Bill C-15

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Royal Assent

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	155. Section 95 of the Act is renumbered as subsection 95(1) and is amended by adding the following:
Interest from commence- ment of winding-up	(2) Any surplus referred to in subsection (1) shall first be applied in payment of interest from the commencement of the winding-up at the rate of five per cent per annum on all claims proved in the winding-up and according to their priority.
	156. Subsection 100(2) of the Act is replaced by the following:
Presumption if within thirty days	(2) Where the sale, deposit, pledge or transfer under subsection (1) is made within thirty days next before the commencement of the winding-up of the company under this Act, or at any time afterwards, it shall be presumed to have been so made in contemplation of insolvency, whether or not it was made voluntarily or under pressure and evidence of pressure shall not be admissible to support the transaction.
	157. The Act is amended by adding the following after section 102:
Inquiry into dividends and redemptions of shares	102.1 (1) Where a company that is being wound up under this Act has, within twelve months preceding the commencement of the winding-up, paid a dividend in respect of any share of the company, other than a stock dividend, or redeemed or purchased for cancellation any of the shares of the capital stock of the company, the court may, on the application of the liquidator, inquire into whether the dividend was paid or the shares redeemed or purchased for cancellation at a time when the company was insolvent, or whether the payment of the dividend or the redemption or purchase for cancellation of its shares rendered the company insolvent.
Judgment against directors	(2) The court may give judgment to the liquidator against the directors of the company, jointly and severally, in the amount of the dividend or redemption or purchase price, with interest thereon, as has not been paid to the company where the court finds that
	(a) the transaction occurred at a time when the company was insolvent or the transaction rendered the company insolvent; and
	(b) the directors did not have reasonable grounds to believe that the transaction was occurring at a time when the company was solvent or the transaction would not render the company insolvent.
Criteria	(3) In making a determination under paragraph (2)(b), the court shall consider whether the directors acted as prudent and diligent persons would have acted in the same circumstances and whether the directors in good faith relied on
	(a) financial or other statements of the company represented to them by officers of the company or the auditor of the company, as the case may be, or by written reports of the auditor to fairly reflect the financial condition of the company; or
	(b) a report relating to the company's affairs prepared pursuant to a contract with the company by a lawyer, notary, an accountant, engineer or appraiser or other person whose profession gave credibility to the statements made in the report.
Judgment against shareholders	(4) Where a transaction referred to in subsection (1) has occurred and the court makes a finding referred to in paragraph (2)(a), the court may give judgment to the liquidator against a shareholder who is related to one or more directors or to the company or who is a director not liable by reason of paragraph (2)(b) or subsection (5), in the amount of the dividend or redemption or purchase price referred to in subsection (1) and the interest thereon, as was received by the shareholder and not repaid to the company.
Directors exonerated by law	(5) A judgment pursuant to subsection (2) shall not be entered against or be binding on a director who had, in accordance with any applicable law governing the operation of the company, protested against the payment of the dividend or the redemption or purchase for cancellation of the shares of the capital stock of the company and had thereby exonerated himself or herself under that law from any liability therefor.
Directors' right to recover	(6) Nothing in this section shall be construed to affect any right, under any applicable law governing the operation of the company, of the directors to recover from a shareholder the whole or any part of any dividend, or any redemption or purchase price, made or paid to the shareholder when the company was insolvent or that rendered the company insolvent.
Onus	(7) For the purposes of an inquiry under this section, the onus of proving
	(a) that the company was not insolvent lies on the directors and the shareholders of the company; and
	(b) in the case of the directors, that there were reasonable grounds to believe that the company was not insolvent when a dividend was paid or shares were redeemed or purchased for cancellation or that the payment of a dividend or a redemption of shares did not render the company insolvent lies on the directors.
	158. Section 144 of the Act is repealed.
	159. Section 150 of the Act is repealed.
	160. Part II of the Act is repealed.
R.S., c. 18 (3rd Supp.), ss. 45, 46, c. 21 (3rd Supp.), s. 55(1); 1991, c. 47, ss. 747-752	161. Part III of the Act is replaced by the following:
	PART III
	RESTRUCTURING OF INSURANCE COMPANIES
Definitions	159. In this Part,
``company'' « société »	``company'' means an insurance company;
``foreign company'' Version anglaise seulement	``foreign company'' means a foreign insurance company;
``policy'' « police »	``policy'' includes, without limiting the generality of its meaning, ``policy'' as defined in subsection 2(1) of the Insurance Companies Act.
Application of Part	159.1 (1) This Part applies only to insurance companies.
Transitional	(2) This Part applies only in respect of applications for winding-up orders that are made after the date of coming into force of this subsection, and applications for winding-up orders that were made on or before that date shall be dealt with in accordance with the provisions of this Part as they read immediately before that date.
Protection of asset orders	160. The court may, at any time after an application for a winding-up order is made, on the application of the applicant for the winding-up order or of the liquidator, make such order as the court considers appropriate for the protection of the assets of the estate of the company.
Order of priority for payment of claims	161. (1) Subject to this Act, claims shall be paid in the following order of priority:
	(a) costs of liquidation and the mortgage insurance and special insurance portions of the expenses described in paragraph 686(1)(a) of the Insurance Companies Act;
	(b) claims of preferred creditors, specified in section 72;
	(c) claims of policyholders of the company ranking as follows:
	(i) in the case of policies of life insurance and policies of accident and sickness insurance,
	(A) if transfer or reinsurance is not effected as provided in section 162, claims that have arisen under those policies of the company, in accordance with the terms thereof, prior to the date of the filing of the statement of the liquidator in the Office of the Superintendent as provided in subsection 168(1), less any amount previously advanced by the company on the security of those policies, and claims to the value of those policies computed as provided in section 163, or
	(B) if transfer or reinsurance is effected as provided in section 162, of all or any of the policies of the company,
	(I) in respect of those policies of the company for which transfer or reinsurance is effected, the consideration payable for the transfer or reinsurance of the policies of the company, and
	(II) in respect of those policies of the company for which transfer or reinsurance is not effected, claims that have arisen under those policies, in accordance with the terms thereof, prior to the date of the filing of the statement of the liquidator in the Office of the Superintendent as provided in subsection 168(1), less any amount previously advanced by the company on the security of those policies and claims to the value of those policies computed as provided in section 163, and
	(ii) in the case of policies of insurance other than policies of life insurance and policies of accident and sickness insurance,
	(A) firstly, claims that have arisen under those policies of the company by reason of the occurrence of the event insured against, in accordance with the terms thereof, prior to the date of the filing of the statement of the liquidator in the Office of the Superintendent as provided in subsection 168(1), less any amount previously advanced by the company on the security of those policies, and
	(B) secondly, the claims of such policyholders to the value of those policies computed as provided in section 163 or, where transfer or reinsurance is effected as provided in section 162 of all or any of the policies of the company, the consideration payable for the transfer or reinsurance of the policies of the company or, as the case may be, claims that have arisen under those policies of the company by reason of the cancellation of such policies, in accordance with the terms thereof, prior to the date of the filing of the statement of the liquidator in the Office of the Superintendent as provided in subsection 168(1), less any amount previously advanced by the company on the security of the policies so cancelled; and
	(d) expenses described in paragraph 686(1)(a) of the Insurance Companies Act that were incurred by the Superintendent in respect of the company and assessed against and paid by other companies pursuant to that Act, and interest in respect thereof at such rate as is specified by the Superintendent.
Claims re life companies	(2) No payment on a claim by
	(a) a creditor of a company insuring risks under policies referred to in subparagraph 161(1)(c)(i), or
	(b) a policyholder of the company claiming a minimum amount that the company has agreed to pay under a policy or in respect of an amount for which a segregated fund is maintained pursuant to section 451, 542 or 593 of the Insurance Companies Act for a deficiency if the assets of the fund are insufficient to satisfy such a claim
	shall be made unless the assets of the company are sufficient to pay the claims referred to in subsection (1) and all of the terms of the policies of policyholders referred to in that subsection have been satisfied in full including any interest component of those policies accruing to the date of payment of the claim.
Interest component	(3) For the purposes of subsection (2), the interest component of the claims of policyholders referred to in subparagraph 161(1)(c)(i) shall be treated as part of the claim that has arisen under the policy in accordance with the terms thereof.
Claims re other companies	(4) No payment on a claim by a creditor of a company insuring risks under policies referred to in subparagraph 161(1)(c)(ii) shall be made unless the assets of the company are sufficient to pay the claims referred to in subsection (1).
Subordinated debt holders	(5) Holders of subordinated indebtedness, within the meaning of subsection 2(1) of the Insurance Companies Act, of a company and other indebtedness that by their terms rank equally or are subordinate to such indebtedness are entitled to receive payment on their claims only if the assets of the company are sufficient to pay the claims referred to in subsections (2) and (4).
Priority of claims of policyholders in foreign companies	(6) Notwithstanding anything in this Part, but subject to subsection (8), if a company is a foreign company, no claim, after the payment of costs of liquidation and the mortgage insurance and special insurance portions of the expenses described in paragraph 686(1)(a) of the Insurance Companies Act, other than claims of
	(a) the preferred creditors referred to in paragraph (1)(b),
	(b) holders of policies of a class of insurance specified in the order of the Superintendent under Part XIII of the Insurance Companies Act, and
	(c) expenses described in paragraph 686(1)(a) of the Insurance Companies Act, that were incurred by the Superintendent in respect of the company and assessed against and paid by other companies pursuant to that Act, and interest in respect thereof at such rate as is specified by the Superintendent,
	ranks against the assets, and the balance, if any, of the assets remaining after the claims are paid shall be applied by the liquidator in satisfaction of the claims of any other creditors of the insurance business in Canada of the foreign company in accordance with subsections (2) and (4), but not including policyholders and creditors of the foreign company in respect of a class of insurance not specified in that order.
Definitions	(7) In subsection (8),
``assets in Canada'' « actif au Canada »	``assets in Canada'' means assets in Canada, within the meaning of subsection 2(1) of the Insurance Companies Act, of a foreign company;
``assets under the control of the chief agent'' « actif sous le contrôle de l'agent principal »	``assets under the control of the chief agent'' means the other assets of the foreign company that are held in Canada under the control of its chief agent, within the meaning of section 571 of the Insurance Companies Act, including all amounts received or receivable in respect of its insurance business in Canada.
Other foreign company priority provisions	(8) Where a foreign company is authorized to insure in Canada
	(a) risks falling within the class of life insurance; and
	(b) risks falling within some other class of insurance, other than accident and sickness insurance, accident insurance, personal accident insurance and sickness insurance,
	(i) in the case of
	(A) the costs of liquidation, the mortgage insurance and special insurance portions of the expenses described in paragraph 686(1)(a) of the Insurance Companies Act, and
	(B) the claims of preferred creditors,
	the costs, portions of expenses and claims shall be paid from the assets in Canada, maintained for the policies referred to in subparagraphs (ii) and (iii), together with the assets under the control of the chief agent, in such proportion as the court considers fair and equitable,
	(ii) in the case of policies falling within the classes of life insurance, accident and sickness insurance, accident insurance, personal accident insurance and sickness insurance, claims shall be paid
	(A) firstly, from the assets in Canada maintained for those policies,
	(B) secondly, from the assets under the control of the chief agent in such proportion as the court considers fair and equitable, and
	(C) thirdly, from the balance, if any, of any assets referred to in clauses (iii)(A) and (B) remaining after the claims under subparagraphs (i) and (iii) are paid,
	(iii) in the case of policies falling within some other class of insurance, claims shall be paid
	(A) firstly, from the assets in Canada maintained for those policies,
	(B) secondly, from the assets under the control of the chief agent in such proportion as the court considers fair and equitable, and
	(C) thirdly, from the balance, if any, of any assets referred to in clauses (ii)(A) and (B) remaining after the claims under subparagraphs (i) and (ii) are paid, and
	(iv) in the case of expenses described in paragraph 686(1)(a) of the Insurance Companies Act that were incurred by the Superintendent in respect of the foreign company and assessed against and paid by other companies pursuant to that Act, the expenses shall be paid from the balance, if any, of the assets referred to in clauses (ii)(A) and (B) and (iii)(A) and (B) remaining after the claims under subparagraphs (i), (ii) and (iii) are paid.
Priority of costs, etc.	(9) For greater certainty, the costs, claims and expenses referred to in subsections (6) and (8) shall be paid in accordance with the priorities set out in subsection 161(1).
Release of balance of assets to company	(10) The liquidator may, with the approval of the court, release to the foreign company any balance of the assets remaining after payment of claims in the order of priority prescribed by subsection (9).
Payment of liabilities	(11) Notwithstanding anything in this section, the liquidator may, in carrying on the business of the company pursuant to paragraph 35(1)(b), with the approval of the court, pay liabilities relating to the portion of the business being carried on, where the payment is considered desirable for the retention of goodwill and enhancement of value to the estate of the company.
Transfer and reinsurance of policies by liquidator	162. (1) The liquidator may, with the approval of the court and without the consent of the policyholders, arrange for the transfer or reinsurance of
	(a) all or a portion of the policies of the company, in the case of a company other than a foreign company, or
	(b) all or a portion of the policies in Canada of a foreign company

Bill C-15

PART III