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Bill C-231

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2nd Session, 35th Parliament,
45 Elizabeth II, 1996-97

The House of Commons of Canada

BILL C-231

An Act to amend the Bankruptcy Act (priority of claims)

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

      Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

1. Subsection 136(1) of the Bankruptcy Act is replaced by the following:

Priority of claims

136. (1) Notwithstanding any law or any other provision in this or any other federal or provincial Act, the proceeds realized from the property of a bankrupt shall be applied in priority of payment as follows:

    (a) up to a limit of nine thousand dollars per person, contributions paid or deemed to have been paid by the bankrupt or by an employee or a travelling salesman into a retirement plan or any plan established for the benefit of the employee or travelling salesman and managed or kept by the bankrupt, as well as wages, salaries, commissions or compensation owed to the employee or travelling salesman for services rendered to the bankrupt during the six months immediately preceding the bankruptcy, and for the purposes of this paragraph commissions payable when goods are shipped, delivered or paid for, if shipped, delivered or paid for within the six month period, shall be deemed to have been earned therein;

    (b) the claims of secured creditors;

    (c) in the case of a deceased bankrupt, the reasonable funeral and testamentary expenses incurred by the legal personal representative of the deceased bankrupt;

    (d) the costs of administration, in the following order,

      (i) the expenses and fees of the trustee, and

      (ii) legal costs;

    (e) the levy payable under section 147;

    (f) municipal taxes assessed or levied against the bankrupt, within the two years immediately preceding his bankruptcy, that do not constitute a preferential lien or charge against the real property of the bankrupt, but not exceeding the value of the interest of the bankrupt in the property in respect of which the taxes were imposed as declared by the trustee;

    (g) the landlord for arrears of rent for a period of three months immediately preceding the bankruptcy and accelerated rent for a period not exceeding three months following the bankruptcy if entitled thereto under the lease, but the total amount so payable shall not exceed the realization from the property on the premises under lease, and any payment made on account of accelerated rent shall be credited against the amount payable by the trustee for occupation rent;

    (h) the fees and costs referred to in subsection 70(2) but only to the extent of the realization from the property exigible thereunder;

    (i) in the case of a bankrupt who became bankrupt before the prescribed date, all indebtedness of the bankrupt under any Act respecting workers' compensation, under any Act respecting unemployment insurance or under any provision of the Income Tax Act creating an obligation to pay to Her Majesty amounts that have been deducted or withheld, rateably;

    (j) claims resulting from injuries to employees of the bankrupt in respect of which the provisions of any Act respecting workers' compensation do not apply, but only to the extent of moneys received from persons or companies guaranteeing the bankrupt against damages resulting from those injuries; and

    (k) in the case of a bankrupt who became bankrupt before the prescribed date, claims of the Crown not previously mentioned in paragraphs (a) to (j) , in right of Canada or any province, rateably notwithstanding any statutory preference to the contrary.