Bankruptcy and Insolvency Act (R.S.C., 1985, c. B-3)

Marginal note:Protection of trustee

80 If the trustee has seized or disposed of property in the possession or on the premises of a bankrupt without notice of any claim in respect of the property and after the seizure or disposal it is made to appear that the property, at the date of the bankruptcy, was not the property of the bankrupt or was subject to an unregistered security or charge, the trustee is not personally liable for any loss or damage arising from the seizure or disposal sustained by any person claiming the property, interest in property or, in the Province of Quebec, a right in property, or for the costs of proceedings taken to establish a claim to that property, interest or right, unless the court is of opinion that the trustee has been negligent with respect to the trustee’s duties in relation to the property.

Marginal note:Persons claiming property in possession of bankrupt

• 81 (1) Where a person claims any property, or interest therein, in the possession of a bankrupt at the time of the bankruptcy, he shall file with the trustee a proof of claim verified by affidavit giving the grounds on which the claim is based and sufficient particulars to enable the property to be identified.

• Marginal note:How claim disposed of

  (2) The trustee with whom a proof of claim is filed under subsection (1) shall within 15 days after the filing of the claim or within 15 days after the first meeting of creditors, whichever is the later, either admit the claim and deliver possession of the property to the claimant or send notice in the prescribed manner to the claimant that the claim is disputed, with the trustee’s reasons for disputing it, and, unless the claimant appeals the trustee’ decision to the court within 15 days after the sending of the notice of dispute, the claimant is deemed to have abandoned or relinquished all his or her right to or interest in the property to the trustee who may then sell or dispose of the property free of any right, title or interest of the claimant.

• Marginal note:Onus on claimant

  (3) The onus of establishing a claim to or in property under this section is on the claimant.

• Marginal note:Require proof of claim

  (4) The trustee may send notice in the prescribed manner to any person to prove his or her claim to or in property under this section, and, unless that person files with the trustee a proof of claim, in the prescribed form, within 15 days after the sending of the notice, the trustee may then, with the leave of the court, sell or dispose of the property free of any right, title or interest of that person.

• Marginal note:No other proceeding to be instituted

  (5) No proceedings shall be instituted to establish a claim to, or to recover any right or interest in, any property in the possession of a bankrupt at the time of the bankruptcy, except as provided in this section.

• Marginal note:Rights of others not extended

  (6) Nothing in this section shall be construed as extending the rights of any person other than the trustee.

Marginal note:Right of unpaid supplier to repossess goods

• 81.1 (1) Subject to this section, if a person (in this section referred to as the “supplier”) has sold to another person (in this section referred to as the “purchaser”) goods for use in relation to the purchaser’s business and delivered the goods to the purchaser or to the purchaser’s agent or mandatary, and the purchaser has not fully paid for the goods, the supplier may have access to and repossess the goods at the supplier’s own expense, and the purchaser, trustee or receiver, or the purchaser’s agent or mandatary, as the case may be, shall release the goods, if

  • (a) the supplier presents a written demand for repossession to the purchaser, trustee or receiver, in the prescribed form and containing the details of the transaction, within a period of 15 days after the day on which the purchaser became bankrupt or became a person who is subject to a receivership;

  • (b) the goods were delivered within 30 days before the day on which the purchaser became bankrupt or became a person who is subject to a receivership;

  • (c) at the time when the demand referred to in paragraph (a) is presented, the goods

    • (i) are in the possession of the purchaser, trustee or receiver,

    • (ii) are identifiable as the goods delivered by the supplier and not fully paid for,

    • (iii) are in the same state as they were on delivery,

    • (iv) have not been resold at arms’ length, and

    • (v) are not subject to any agreement for sale at arms’ length; and

  • (d) the purchaser, trustee or receiver does not, forthwith after the demand referred to in paragraph (a) is presented, pay to the supplier the entire balance owing.

• Marginal note:Where goods have been partly paid for

  (2) Where, at the time when the demand referred to in paragraph (1)(a) is presented, the goods have been partly paid for, the supplier’s right to repossess under subsection (1) shall be read as a right

  • (a) to repossess a portion of the goods proportional to the unpaid amount; or

  • (b) to repossess all of the goods on paying to the purchaser, trustee or receiver an amount equal to the partial payment previously made to the supplier.

• (3) [Repealed, 1999, c. 31, s. 23]

• Marginal note:If notice of intention or proposal was filed

  (4) If a notice of intention under section 50.4 or a proposal was filed in respect of the purchaser after the delivery of the goods to the purchaser and before the purchaser became bankrupt or became a person who is subject to a receivership, the 30-day period referred to in paragraph (1)(b) is the 30-day period before the filing of the notice of intention or, if there was no notice of intention, the filing of the proposal.

• Marginal note:Expiry of supplier’s right

  (5) A supplier’s right to repossess goods under this section expires if not exercised within the 15-day period referred to in paragraph (1)(a), unless the period is extended before its expiry by the trustee or receiver, or by the court.

• Marginal note:Ranks above other claims

  (6) Notwithstanding any other federal or provincial Act or law, a supplier’s right to repossess goods pursuant to this section ranks above every other claim or right against the purchaser in respect of those goods, other than the right of a bona fide subsequent purchaser of the goods for value without notice that the supplier had demanded repossession of the goods.

• Marginal note:Application to court for directions

  (7) The purchaser, trustee or receiver may apply to the court for directions in relation to any matter relating to this section, and the court shall give, in writing, such directions, if any, as it considers proper in the circumstances.

• Marginal note:Supplier may appeal to court

  (8) Where a supplier is aggrieved by any act, omission or decision of the purchaser, trustee or receiver, the supplier may apply to the court and the court may make such order as it considers proper in the circumstances.

• Marginal note:Other rights saved

  (9) Nothing in subsection (7) or (8) precludes a person from exercising any right that the person may have under subsection 34(1) or section 37.

• Marginal note:No payment

  (10) A supplier who repossesses goods pursuant to this section is not entitled to be paid for those goods.

• Marginal note:Provincial rights saved

  (11) Nothing in this section precludes a supplier from exercising any right that the supplier may have under the law of a province.

• Marginal note:Definitions

  (12) The following definitions apply in this section.

  person who is subject to a receivership

  person who is subject to a receivership means a person in respect of whom any property is under the possession or control of a receiver. (mise sous séquestre)

  receiver

  receiver means a receiver within the meaning of subsection 243(2). (séquestre)

Marginal note:Special right for farmers, fishermen and aquaculturists

• 81.2 (1) Where

  • (a) a farmer has sold and delivered products of agriculture, a fisherman has sold and delivered products of the sea, lakes and rivers, or an aquaculturist has sold and delivered products of aquaculture, to another person (in this section referred to as the “purchaser”) for use in relation to the purchaser’s business,

  • (b) the products were delivered to the purchaser within the fifteen day period preceding

    • (i) the day on which the purchaser became bankrupt, or

    • (ii) the first day on which there was a receiver, within the meaning of subsection 243(2), in relation to the purchaser,

  • (c) as of the day referred to in subparagraph (b)(i) or (ii), the farmer, fisherman or aquaculturist has not been fully paid for the products, and

  • (d) the farmer, fisherman or aquaculturist files a proof of claim in the prescribed form in respect of the unpaid amount with the trustee or receiver, as the case may be, within thirty days after the day referred to in subparagraph (b)(i) or (ii),

  the claim of the farmer, fisherman or aquaculturist for the unpaid amount in respect of the products is secured by security on all the inventory of or held by the purchaser as of the day referred to in subparagraph (b)(i) or (ii), and the security ranks above every other claim, right, charge or security against that inventory, regardless of when that other claim, right, charge or security arose, except a supplier’s right, under section 81.1, to repossess goods, despite any other federal or provincial Act or law; and if the trustee or receiver, as the case may be, takes possession or in any way disposes of inventory covered by the security, the trustee or receiver is liable for the claim of the farmer, fisherman or aquaculturist to the extent of the net amount realized on the disposition of that inventory, after deducting the cost of realization, and is subrogated in and to all rights of the farmer, fisherman or aquaculturist to the extent of the amounts paid to them by the trustee or receiver.

• Marginal note:Definitions

  (2) In this section,

  aquaculture

  aquaculture means the cultivation of aquatic plants and animals; (aquiculture)

  aquaculture operation

  aquaculture operation means any premises or site where aquaculture is carried out; (exploitation aquicole)

  aquaculturist

  aquaculturist includes the owner, occupier, lessor and lessee of an aquaculture operation; (aquiculteur)

  aquatic plants and animals

  aquatic plants and animals means plants and animals that, at most stages of their development or life cycles, live in an aquatic environment; (organismes animaux et végétaux aquatiques)

  farm

  farm means land in Canada used for the purpose of farming, which term includes livestock raising, dairying, bee-keeping, fruit growing, the growing of trees and all tillage of the soil; (ferme)

  farmer

  farmer includes the owner, occupier, lessor and lessee of a farm; (agriculteur)

  fish

  fish includes shellfish, crustaceans and marine animals; (poisson)

  fisherman

  fisherman means a person whose business consists in whole or in part of fishing; (pêcheur)

  fishing

  fishing means fishing for or catching fish by any method; (pêche)

  products of agriculture

  products of agriculture includes

  • (a) grain, hay, roots, vegetables, fruits, other crops and all other direct products of the soil, and

  • (b) honey, livestock (whether alive or dead), dairy products, eggs and all other indirect products of the soil; (produits agricoles)

  products of aquaculture

  products of aquaculture includes all cultivated aquatic plants and animals; (produits aquicoles)

  products of the sea, lakes and rivers

  products of the sea, lakes and rivers includes fish of all kinds, marine and freshwater organic and inorganic life and any substances extracted or derived from any water, but does not include products of aquaculture. (produits aquatiques)

• Marginal note:Interpretation — products and by-products

  (3) For the purposes of this section, each thing included in the following terms as defined in subsection (2), namely,

  • (a) “products of agriculture”,

  • (b) “products of aquaculture”, and

  • (c) “products of the sea, lakes and rivers”,

  comprises that thing in any form or state and any part thereof and any product or by-product thereof or derived therefrom.

• Marginal note:Section 81.1 applies

  (4) For greater certainty, “goods” in section 81.1 includes products of agriculture, products of the sea, lakes and rivers, and products of aquaculture.

• Marginal note:Other rights saved

  (5) Nothing in this section precludes a farmer, fisherman or aquaculturist from exercising

  • (a) the right that that person may have under section 81.1 to repossess products of agriculture, products of the sea, lakes and rivers, or products of aquaculture; or

  • (b) any right that that person may have under the law of a province.

Marginal note:Security for unpaid wages, etc. — bankruptcy

• 81.3 (1) The claim of a clerk, servant, travelling salesperson, labourer or worker who is owed wages, salaries, commissions or compensation by a bankrupt for services rendered during the period beginning on the day that is six months before the date of the initial bankruptcy event and ending on the date of the bankruptcy is secured, as of the date of the bankruptcy, to the extent of $2,000 — less any amount paid for those services by the trustee or by a receiver — by security on the bankrupt’s current assets on the date of the bankruptcy.

• Marginal note:Commissions

  (2) For the purposes of subsection (1), commissions payable when goods are shipped, delivered or paid for, if shipped, delivered or paid for during the period referred to in that subsection, are deemed to have been earned in that period.

• Marginal note:Security for disbursements

  (3) The claim of a travelling salesperson who is owed money by a bankrupt for disbursements properly incurred in and about the bankrupt’s business during the period referred to in subsection (1) is secured, as of the date of the bankruptcy, to the extent of $1,000 — less any amount paid for those disbursements by the trustee or by a receiver — by security on the bankrupt’s current assets on that date.

• Marginal note:Rank of security

  (4) A security under this section ranks above every other claim, right, charge or security against the bankrupt’s current assets — regardless of when that other claim, right, charge or security arose — except rights under sections 81.1 and 81.2 and amounts referred to in subsection 67(3) that have been deemed to be held in trust.

• Marginal note:Liability of trustee

  (5) If the trustee disposes of current assets covered by the security, the trustee is liable for the claim of the clerk, servant, travelling salesperson, labourer or worker to the extent of the amount realized on the disposition of the current assets and is subrogated in and to all rights of the clerk, servant, travelling salesperson, labourer or worker in respect of the amounts paid to that person by the trustee.

• Marginal note:Claims of officers and directors

  (6) No officer or director of the bankrupt is entitled to have a claim secured under this section.

• Marginal note:Non-arm’s length

  (7) A person who, in respect of a transaction, was not dealing at arm’s length with the bankrupt is not entitled to have a claim arising from that transaction secured by this section unless, in the opinion of the trustee, having regard to the circumstances — including the remuneration for, the terms and conditions of and the duration, nature and importance of the services rendered — it is reasonable to conclude that they would have entered into a substantially similar transaction if they had been dealing with each other at arm’s length.

• Marginal note:Proof by delivery

  (8) A claim referred to in this section is proved by delivering to the trustee a proof of claim in the prescribed form.

• Marginal note:Definitions

  (9) The following definitions apply in this section.

  compensation

  compensation includes vacation pay but does not include termination or severance pay. (rémunération)

  receiver

  receiver means a receiver within the meaning of subsection 243(2) or an interim receiver appointed under subsection 46(1), 47(1) or 47.1(1). (séquestre)