupt, and any creditor who has requested a copy of the report. Source: BIA s. 170

Answer 728

The court gives the trustee’s report considerable weight, but it isn't bound by it and must come to its own conclusions. The burden lies with the bankrupt to refute any unfavorable information in the report. Source: BIA s. 170

Answer 729

* Current marital and employment status * Amounts of claims declared and proven * Details of estate receipts or anticipated asset realizations * Causes of bankruptcy * Conduct of the bankrupt before and after bankruptcy * Facts justifying a refusal of an unconditional discharge order * Any other relevant information Source: BIA s. 170

Answer 730

The court may refuse an absolute discharge unless a satisfactory explanation suggests the deficiency is due to circumstances the bankrupt isn't responsible for. Source: BIA s. 172 and 173

Answer 731

If the bankrupt failed to keep proper books to disclose business transactions and financial position from three years before the bankruptcy to the date of bankruptcy. Source: BIA s. 172 and 173

Answer 732

If the bankrupt continued to trade after knowing they were insolvent. Source: BIA s. 172 and 173

Answer 733

Inordinate extravagance in living, neglect of business affairs, gambling, speculation, or causing unnecessary creditor expense due to frivolous defence. Source: BIA s. 172 and 173

Answer 734

If the bankrupt gives an undue preference to a creditor or incurs liabilities to balance assets within three months before bankruptcy, the court may refuse discharge. Source: BIA s. 172 and 173

Answer 735

The court may refuse an absolute discharge. Source: BIA s. 172 and 173

Answer 736

If the bankrupt has been guilty of fraud, committed an offence related to property or the bankruptcy, or failed to comply with surplus income requirements/duties under the BIA. Source: BIA s. 172 and 173

Answer 737

If the bankrupt could have made a viable proposal but chose to assign himself into bankruptcy. Source: BIA s. 172 and 173

Answer 738

The trustee presents the "Report of Trustee on Bankrupt’s Application for Discharge" (s. 170 report) and several of the bankrupt’s monthly statements of income and expense reports. Source: BIA s. 172

Answer 739

The court considers information presented by all parties including the bankrupt, any opposing creditors, the Office of the Superintendent of Bankruptcy, and the trustee. Source: BIA s. 172

Answer 740

If the bankrupt has been previously bankrupt and there's no surplus income, the order may state that the discharge is suspended for a period, after which it's absolute. Source: BIA s. 172

Answer 741

If the bankrupt has failed to remit surplus income, pay to repurchase assets, or hasn't fulfilled certain duties, such as submitting monthly income and expense statements. Source: BIA s. 172

Answer 742

If there's no reasonable probability of compliance, the bankrupt can apply to vary or rescind the order one year after its date, especially if they've made good faith efforts but can't comply. Source: BIA s. 172

Answer 743

The bankrupt is freed from any legal obligation to creditors except those not discharged by virtue of BIA s. 178. Certain debts that survive bankruptcy are exceptions. Source: BIA s. 178 and 180

Answer 744

If the bankrupt fails to perform duties imposed by the BIA after discharge or if the discharge was obtained fraudulently. For example, in Re: De Grandpre, the discharge was annulled due to the bankrupt failing to disclose all assets to the trustee. Source: BIA s. 178 and 180

Answer 745

An order of discharge releases the bankrupt from all debts and liabilities existing at the date of bankruptcy, with certain exceptions. Source: BIA s. 178 and 179

Answer 746

Debts related to fines, judicial penalties, restitution orders by a court, or amounts due in connection with recognizance or bail, particularly if they are tied to a criminal or quasi-criminal offence. Source: BIA s. 178 and 179

Answer 747

Debts arising from damages awarded for intentional bodily harm, sexual assault, wrongful death, alimony, support, or maintenance orders/agreements. Source: BIA s. 178 and 179

Answer 748

Debts arising from fraud, embezzlement, misrepresentation, defalcation, or, in Québec, as trustee or administrator of another's property. Source: BIA s. 178 and 179

Answer 749

If the bankruptcy occurred before the individual ceased to be a student (as defined in s.2 of the Canada Student Loans Regulations) or within seven years after that time. Source: BIA s. 178 and 179; Canada Student Loans Regulations s. 2

Answer 750

Any person who was a partner of the bankrupt, jointly liable, or a surety for the bankrupt remains liable. Source: BIA s. 178 and 179

Answer 751

They are stayed by the BIA process, and the bankruptcy order or assignment takes precedence over all other attachments, garnishments, and executions. Source: BIA s. 70

Answer 752

While the debt remains, any execution or order seeking to enforce it must be issued by a post-discharge order of the court. Source: BIA s. 178