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

Marginal note:Audit of proceedings

241 The accounts of every clerk that relate to proceedings under this Part are subject to audit in the same manner as if the accounts were the accounts of a provincial officer.

Marginal note:Application of this Part

• 242 (1) The Governor in Council shall, at the request of the lieutenant governor in council of a province, declare, by order, that this Part applies or ceases to apply, as the case may be, in respect of the province.

• Marginal note:Automatic application

  (2) Subject to an order being made under subsection (1) declaring that this Part ceases to apply in respect of a province, if this Part is in force in the province immediately before that subsection comes into force, this Part applies in respect of the province.

PART XISecured Creditors and Receivers

Marginal note:Court may appoint receiver

• 243 (1) Subject to subsection (1.1), on application by a secured creditor, a court may appoint a receiver to do any or all of the following if it considers it to be just or convenient to do so:

  • (a) take possession of all or substantially all of the inventory, accounts receivable or other property of an insolvent person or bankrupt that was acquired for or used in relation to a business carried on by the insolvent person or bankrupt;

  • (b) exercise any control that the court considers advisable over that property and over the insolvent person’s or bankrupt’s business; or

  • (c) take any other action that the court considers advisable.

• Marginal note:Restriction on appointment of receiver

  (1.1) In the case of an insolvent person in respect of whose property a notice is to be sent under subsection 244(1), the court may not appoint a receiver under subsection (1) before the expiry of 10 days after the day on which the secured creditor sends the notice unless

  • (a) the insolvent person consents to an earlier enforcement under subsection 244(2); or

  • (b) the court considers it appropriate to appoint a receiver before then.

• Definition of receiver

  (2) Subject to subsections (3) and (4), in this Part, receiver means a person who

  • (a) is appointed under subsection (1); or

  • (b) is appointed to take or takes possession or control — of all or substantially all of the inventory, accounts receivable or other property of an insolvent person or bankrupt that was acquired for or used in relation to a business carried on by the insolvent person or bankrupt — under

    • (i) an agreement under which property becomes subject to a security (in this Part referred to as a “security agreement”), or

    • (ii) a court order made under another Act of Parliament, or an Act of a legislature of a province, that provides for or authorizes the appointment of a receiver or receiver-manager.

• Definition of receiver — subsection 248(2)

  (3) For the purposes of subsection 248(2), the definition receiver in subsection (2) is to be read without reference to paragraph (a) or subparagraph (b)(ii).

• Marginal note:Trustee to be appointed

  (4) Only a trustee may be appointed under subsection (1) or under an agreement or order referred to in paragraph (2)(b).

• Marginal note:Place of filing

  (5) The application is to be filed in a court having jurisdiction in the judicial district of the locality of the debtor.

• Marginal note:Orders respecting fees and disbursements

  (6) If a receiver is appointed under subsection (1), the court may make any order respecting the payment of fees and disbursements of the receiver that it considers proper, including one that gives the receiver a charge, ranking ahead of any or all of the secured creditors, over all or part of the property of the insolvent person or bankrupt in respect of the receiver’s claim for fees or disbursements, but the court may not make the order unless it is satisfied that the secured creditors who would be materially affected by the order were given reasonable notice and an opportunity to make representations.

• Meaning of disbursements

  (7) In subsection (6), disbursements does not include payments made in the operation of a business of the insolvent person or bankrupt.

Marginal note:Advance notice

• 244 (1) A secured creditor who intends to enforce a security on all or substantially all of

  • (a) the inventory,

  • (b) the accounts receivable, or

  • (c) the other property

  of an insolvent person that was acquired for, or is used in relation to, a business carried on by the insolvent person shall send to that insolvent person, in the prescribed form and manner, a notice of that intention.

• Marginal note:Period of notice

  (2) Where a notice is required to be sent under subsection (1), the secured creditor shall not enforce the security in respect of which the notice is required until the expiry of ten days after sending that notice, unless the insolvent person consents to an earlier enforcement of the security.

• Marginal note:No advance consent

  (2.1) For the purposes of subsection (2), consent to earlier enforcement of a security may not be obtained by a secured creditor prior to the sending of the notice referred to in subsection (1).

• Marginal note:Exception

  (3) This section does not apply, or ceases to apply, in respect of a secured creditor

  • (a) whose right to realize or otherwise deal with his security is protected by subsection 69.1(5) or (6); or

  • (b) in respect of whom a stay under sections 69 to 69.2 has been lifted pursuant to section 69.4.

• Marginal note:Idem

  (4) This section does not apply where there is a receiver in respect of the insolvent person.

Marginal note:Receiver to give notice

• 245 (1) A receiver shall, as soon as possible and not later than ten days after becoming a receiver, by appointment or otherwise, in respect of property of an insolvent person or a bankrupt, send a notice of that fact, in the prescribed form and manner, to the Superintendent, accompanied by the prescribed fee, and

  • (a) in the case of a bankrupt, to the trustee; or

  • (b) in the case of an insolvent person, to the insolvent person and to all creditors of the insolvent person that the receiver, after making reasonable efforts, has ascertained.

• Marginal note:Idem

  (2) A receiver in respect of property of an insolvent person shall forthwith send notice of his becoming a receiver to any creditor whose name and address he ascertains after sending the notice referred to in subsection (1).

• Marginal note:Names and addresses of creditors

  (3) An insolvent person shall, forthwith after being notified that there is a receiver in respect of any of his property, provide the receiver with the names and addresses of all creditors.

Marginal note:Receiver’s statement

• 246 (1) A receiver shall, forthwith after taking possession or control, whichever occurs first, of property of an insolvent person or a bankrupt, prepare a statement containing the prescribed information relating to the receivership, and shall forthwith provide a copy thereof to the Superintendent and

  • (a) to the insolvent person or the trustee (in the case of a bankrupt); and

  • (b) to any creditor of the insolvent person or the bankrupt who requests a copy at any time up to six months after the end of the receivership.

• Marginal note:Receiver’s interim reports

  (2) A receiver shall, in accordance with the General Rules, prepare further interim reports relating to the receivership, and shall provide copies thereof to the Superintendent and

  • (a) to the insolvent person or the trustee (in the case of a bankrupt); and

  • (b) to any creditor of the insolvent person or the bankrupt who requests a copy at any time up to six months after the end of the receivership.

• Marginal note:Receiver’s final report and statement of accounts

  (3) A receiver shall, forthwith after completion of duties as receiver, prepare a final report and a statement of accounts, in the prescribed form and containing the prescribed information relating to the receivership, and shall forthwith provide a copy thereof to the Superintendent and

  • (a) to the insolvent person or the trustee (in the case of a bankrupt); and

  • (b) to any creditor of the insolvent person or the bankrupt who requests a copy at any time up to six months after the end of the receivership.

Marginal note:Intellectual property — sale or disposition

• 246.1 (1) If the insolvent person or the bankrupt is a party to an agreement that grants to another party a right to use intellectual property that is included in a sale or disposition by the receiver, that sale or disposition does not affect that other party’s right to use the intellectual property — including the other party’s right to enforce an exclusive use — during the term of the agreement, including any period for which the other party extends the agreement as of right, as long as the other party continues to perform its obligations under the agreement in relation to the use of the intellectual property.

• Marginal note:Intellectual property — disclaimer or resiliation

  (2) If the insolvent person or the bankrupt is a party to an agreement that grants to another party a right to use intellectual property, the disclaimer or resiliation of that agreement by the receiver does not affect that other party’s right to use the intellectual property — including the other party’s right to enforce an exclusive use — during the term of the agreement, including any period for which the other party extends the agreement as of right, as long as the other party continues to perform its obligations under the agreement in relation to the use of the intellectual property.

Marginal note:Good faith, etc.

247 A receiver shall

• (a) act honestly and in good faith; and

• (b) deal with the property of the insolvent person or the bankrupt in a commercially reasonable manner.

Marginal note:Powers of court

• 248 (1) Where the court, on the application of the Superintendent, the insolvent person, the trustee (in the case of a bankrupt), a receiver or a creditor, is satisfied that the secured creditor, the receiver or the insolvent person is failing or has failed to carry out any duty imposed by sections 244 to 247, the court may make an order, on such terms as it considers proper,

  • (a) directing the secured creditor, receiver or insolvent person, as the case may be, to carry out that duty, or

  • (b) restraining the secured creditor or receiver, as the case may be, from realizing or otherwise dealing with the property of the insolvent person or bankrupt until that duty has been carried out,

  or both.

• Marginal note:Idem

  (2) On the application of the Superintendent, the insolvent person, the trustee (in the case of a bankrupt) or a creditor, made within six months after the statement of accounts was provided to the Superintendent pursuant to subsection 246(3), the court may order the receiver to submit the statement of accounts to the court for review, and the court may adjust, in such manner and to such extent as it considers proper, the fees and charges of the receiver as set out in the statement of accounts.

Marginal note:Receiver may apply to court for directions

249 A receiver may apply to the court for directions in relation to any provision of this Part, and the court shall give, in writing, such directions, if any, as it considers proper in the circumstances.

Marginal note:Right to apply to court

• 250 (1) An application may be made under section 248 or 249 notwithstanding any order of a court as defined in subsection 243(1).

• Marginal note:Where inconsistency

  (2) Where there is any inconsistency between an order made under section 248, or a direction given under section 249, and

  • (a) the security agreement or court order under which the receiver acts or was appointed, or

  • (b) any other order of the court that appointed the receiver,

  the order made under section 248 or the direction given under section 249, as the case may be, prevails to the extent of the inconsistency.

Marginal note:Protection of receivers

251 No action lies against a receiver for loss or damage arising from the sending or providing by the receiver of a notice pursuant to section 245 or a statement or report pursuant to section 246, if done in good faith in compliance or intended compliance with those sections.

Marginal note:Defence available

252 In any proceeding where it is alleged that a secured creditor or a receiver contravened or failed to comply with any provision of this Part, it is a defence if the secured creditor or the receiver, as the case may be, shows that, at the time of the alleged contravention or failure to comply, he had reasonable grounds to believe that the debtor was not insolvent.

PART XIISecurities Firm Bankruptcies

Interpretation

Marginal note:Definitions

253 In this Part,

customer

customer includes

• (a) a person with or for whom a securities firm deals as principal, or agent or mandatary, and who has a claim against the securities firm in respect of a security received, acquired or held by the securities firm in the ordinary course of business as a securities firm from or for a securities account of that person

  • (i) for safekeeping or deposit or in segregation,

  • (ii) with a view to sale,

  • (iii) to cover a completed sale,

  • (iv) pursuant to a purchase,

  • (v) to secure performance of an obligation of that person, or

  • (vi) for the purpose of effecting a transfer,

• (b) a person who has a claim against the securities firm arising out of a sale or wrongful conversion by the securities firm of a security referred to in paragraph (a), and

• (c) a person who has cash or other assets held in a securities account with the securities firm,

but does not include a person who has a claim against the securities firm for cash or securities that, by agreement or operation of law, is part of the capital of the securities firm or a claim that is subordinated to claims of creditors of the securities firm; (client)

customer compensation body

customer compensation body means a prescribed body and includes, unless it is prescribed to be excluded from this definition, the Canadian Investor Protection Fund; (organisme d’indemnisation des clients)

customer name securities

customer name securities means securities that on the date of bankruptcy of a securities firm are held by or on behalf of the securities firm for the account of a customer and are registered or recorded in the appropriate manner in the name of the customer or are in the process of being so registered or recorded, but does not include securities registered or recorded in the appropriate manner in the name of the customer that, by endorsement or otherwise, are negotiable by the securities firm; (valeur mobilière immatriculée)

deferred customer

deferred customer means a customer whose misconduct, either in the customer’s capacity as a customer or otherwise, caused or materially contributed to the insolvency of a securities firm; (client responsable)

eligible financial contract

eligible financial contract[Repealed, 2007, c. 29, s. 101]

hold

hold, in relation to a security, includes holding it in electronic form; (détenir)

net equity

net equity means, with respect to the securities account or accounts of a customer, maintained in one capacity, the net dollar value of the account or accounts, equal to the amount that would be owed by a securities firm to the customer as a result of the liquidation by sale or purchase at the close of business of the securities firm on the date of bankruptcy of the securities firm, of all security positions of the customer in each securities account, other than customer name securities reclaimed by the customer, including any amount in respect of a securities transaction not settled on the date of bankruptcy but settled thereafter, less any indebtedness of the customer to the securities firm on the date of bankruptcy including any amount owing in respect of a securities transaction not settled on the date of bankruptcy but settled thereafter, plus any payment of indebtedness made with the consent of the trustee after the date of bankruptcy; (capitaux nets)

open contractual commitment

open contractual commitment means an enforceable contract of a securities firm to purchase or sell a security that was not completed by payment and delivery on the date of bankruptcy; (contrat en cours)

securities firm

securities firm means a person who carries on the business of buying and selling securities from, to or for a customer, whether or not as a member of an exchange, as principal, or agent or mandatary, and includes any person required to be registered to enter into securities transactions with the public, but does not include a corporate entity that is not a corporation within the meaning of section 2; (courtier en valeurs mobilières)

security

security means any document, instrument or written or electronic record that is commonly known as a security, and includes, without limiting the generality of the foregoing,

• (a) a document, instrument or written or electronic record evidencing a share, participation right or other right or interest in property or in an enterprise, including an equity share or stock, or a mutual fund share or unit,

• (b) a document, instrument or written or electronic record evidencing indebtedness, including a note, bond, debenture, mortgage, hypothec, certificate of deposit, commercial paper or mortgage-backed instrument,

• (c) a document, instrument or written or electronic record evidencing a right or interest in respect of an option, warrant or subscription, or under a commodity future, financial future, or exchange or other forward contract, or other derivative instrument, including an eligible financial contract, and

• (d) such other document, instrument or written or electronic record as is prescribed. (valeur mobilière ou titre)