Chapter 15

Question 1

Accounts receivable

Answer 1

Funds owed to a business for goods or services provided to customers

Question 2

Assignment in bankruptcy

Answer 2

The voluntary transfer of a debtor’s assets to a trustee in bankruptcy so that they can be administered for the benefit of the creditors; also known as voluntary assignment in bankruptcy

Question 3

Attachment

Answer 3

Under the personal Property Security Act, the situation in which value has been given pursuant to the contract, giving the creditor a claim against the assets used as security if there is a default by the debtor

Question 4

Bankrupt

Answer 4

A person who has made an assignment in bankruptcy or been forced into bankruptcy through a court order and who has not been discharged from bankruptcy

Question 5

Bankruptcy

Answer 5

The process by which an insolvent person voluntarily or involuntarily transfers assets to a trustee for distribution to creditors

Question 6

Bankruptcy order

Answer 6

A statutory assignment of a debtor’s assets to a trustee in bankruptcy

Question 7

Bill of sale

Answer 7

A written agreement that conveys title from seller to buyer

Question 8

Bona fixe purchaser for value

Answer 8

An innocent third party who has paid a fair price for goods under claim by a creditor

Question 9

Book accounts

Answer 9

Accounts receivable that can be used as security for a loan

Question 10

Chattel mortgage

Answer 10

A loan for which a creditor provides credit to the debtor, securing the loan by taking title of a good such as a car

Question 11

Chattels

Answer 11

Tangible, movable personal property that can be measured and weighted; also known as goods

Question 12

Chose in action

Answer 12

The thing or benefit that is transferred in an assignment; intangible personal property, such as a claim or the right to sue

Question 13

Collateral

Answer 13

Goods or property used to secure a debt

Question 14

Conditional sale

Answer 14

A sale in which the seller provides credit to the purchaser, holding title until the goods are paid for

Question 15

Confirmed letter of credit

Answer 15

A document, ratified by the lender, that secures or guarantees the financial aspects of a trade transaction

Question 16

Consolidation order

Answer 16

A court order issued under the Orderly Payment of Debts program that sets out amounts to be paid into court by the debtor (and the time of each payment) for the benefit of each of the creditors subject to the order

Question 17

Consumer debtor

Answer 17

An individual who is bankrupt or insolvent, with less than $250,00 in claims against them (excluding a mortgage on their home)

Question 18

Consumer proposal

Answer 18

An alternative to bankruptcy, created by the Bankruptcy and Insolvency act, whereby a consumer debtor secures some time to reorganize their affairs and make a proposal for partial payment that will satisfy their creditors; Division 2 proposal

Question 19

Continuing guarantee

Answer 19

A provision in a guarantee allowing the creditor to advance further funds without affecting the obligation of the guarantor to pay in the event of default

Question 20

Division 1 proposal

Answer 20

An alternative to bankruptcy whereby the debtor secures some time to reorganize their affairs and make a proposal for partial payment that will satisfy their creditors, if the proposal is rejected, the debtor is deemed to have made an assignment in bankruptcy from the day of the meeting with the creditors, and normal bankruptcy proceedings occur

Question 21

Division 2 proposal

Answer 21

Same as consumer proposal

Question 22

Estate

Answer 22

All the property the owner has power to dispose of, less any related debt; also the property of a bankrupt given to the trustee in bankruptcy

Question 23

Fixture

Answer 23

A thing attached to land or to a another fixture attached land

Question 24

Floating charge

Answer 24

a security not fixed on any particular assets until default or some other specified event

Question 25

Fraudulent preference

Answer 25

A debtor’s payment of money to one creditor to give that creditor preference over the other creditors

Question 26

Fraudulent transfer

Answer 26

A debtor’s transfer of property in an attempt to keep it out of the hands of creditors; not a valid sale at a fair price to an innocent third party

Question 27

Guarantee

Answer 27

A written commitment whereby a guarantor agrees to pay a debt if the debtor does not

Question 28

Guarantor

Answer 28

A person assuming obligation to pay if the debtor does

Question 29

Holdback

Answer 29

A specified percentage that a person owing funds on a construction contract must retain for a specified period to protect against claims made by the suppliers of goods and services

Question 30

Indemnity

Answer 30

A primary obligation of a third party to pay a debt along with the debtor

Question 31

Insolvency

Answer 31

Inability of a person to pay their debts as they become due

Question 32

Lease

Answer 32

A secured arrangements whereby possession of the goods goes to the lessee, while the title to the goods remains with lessor

Question 33

Lease to purchase

Answer 33

A lease in which title to the goods is transferred to the lessee at the end of the lease period

Question 34

Letter of credit

Answer 34

A commitment by the importer’s bank that the price stated will be paid upon presentation of documentation confirming delivery

Question 35

Mortgage

Answer 35

A means of securing loans; title of property is held by the moneylender as security in some jurisdictions, in other jurisdictions, a mortgage is simply a charge against title

Question 36

Official receiver

Answer 36

An officer of the court, appointed by the Superintendent of Bankruptcy for each bankruptcy district

Question 37

Operating lease

Answer 37

A lease in which the goods are returned to the lessor at the end of the lease period

Question 38

Perfection

Answer 38

Protection of a secured creditor’s claim, either by registering the secured obligation or by taking possession of the collateral

Question 39

Personal property

Answer 39

Tangible, movable goods (chattels) and intangible claims (choses in action)

Question 40

Pledge

Answer 40

An item that a creditor (like a pawnbroker) takes possession of a security and holds until repayment

Question 41

Preferred creditors

Answer 41

Creditors who by law must be paid before other unsecured creditors

Question 42

Priority

Answer 42

When there are two or more creditors, the one entitled to be paid first has priority

Question 43

Proof of claim

Answer 43

A document filed with the trustee in bankruptcy establishing the validity of a creditors claim

Question 44

Purchase money security interest

Answer 44

A security interest on specific goods that has priority over a general security agreement provided it is registered within a specific time

Question 45

Real property

Answer 45

Land, buildings attached to the land, and items called fixtures (items attached to the land or the building or to another fixture attached to the land)

Question 46

Receivership

Answer 46

A proceeding in which a receiver is appointed for an insolvent corporation, partnership, or individual to take possession of assets for its ultimate sale and distribution to creditors

Question 47

Right to redeem

Answer 47

After a creditor has taken possession of collateral, the right of the debtor to reclaim it on payment of any money owing

Question 48

Secured creditor

Answer 48

A creditor who has a claim on the property of the debtor, giving them priority on that property over other creditors

Question 49

Secured transaction

Answer 49

A collateral right to debt giving the creditor the right to take back the goods or intercept the debt owing used as security in the event of default

Question 50

Settlement

Answer 50

Transfer of assets where nominal or no consideration is involved

Question 51

Standby letter of credit

Answer 51

A commitment by the importer’s bank that the price stated will be paid upon presentation of document confirming delivery, used as a guarantee

Question 52

Superintendent of Bankrupty

Answer 52

The government official appointed by the federal government who is responsible for the administration of bankruptcy across Canada

Question 53

Surplus income

Answer 53

Amount a bankrupt’s income exceeds what is necessary to maintain a reasonable standard of living according to the standards set by the Office of Superintendent of Bankruptcy

Question 54

Trustee in bankruptcy

Answer 54

The licensed professional appointed to administer the estate of a bankrupt for the benefit of the creditors

Question 55

Voluntary assignment in bankruptcy

Answer 55

The voluntary transfer of a debtor’s assets to a trustee in bankruptcy so that they can be administered for the benefit of the creditors; assignment in bankruptcy