Bill C-109

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First Reading

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	1st Session, 35th Parliament, 42-43-44 Elizabeth II, 1994-95
	The House of Commons of Canada
	BILL C-109
	An Act to amend the Bankruptcy and Insolvency Act, the Companies' Creditors Arrangement Act and the Income Tax Act
	Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:
R.S., c. B-3; R.S., cc. 27, 31 (1st Supp.), cc. 3, 27 (2nd Supp.); 1990, c. 17; 1991, c. 46; 1992, cc. 1, 27; 1993, cc. 28, 34; 1994, c. 26; 1995, c. 1	BANKRUPTCY AND INSOLVENCY ACT
	*1. (1) Section 2 of the Bankruptcy and Insolvency Act* is renumbered as subsection 2(1).**
1992, c. 27, s. 3(1)	(2) The definitions ``corporation'', ``creditor'', ``person'', ``prescribed'' and ``proposal'' in subsection 2(1) of the Act are replaced by the following:
``corporation' ' « personne morale »	``corporation'' includes any company or legal person incorporated by or under an Act of Parliament or of any province or any company authorized to carry on business in Canada or that has property in Canada, but does not include incorporated banks to which the Bank Act applies, savings banks, insurance companies, trust companies, loan companies or railway companies;
``creditor'' « créancier »	``creditor'' means a person having a claim, unsecured, preferred by virtue of priority under section 136 or secured, provable as a claim under this Act;
``person'' « personne »	``person'' includes a partnership, an unincorporated association, a corporation, a cooperative society or an organization, the successors of a partnership, association, corporation, society or organization, and the heirs, executors, liquidators of the succession, administrators or other legal representative of a person, according to the law of that part of Canada to which the context extends;
``prescribed'' « prescrit »	``prescribed''
	(a) in the case of the form of a document that is by this Act to be prescribed and the information to be given therein, means prescribed by directive issued by the Superintendent under paragraph 5(4)(e), and
	(b) in any other case, means prescribed by the General Rules;
``proposal'' « proposition concordataire » ou « proposition »	``proposal'' means
	(a) in any provision of Division I of Part III, a proposal made under that Division, and
	(b) in any other provision, a proposal made under Division I of Part III or a consumer proposal made under Division II of Part III
	and includes a proposal or consumer proposal, as the case may be, for a composition, for an extension of time or for a scheme or arrangement;


	(3) The portion of the definition ``insolvent person'' in subsection 2(1) of the Act before paragraph (a) is replaced by the following:
``insolvent person'' « personne insolvable »	``insolvent person'' means a person who is not bankrupt and who resides, carries on business or has property in Canada, whose liabilities to creditors provable as claims under this Act amount to one thousand dollars, and
1992, c. 27, s. 3(2)	(4) The definition ``entreprise de service public'' in subsection 2(1) of the French version of the Act is replaced by the following:
« entreprise de service public » ``public utility''	« entreprise de service public » Vise notamment la personne ou l'organisme qui fournit du combustible, de l'eau ou de l'électricité, un service de télécommunications, d'enlèvement des ordures ou de lutte contre la pollution ou encore des services postaux.
	(5) Subsection 2(1) of the Act is amended by adding the following in alphabetical order:
``date of the initial bankruptcy event'' « ouverture de la faillite »	``date of the initial bankruptcy event'', in respect of a person, means the earliest of the date of filing of or making of
	(a) an assignment by or in respect of the person,
	(b) a proposal by or in respect of the person,
	(c) a notice of intention by the person,
	(d) the first petition for a receiving order against the person, in any case referred to in paragraph 50.4(8)(a) or 57(a), subsection 61(2) or section 64, or
	(e) the petition in respect of which a receiving order is made, in the case of a petition other than one referred to in paragraph (d);
	(6) Section 2 of the Act is amended by adding the following after subsection (1):
References to land or real property	(2) A reference in this Act to land or real property shall be construed as including a reference to an immovable.
	2. The Act is amended by adding the following after section 2:
Time or date of bankruptcy	2.1 For the purposes of this Act, the bankruptcy or putting into bankruptcy of a person is deemed to occur at the time or date of
	(a) the granting of a receiving order against the person;
	(b) the filing of an assignment by or in respect of the person; or
	(c) the event that causes an assignment by the person to be deemed.
Superintenden t's division office	2.2 Any notification, document or other information that is required by this Act to be given, forwarded, mailed, sent or otherwise provided to the Superintendent, other than an application for a licence under subsection 13(1), shall be given, forwarded, mailed, sent or otherwise provided to the Superintendent at the Superintendent's division office as specified in directives of the Superintendent.
	3. Section 3 of the French version of the Act is replaced by the following:
Transaction révisable	3. (1) Pour l'application de la présente loi, la personne qui a conclu une transaction avec une personne ayant un lien de dépendance est réputée avoir conclu une transaction révisable.
Question de fait	(2) La question de savoir si des personnes non liées entre elles au sens de l'article 4 n'avaient pas de lien de dépendance, à un moment donné, est une question de fait.
Présomption	(3) Les personnes liées entre elles, au sens de l'article 4, sont réputées avoir un lien de dépendance tant qu'elles sont ainsi liées.
	4. (1) Paragraph 5(3)(e) of the Act is replaced by the following:
	(e) from time to time make or cause to be made such inspection or investigation of estates or other matters to which this Act applies, including the conduct of a trustee or a trustee acting as a receiver or interim receiver, as the Superintendent may deem expedient and for the purpose of the inspection or investigation the Superintendent or any person appointed by the Superintendent for the purpose shall have access to and the right to examine and make copies of all books, records, data, including data in electronic form, documents and papers pertaining or relating to any estate or other matter to which this Act applies;
	(2) Subsection 5(4) of the Act is amended by striking out the word ``and'' at the end of paragraph (b) and by adding the following after paragraph (c):
	(d) issue directives governing the criteria to be applied by the Superintendent in determining whether a trustee licence is to be issued to a person and governing the qualifications and activities of trustees; and
	(e) issue directives prescribing the form of any document that is by this Act to be prescribed and the information to be given therein.
	5. (1) Subsection 6(1) of the Act is replaced by the following:
Outside investigations	6. (1) The Superintendent may engage such persons as the Superintendent may deem advisable to conduct any inspection or investigation or to take any other necessary action outside of the office of the Superintendent, and the cost and expenses thereof shall, when certified by the Superintendent, be payable out of the appropriation for the office of the Superintendent.
	(2) Subsection 6(3) of the Act is replaced by the following:
Superintenden t may examine records and documents	(3) The Superintendent, or anyone duly authorized in writing by or on behalf of the Superintendent, may with the leave of the court granted on an ex parte application examine the books, records, documents and deposit accounts of a trustee or any other person designated in the order granting that leave for the purpose of tracing or discovering the property or funds of an estate when there are reasonable grounds to believe or suspect that the property or funds of an estate have not been properly disclosed or dealt with and for that purpose may under a warrant from the court enter on and search any premises.
Court order re payments from accounts	(4) Where the Superintendent, on ex parte application, satisfies the court that it is necessary and in the public interest to do so, the court may issue an order directing a deposit-taking institution that holds a deposit account of a trustee or such other person as is designated in the order not to make payments out of the account until such time as the court otherwise directs.
1992, c. 27, s. 9(1)	6. Subsection 13(2) of the Act is replaced by the following:
Conditions of eligibility	(2) The Superintendent, after such investigation concerning an applicant for a licence to act as a trustee as the Superintendent considers necessary, may issue the licence if the Superintendent is satisfied, having regard to the criteria referred to in paragraph 5(4)(d), that the applicant is qualified to obtain the licence.
Non-eligibilit y	(3) The Superintendent may refuse to issue a licence to an applicant who is insolvent or has been convicted of an indictable offence.
	7. Section 13.1 of the Act is amended by striking out the word ``and'' at the end of paragraph (a), by adding the word ``and'' at the end of paragraph (b) and by adding the following after paragraph (b):
	(c) be subject to such conditions and limitations as the Superintendent considers appropriate and may specify therein.
1992, c. 27, s. 9(1)	8. Subsections 13.2(3) and (4) of the Act are replaced by the following:
When licence invalid	(3) A licence ceases to be valid on the failure of the trustee to pay a fee in accordance with subsection (2) or if the trustee becomes bankrupt.
Superintenden t may reinstate licence	(4) Where a licence has ceased to be valid by reason of
	(a) failure to pay fees, the Superintendent may reinstate it where the trustee pays the outstanding fees together with a prescribed penalty amount and provides a reasonable written explanation of the failure to pay them in accordance with subsection (2); or
	(b) the trustee becoming bankrupt, the Superintendent may, on written representations made by the trustee, reinstate the licence subject to such conditions and limitations as the Superintendent considers appropriate and may specify therein.
Suspension or cancellation	(5) A licence may be suspended or cancelled by the Superintendent if the trustee
	(a) is convicted of an indictable offence; or
	(b) has failed to comply with any of the conditions or limitations to which the licence is subject.
Notice of intended decision	(6) Notice of an intended decision under subsection (5) shall be in writing setting out the Superintendent's reasons therefor and shall be sent to the trustee at least ten days before the decision takes effect.
Non-applicati on of procedure	(7) Section 14.02 does not apply in respect of a suspension or cancellation of a licence under subsection (5).
1992, c. 27, s. 9(1)	9. Subparagraph 13.3(1)(a)(iv) of the French version of the Act is replaced by the following:
	(iv) vérificateur, comptable ou conseiller juridique du débiteur ou leur employé ou associé;
1992, c. 27, s. 9(1)	10. Section 13.4 of the Act is replaced by the following:
Trustee may act for secured creditor on certain conditions	13.4 (1) No trustee shall, while acting as the trustee of an estate, act for or assist a secured creditor of the estate to assert any claim against the estate or to realize or otherwise deal with the security that the secured creditor holds, unless the trustee
	(a) has obtained a written opinion of a solicitor who does not act for the secured creditor that the security is valid and enforceable as against the estate; and
	(b) has notified the Superintendent and the creditors or the inspectors
	(i) that the trustee is acting for the secured creditor,
	(ii) of the basis of any remuneration from the secured creditor, and
	(iii) of the opinion referred to in paragraph (a).
Trustee to provide opinion	(2) Within two days after receiving a request therefor, a trustee shall provide the Superintendent with a copy of the opinion referred to in paragraph (1)(a) and shall also provide a copy to each creditor who has made a request therefor.
	11. The Act is amended by adding the following after section 13.5:
Persons disqualified from working for trustee	13.6 A trustee shall not engage the services of a person whose trustee licence has been cancelled under subsection 13.2(5) or 14.01(1).
1992, c. 27, s. 9(1)	12. Subsections 14.01(1) and (2) of the Act are replaced by the following:
Decision affecting licence	14.01 (1) Where, after making or causing to be made an investigation into the conduct of a trustee, it appears to the Superintendent that
	(a) a trustee has not properly performed the duties of a trustee or has been guilty of any improper management of an estate,
	(b) a trustee has not fully complied with this Act, the General Rules, directives of the Superintendent or any law with regard to the proper administration of any estate, or
	(c) it is in the public interest to do so,
	the Superintendent may
	(d) cancel or suspend the licence of the trustee;
	(e) place such conditions or limitations on the licence as the Superintendent considers appropriate including a requirement that the trustee successfully take an exam or enrol in a proficiency course, or
	(f) require the trustee to make restitution to the estate of such amount of money as the estate has been deprived of as a result of the trustee's conduct.

Bill C-109

BILL C-109

BANKRUPTCY AND INSOLVENCY ACT