Winding-up and Restructuring Act (R.S.C., 1985, c. W-11)

Marginal note:Distribution of assets

• 76 (1) After the notices required by sections 74 and 75 have been given, the respective times specified in the notices have expired and all claims of which proof has been required by due notice in writing by the liquidator in that behalf have been allowed or disallowed by the court in whole or in part, the liquidator may distribute the assets of the company or any part of those assets among the persons entitled to them and without reference to any claim against the company, or, in the case of an authorized foreign bank, against the authorized foreign bank in respect of its business in Canada, that has not then been sent to the liquidator.

• Marginal note:Claims not sent in

  (2) The liquidator is not liable to any person whose claim has not been sent in at the time of distributing the assets or part thereof under subsection (1) for the assets or part thereof so distributed.

Marginal note:Rank of claims sent in after distribution started

77 Where any claim or claims are sent in to the liquidator after any partial distribution of the assets of a company, the claim or claims, subject to proof and allowance as required by this Act, shall rank with other claims of creditors in any future distribution of assets of the company.

Secured Claims

Marginal note:Duty of creditor holding security

78 If a creditor holds security on the estate of a company, or, in the case of an authorized foreign bank, a creditor or person holds security on the assets of the authorized foreign bank, the creditor or person shall specify the nature and amount of the security in the claim, and shall, in the claim, on oath, put a specified value on the security.

Marginal note:Option of liquidator

79 The liquidator, under the authority of the court, may either consent to the retention by the creditor, or, in the case of an authorized foreign bank, by the creditor or person who holds security, of the property and effects constituting the security referred to in section 78 or on which it attaches, at the value specified on the security, property and effects, or may require from the creditor or person an assignment and delivery of the security, property and effects, at the specified value, to be paid by the liquidator out of the estate as soon as the liquidator has realized the security, together with interest on the value from the date of filing the claim until payment.

Marginal note:Ranking of secured creditor

80 In the event of the retention referred to in section 79, the difference between the value at which the security is retained and the amount of the claim of the creditor shall be the amount for which he may rank in any future distribution of assets.

Marginal note:Security by negotiable instrument

• 81 (1) If a creditor holds a claim based on negotiable instruments on which the company or, in the case of an authorized foreign bank, the authorized foreign bank in respect of its business in Canada, is only indirectly or secondarily liable and that is not mature or exigible, the creditor is considered to hold security within the meaning of sections 78, 79 and 80, and shall put a value on the liability of the person primarily liable on the security as being the security for the payment of the claim.

• Marginal note:Revaluation

  (2) After the maturity of the liability referred to in subsection (1) and its non-payment, the creditor is entitled to amend and revalue his claim.

Marginal note:Authorized foreign bank

81.1 Where a person holds security on the assets of an authorized foreign bank, other than those in respect of its business in Canada

• (a) sections 80 and 81 do not apply in relation to the person’s claim;

• (b) where there is a difference between the value at which the security is retained and the amount of the person’s claim, no claim for the difference in value is admissible to proof or may be made under this Act against the assets of the authorized foreign bank; and

• (c) the person is not barred from any recourse either in law or in equity against the authorized foreign bank in proceedings outside Canada for the difference referred to in paragraph (b).

Marginal note:Security by mortgage or charge

82 Where the security consists of a mortgage on ships or shipping or on real property, or of a registered judgment or an execution binding real property that is not by any other provision of this Act invalid for any purpose of creating a lien, claim or privilege on the real or personal property of the company, the property mortgaged or bound by the security shall only be assigned and delivered to the creditor, or, in the case of an authorized foreign bank, to the creditor or person who holds the security

• (a) subject to all previous mortgages, judgments, executions, hypothecs and liens on the security, holding rank and priority before the creditor’s or person’s claim;

• (b) on the creditor’s or person’s assuming and binding themself to pay all of those previous mortgages, judgments, executions, hypothecs and liens; and

• (c) on the creditor’s or person’s securing the estate of the company to the satisfaction of the liquidator against any claim by reason of those previous mortgages, judgments, executions, hypothecs and liens.

Marginal note:In case of subsequent claims

83 Where there are mortgages, judgments, executions, hypothecs or liens on ships or shipping or real property subsequent to those of a creditor or person referred to in section 82, the creditor or person shall only obtain the property

• (a) by consent of the subsequently secured creditors or persons;

• (b) on the subsequently secured creditors or persons filing their claims specifying their security on the property as of no value;

• (c) on the creditor or person paying the subsequently secured creditors or persons the value by them placed on the property; or

• (d) on the creditor or person securing the estate of the company to the satisfaction of the liquidator against any claim by reason of the subsequent mortgages, judgments, executions, hypothecs and liens.

Marginal note:Authority to retain

84 On a secured claim being filed, with a valuation of the security, the liquidator shall procure the authority of the court to consent to the retention of the security by the creditor or, in the case of an authorized foreign bank, by the creditor or other person who holds the security or shall require from the creditor or person an assignment and delivery of the security.

Dividend Sheet

Marginal note:Preparing dividend sheet

85 In the preparation of a dividend sheet, due regard shall be had to the rank and privilege of every creditor, but no dividend shall be allotted or paid to any creditor holding security on the estate of the company for his claim until the amount for which he may rank as a creditor on the estate, with respect to dividends therefrom, is established as herein provided.

Liens

Marginal note:No lien by execution, etc., after commencement of winding-up

• 86 (1) No lien or privilege shall be created

  • (a) on the real or personal property of the company for the amount of any judgment debt, or of the interest thereon, by the issue or delivery to the sheriff of any writ of execution or by levying on or seizing under that writ the effects or estate of the company, or

  • (b) on the real or personal property of the company, or on any debts due or accruing or becoming due to the company, by the filing or registering of any memorial or minute of judgment or by the issue or taking out of any attachment or garnishee order or other process or proceeding,

  if, before the payment over to the plaintiff of the moneys actually levied, paid or received under the writ, memorial, minute, attachment, garnishee order or other process or proceeding, the winding-up of the business of the company has commenced.

• Marginal note:Lien for costs excepted

  (2) This section does not affect any lien or privilege for costs that the plaintiff possesses under the law of the province in which the writ, attachment, garnishee order or other process or proceeding was issued or taken out.

Contestation of Claims

Marginal note:Claims or dividend may be objected to

87 Any liquidator, creditor, contributory, shareholder or member of a company or, in the case of an authorized foreign bank, the liquidator, the authorized foreign bank or any creditor, may object to any claim filed with the liquidator or to any dividend declared.

Marginal note:Objections in writing

• 88 (1) Where a claim or dividend is objected to under section 87, the objections shall be filed in writing with the liquidator, together with the evidence of the previous service of a copy thereof on the claimant.

• Marginal note:Answers and replies

  (2) The claimant shall have six days to answer the objections, or such further time as the court allows, and the contestant shall have three days to reply, or such further time as the court allows.

Marginal note:Day to be fixed for hearing

89 On the completion of the issues on the objections filed under section 88, the liquidator shall transmit to the court all necessary papers relating to the contestation, and the court shall, on the application of either party, fix a day for taking evidence on the contestation and hearing and determining the contestation.

Marginal note:Costs

90 The court may make such order as seems proper in respect of the payment of the costs of the contestation referred to in section 89 by either party or out of the estate of the company.

Marginal note:Default in answer by claimant

91 Where, after a claim or dividend has been duly objected to, the claimant does not answer the objections, the court may, on the application of the contestant, make an order barring the claim or correcting the dividend, or may make such other order with reference thereto as appears right.

Marginal note:Security for costs

92 The court may order the person objecting to a claim or dividend to give security for the costs of the contestation within a limited time, and may, in default, dismiss the contestation or stay proceedings thereon on such terms as the court thinks just.

Distribution of Assets

Marginal note:Distribution of property

93 The property of the company shall be applied in satisfaction of its debts and liabilities, and the charges, costs and expenses incurred in winding-up its affairs.

Marginal note:Winding-up expenses

94 All costs, charges and expenses properly incurred in the winding-up of a company, including the remuneration of the liquidator, are payable out of the assets of the company, in priority to all other claims.

Marginal note:Distribution of surplus

• 95 (1) The court shall distribute among the persons entitled thereto any surplus that remains after the satisfaction of the debts and liabilities of the company and the winding-up charges, costs and expenses, and unless otherwise provided by law or by the Act, charter or instrument of incorporation of the company, any property or assets remaining after the satisfaction shall be distributed among the members or shareholders according to their rights and interests in the company.

• Marginal note:Interest from commencement 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.