Bill C-109

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First Reading

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	General
Application of other provisions	254. (1) All of the provisions of this Act apply, with such modifications as the circumstances require, in respect of claims by customers for securities and customer name securities as if customers were creditors in respect of such claims.
Application of transaction provisions	(2) Sections 91 to 101 apply, with such modifications as the circumstances require, in respect of transactions of a customer with or through a securities firm relating to securities.
Non-applicati on	(3) This Part does not apply to proceedings under Part III.
Conflicts	255. If a conflict arises between the application of the provisions of this Part and the other provisions of this Act, the provisions of this Part prevail.
Petitions re securities firm	256. (1) In addition to any creditor who may petition in accordance with sections 43 to 45, a petition for a receiving order against a securities firm may be filed by
	(a) a securities commission established under an enactment of a province if the securities firm has committed an act of bankruptcy referred to in section 42 or subsection (2) of this section within the six months before the filing of the petition and while the securities firm was licensed or registered by the securities commission to carry on business in Canada;
	(b) a securities exchange recognized by a provincial securities commission, if the securities firm has committed an act of bankruptcy referred to in section 42 or subsection (2) of this section within the six months before the filing of the petition and while the securities firm was a member of the securities exchange;
	(c) a customer compensation body, if the securities firm has committed an act of bankruptcy referred to in section 42 or subsection (2) of this section within the six months before the filing of the petition and while the securities firm had customers whose securities accounts were protected, in whole or in part, by the customer compensation body; and
	(d) a person who, in respect of property of a securities firm, is a receiver, receiver manager, liquidator or other person appointed under a federal or provincial enactment relating to securities that provides for the appointment of such other person, where the securities firm has committed an act of bankruptcy referred in to section 42 within the six months before the filing of the petition.
Interpretation	(2) For the purposes of paragraphs (1)(a) to (c), the suspension of a securities firm by
	(a) a securities commission referred to in paragraph (1)(a), or
	(b) a securities exchange referred to in paragraph (1)(b)
	constitutes an act of bankruptcy if the suspension is due to the failure of the firm to meet capital adequacy requirements.
Statement of customer account	257. The trustee of the estate of a securities firm shall send to customers a statement of customer accounts with the firm together with the notice under subsection 102(1).
Deferred customers	258. (1) Where the trustee is of the opinion that a customer should be treated as a deferred customer, the trustee shall apply to the court for a ruling on the matter and shall send the customer a notice of the trustee's opinion and the trustee's reasons therefor and a copy of the application, and the court may, on such notice as it considers appropriate, make such order as it considers appropriate in the circumstances.
Application by customer compensation body	(2) Where securities accounts of customers are protected by a customer compensation body, the customer compensation body may apply to the court for a ruling as to whether a customer should be treated as a deferred customer and, in the case of such an application,
	(a) the customer compensation body shall send the customer a copy of the application together with a statement setting out the reasons why the customer should be so treated; and
	(b) the court may make such order as it considers appropriate in the circumstances.
Trustee powers	259. The trustee may, in respect of a bankruptcy under this Part, without the permission of inspectors until inspectors are appointed and thereafter with the permission of inspectors,
	(a) exercise a power of attorney in respect of and transfer any security vested in the trustee;
	(b) sell securities, other than customer name securities;
	(c) purchase securities;
	(d) discharge any security interests on securities vested in the trustee;
	(e) complete open contractual commitments;
	(f) maintain customers' securities accounts and meet margin calls;
	(g) distribute cash and securities to customers;
	(h) transfer securities accounts to another securities firm, to the extent practicable, comply with customer requests regarding the disposal of open contractual commitments and the transfer of open contractual commitments to another securities firm, and enter into agreements to indemnify the other securities firm against shortages of cash or securities in transferred accounts;
	(i) liquidate any securities account without notice; and
	(j) sell, without tender, assets of the securities firm essential to the carrying on of its business.
Determination of customer name securities	260. The trustee shall
	(a) determine which of the securities in customers' securities accounts are to be dealt with as customer name securities and those that are not to be dealt with as such; and
	(b) advise customers with securities determined to be customer name securities of the determination as soon as possible thereafter.
	Distribution of Estate
Vesting of securities, etc., in trustee	261. (1) Where a securities firm becomes bankrupt, securities owned by the securities firm and securities and cash received, acquired or held by or for the account of the securities firm or a customer, other than customer name securities, vest in the trustee.
Establishment of a customer pool fund and a general fund	(2) Where property vests in a trustee under subsection (1), the trustee shall establish
	(a) a fund, in this Part called the ``customer pool fund'', including therein
	(i) securities held for the account of customers, other than customer name securities, together with securities obtained through settlement of securities transactions after the date of the bankruptcy and securities held for the securities firm's own account, and
	(ii) cash in customers' securities accounts or obtained through settlement of securities transactions after the bankruptcy, including any dividend, interest or other income obtained after the bankruptcy in respect of securities in the customer pool fund; and
	(b) a fund, in this Part called the ``general fund'', including therein all of the remaining vested property.
Allocation and distribution of cash and securities in customer pool fund	262. (1) Cash and securities in the customer pool fund shall be allocated in the following priority:
	(a) for costs of administration referred to in paragraph 136(1)(b), to the extent that sufficient funds are not available in the general fund to pay such costs;
	(b) to customers, other than deferred customers, in proportion to their net equity; and
	(c) to the general fund.
Distribution	(2) To the extent that securities of a particular type are available in the customer pool fund, the trustee shall distribute them to customers with claims to such securities, in proportion to their claims to such securities, up to the appropriate portion of their net equity.
Allocation of property in the general fund	(3) Property in the general fund shall be allocated in the following priority:
	(a) to preferred creditors in the order set out in subsection 136(1);
	(b) rateably
	(i) to customers, other than deferred customers, having claims for net equity remaining after distribution of property from the customer pool fund and property provided by a customer compensation body, where applicable, in proportion to claims for net equity remaining,
	(ii) where applicable, to a customer compensation body to the extent that it paid or compensated customers in respect of their net equity, and
	(iii) to creditors in proportion to the values of their claims;
	(c) rateably to creditors referred to in section 137; and
	(d) to deferred customers, in proportion to their claims for net equity.
Delivery of customer name securities	263. (1) Where a customer is not indebted to a securities firm, the trustee shall deliver to the customer the customer name securities that belong to the customer.
Right to reclaim	(2) The trustee may, where it is in the interests of the estate, permit a customer indebted to the securities firm or who has not paid in full for customer name securities to reclaim the customer name securities on payment of the indebtedness or on payment in full for the customer name securities, as the case may be.
Trustee to consult customer compensation body	264. Where the accounts of customers of a securities firm are protected, in whole or in part, by a customer compensation body, the trustee shall consult the customer compensation body on the administration of the bankruptcy, and the customer compensation body may designate an inspector to act on its behalf.
Late claims	265. A customer may prove a claim after the distribution of cash and securities in the customer pool fund and is entitled to receive cash and securities in the hands of the trustee at the time the claim is proven up to the appropriate portion of the customer's net equity before further distribution is made to other customers, but no such claim shall affect the previous distribution of the customer pool fund or the general fund.
	Accounting of Trustee
Statement of trustee required	266. A trustee shall prepare
	(a) a statement indicating the distribution of securities among customers who have proved their claims or such other report relating to the distribution of securities as the court may direct; and
	(b) a final statement of receipts and disbursements containing a complete account of cash and securities relating to securities accounts of customers obtained by the trustee, indicating those that were determined to be customer name securities and those that were placed in the customer pool fund.
	PART XIII
	INTERNATIONAL INSOLVENCIES
	Interpretation
Definitions	267. In this Part,
``debtor'' « débiteur »	``debtor'' means an insolvent person who has property in Canada, a bankrupt who has property in Canada or a person who has the status of a bankrupt under foreign law in a foreign proceeding and has property in Canada;
``foreign proceeding'' « procédures intentées à l'étranger »	``foreign proceeding'' means a judicial or administrative proceeding commenced outside Canada in respect of a debtor, under a law relating to bankruptcy or insolvency and dealing with the collective interests of creditors generally;
``foreign representative '' « représentant étranger »	``foreign representative'' means a person, other than a debtor, holding office under the law of a jurisdiction outside Canada who, irrespective of the person's designation, is assigned, under the laws of the jurisdiction outside Canada, functions in connection with a foreign proceeding that are similar to those performed by a trustee, liquidator, administrator or receiver appointed by the court.
	General
Presumption of insolvency	268. (1) For the purposes of this Part, where a bankruptcy, insolvency or reorganization or like order has been made in respect of a debtor in a foreign proceeding, a certified or exemplified copy of the order is, in the absence of evidence to the contrary, proof that the debtor is insolvent and proof of the appointment of the foreign representative made by the order.
Limitation on trustee's authority	(2) Where a foreign proceeding has been commenced and a receiving order or assignment is made under this Act in respect of a debtor, the court may, on application and on such terms as it considers appropriate, limit the property to which the authority of the trustee extends to the property of the debtor situated in Canada and to such property of the debtor outside Canada as the court considers can be effectively administered by the trustee.
Powers of court	(3) The court may, in respect of a debtor, make such orders and grant such relief as it considers appropriate to facilitate, approve or implement arrangements that will result in a co-ordination of proceedings under this Act with any foreign proceeding.
Terms and conditions of orders	(4) An order of the court under this Part may be made on such terms and conditions as the court considers appropriate in the circumstances.
Court not prevented from applying certain rules	(5) Nothing in this Part prevents the court, on the application of a foreign representative or any other interested person, from applying such legal or equitable rules governing the recognition of foreign insolvency orders and assistance to foreign representatives as are not inconsistent with the provisions of this Act.
Court not compelled to give effect to certain orders	(6) Nothing in this Part requires the court to make any order that is not in compliance with the laws of Canada or to enforce any order made by a foreign court.
Foreign stays	269. A stay of proceedings that operates against creditors of a debtor in a foreign proceeding does not apply in respect of creditors who reside or carry on business in Canada with respect to property in Canada unless the stay of proceedings is the result of proceedings taken in Canada.
Commenceme nt or continuation of proceedings	270. A foreign representative may commence and continue proceedings pursuant to sections 43 and 46 to 47.2 and subsections 50(1) and 50.4(1) in respect of a debtor as if the foreign representative were a creditor, trustee, liquidator or receiver of property of the debtor, or the debtor, as the case may be.
Court may seek assistance from foreign tribunal	271. (1) The court may seek the aid and assistance of a court, tribunal or other authority in a foreign proceeding by order or written request or otherwise as the court considers appropriate.
Applications for stays	(2) On application by a foreign representative in respect of a foreign proceeding commenced for the purpose of effecting a composition, an extension of time or a scheme of arrangement in respect of a debtor or in respect of the bankruptcy of a debtor, the court may grant a stay of proceedings against the debtor or the debtor's property in Canada on such terms and for such period as is consistent with the relief provided for under sections 69 to 69.5 in respect of a debtor in Canada who files a notice of intention or a proposal or who becomes bankrupt in Canada, as the case may be.
Powers of court	(3) On application by a foreign representative in respect of a debtor, the court may, where it is satisfied that it is necessary for the protection of the debtor's estate or the interests of a creditor or creditors,
	(a) appoint an interim receiver of all or any part of the debtor's property in Canada, for such term as the court considers appropriate; and
	(b) direct the interim receiver to do all or any of the following:
	(i) take conservatory measures and summarily dispose of property that is perishable or likely to depreciate rapidly in value,
	(ii) take possession of all or part of the debtor's property mentioned in the appointment and exercise such control over the property and over the debtor's business as the court considers appropriate, and
	(iii) take such other action as the court considers appropriate.
Application of fees and expenses provision	(4) Section 47.2 applies, with such modifications as the circumstances require, in respect of an interim receiver appointed under subsection (3).

Bill C-109

General

Distribution of Estate

Accounting of Trustee

PART XIII

INTERNATIONAL INSOLVENCIES

Interpretation

General