Bill C-5

If you have any questions or comments regarding the accessibility of this publication, please contact us at accessible@parl.gc.ca.

PDF

	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 held by or for the account of the securities firm or a customer, other than customer name securities, vest in the trustee.
Establish- ment of a customer pool fund and a general fund	(2) Where a securities firm becomes bankrupt and property vests in a trustee under subsection (1) or under other provisions of this Act, the trustee shall establish
	(a) a fund, in this Part called the ``customer pool fund'', including therein
	(i) securities, including those obtained after the date of the bankruptcy, but excluding customer name securities and excluding eligible financial contracts to which the firm is a party, that are held by or for the account of the firm
	(A) for a securities account of a customer,
	(B) for an account of a person who has entered into an eligible financial contract with the firm and has deposited the securities with the firm to assure the performance of the person's obligations under the contract, or
	(C) for the firm's own account,
	(ii) cash, including cash obtained after the date of the bankruptcy, and including
	(A) dividends, interest and other income in respect of securities referred to in subparagraph (i),
	(B) proceeds of disposal of securities referred to in subparagraph (i), and
	(C) proceeds of policies of insurance covering claims of customers to securities referred to in subparagraph (i),
	that is held by or for the account of the firm
	(D) for a securities account of a customer,
	(E) for an account of a person who has entered into an eligible financial contract with the firm and has deposited the cash with the firm to assure the performance of the person's obligations under the contract, or
	(F) for the firm's own securities account, and
	(iii) any investments of the securities firm in its subsidiaries that are not referred to in subparagraph (i) or (ii); 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.
Where property deposited with securities firm under an EFC	(1.1) Where
	(a) a person has, under the terms of an eligible financial contract with the securities firm, deposited property with the firm to assure the performance of the person's obligations under the contract, and
	(b) that property is included in the customer pool fund pursuant to paragraph 261(2)(a),
	that person shall share in the distribution of the customer pool fund as if the person were a customer of the firm with a claim for net equity equal to the net value of the property deposited that would have been returnable to the person after deducting any amount owing by the person under the contract.
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.
Compensa- tion in kind	(2.1) Subject to subsection (2), the trustee may satisfy all or part of a customer's claim to securities of a particular type by delivering to the customer securities of that type to which the customer was entitled at the date of bankruptcy. For greater certainty, the trustee may, for that purpose, exercise the trustee's power to purchase securities in accordance with section 259.
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.
Where customer indebted to securities firm	(2) Where a customer to whom customer name securities belong and who is indebted to the securities firm on account of customer name securities not fully paid for, or on another account, discharges their indebtedness in full, the trustee shall deliver to that customer the customer name securities that belong to the customer.
Where customer indebted to securities firm	(3) Where a customer to whom customer name securities belong and who is indebted to the securities firm on account of customer name securities not fully paid for, or on another account, does not discharge their indebtedness in full, the trustee may, on notice to the customer, sell sufficient customer name securities to discharge the indebtedness, which securities are thereupon free of any lien, right, title or interest of the customer. Where the trustee so discharges the customer's indebtedness, the trustee shall deliver any remaining customer name securities to the customer.
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. In addition to any other statement or report required to be prepared under this Act, a trustee shall prepare
	(a) a statement indicating
	(i) the distribution of property in the customer pool fund among customers who have proved their claims, and
	(ii) the disposal of customer name securities; or
	(b) such other report relating to that distribution or disposal as the court may direct.
	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 representa- tive'' « représen- tant 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.
Commence- ment 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 a trustee as 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).
Examination may be authorized	(5) On application of a foreign representative in respect of a debtor, the court may authorize the examination under oath by the foreign representative of the debtor or of any person in relation to the debtor who, if the debtor were a bankrupt referred to in subsection 163(1), would be a person who could be examined under that subsection.
Foreign representa- tive status	272. An application to the court by a foreign representative under this Part does not submit the foreign representative to the jurisdiction of the court for any other purpose except with regard to the costs of the proceedings, but the court may make any order under this Part conditional on the compliance by the foreign representative with any other order of the court.
Foreign proceeding appeal	273. A foreign representative is not prevented from making an application to the court under this Part by reason only that proceedings by way of appeal or review have been taken in a foreign proceeding, and the court may, on an application where such proceedings have been taken, grant relief as if the proceedings had not been taken.
Credit for recovery in other jurisdictions	274. Where any receiving order, proposal or assignment is made in respect of a debtor under this Act,
	(a) the amount that a creditor receives or is entitled to receive outside Canada by way of a dividend in a foreign proceeding in respect of the debtor, and
	(b) the value of any property of the debtor that the creditor acquires outside Canada on account of a provable claim of the creditor or that the creditor acquires outside Canada by way of a transfer that, if it were subject to this Act, would be set aside or reviewed under sections 91 to 101.2,
	shall be taken into account in the distribution of dividends to creditors of the debtor in Canada as if they were a part of that distribution, and the creditor is not entitled to receive a dividend from the distribution in Canada until every other creditor who has a claim of equal rank in the order of priority established under this Act has received a dividend, the amount of which is the same percentage of that other creditor's claim as the aggregate of the amount referred to in paragraph (a) and the value referred to in paragraph (b) is of that creditor's claim.
Claims in foreign currency	275. A claim for a debt that is payable in a currency other than Canadian currency shall be converted to Canadian currency
	(a) in the case of a proposal in respect of an insolvent person and unless otherwise provided in the proposal, where a notice of intention was filed under subsection 50.4(1), as of the day the notice was filed or, if no notice was filed, as of the day the proposal was filed with the official receiver under subsection 62(1);
	(b) in the case of a proposal in respect of a bankrupt and unless otherwise provided in the proposal, as of the date of the bankruptcy; or
	(c) in the case of a bankruptcy, as of the date of the bankruptcy.
Application	(2) Part XII of the Act, as enacted by subsection (1), applies to bankruptcies in respect of which proceedings are commenced after that subsection comes into force.

Bill C-5

Distribution of Estate

Accounting of Trustee

PART XIII

INTERNATIONAL INSOLVENCIES

Interpretation

General