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

Marginal note:What debts may be proved

• 157 (1) When the business in Canada of an authorized foreign bank is being wound up and its assets are being liquidated under this Act, only debts and claims against the authorized foreign bank in respect of its business in Canada in existence at the commencement of the winding-up, certain or contingent, matured or not, and liquidated or unliquidated, are admissible to proof and, subject to subsection (2), the amount of any claim admissible to proof is the unpaid debt or other liability of the authorized foreign bank in respect of its business in Canada outstanding or accrued at the commencement of the winding-up.

• Marginal note:Uncertain claims valued

  (2) In case of any claim subject to any contingency or for unliquidated damages or which for any other reason does not bear a certain value, the court shall determine the value of the claim and the amount for which it shall rank.

Marginal note:Law of set-off to apply

158 The law of set-off, as administered by the courts, whether of law or equity, applies, in the same manner and to the same extent as if the business in Canada of the authorized foreign bank was not being wound up under this Act, only to

• (a) claims by creditors of the authorized foreign bank in respect of its business in Canada; and

• (b) proceedings for the recovery of debts due or accruing due to an authorized foreign bank in respect of its business in Canada at the commencement of the winding-up.

Marginal note:Distribution of property

• 158.1 (1) Where a winding-up order is made in respect of an authorized foreign bank, claims shall be paid in the following order of priority:

  • (a) charges, costs and expenses, including the remuneration of the liquidator, incurred in the winding-up of the business in Canada of the authorized foreign bank and of the liquidation of its assets;

  • (b) claims of preferred creditors, specified in section 72; and

  • (c) debts and liabilities of the authorized foreign bank in respect of its business in Canada in order of priority as set out in sections 625 and 627 of the Bank Act.

• Marginal note:Distribution and release of surplus assets

  (2) Any assets that remain after payment of the claims referred to in paragraphs (1)(a) to (c) are to be applied firstly 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. The liquidator may, with the approval of the court, release to the authorized foreign bank any assets remaining after payment of the interest.

Marginal note:Transfer to foreign liquidator

158.2 Where an authorized foreign bank is in liquidation in the jurisdiction in which its head office is situated or where it principally carries on business, the Superintendent may, if the Superintendent deems it advisable and in the interests of the creditors of the authorized foreign bank, authorize the liquidator, subject to the approval of the court, to transfer the assets of the authorized foreign bank to the liquidator in that jurisdiction.

Marginal note:Right of action not debarred

158.3 Subject to this Act, where the assets of an authorized foreign bank are not sufficient to cover in full all claims referred to in paragraphs 158.1(1)(a) to (c), the creditors are not barred from any recourse they have, either in law or equity, except in respect of the share, if any, received in the distribution of the assets.

PART IIIRestructuring of Insurance Companies

Marginal note:Definitions

159 In this Part,

company

company means an insurance company; (société)

foreign company

foreign company means a foreign insurance company; (Version anglaise seulement)

policy

policy includes, without limiting the generality of its meaning, policy as defined in subsection 2(1) of the Insurance Companies Act. (police)

Marginal note:Application of Part

• 159.1 (1) This Part applies only to insurance companies.

• Marginal note:Transitional

  (2) This Part applies only in respect of applications for winding-up orders that are made after the date of coming into force of this subsection, and applications for winding-up orders that were made on or before that date shall be dealt with in accordance with the provisions of this Part as they read immediately before that date.

Marginal note:Protection of asset orders

160 The court may, at any time after an application for a winding-up order is made, on the application of the applicant for the winding-up order or of the liquidator, make such order as the court considers appropriate for the protection of the assets of the estate of the company.

Marginal note:Order of priority for payment of claims

• 161 (1) Subject to this Act, claims shall be paid in the following order of priority:

  • (a) costs of liquidation;

  • (b) claims of preferred creditors, specified in section 72;

  • (c) claims of policyholders of the company ranking as follows:

    • (i) in the case of policies of life insurance and policies of accident and sickness insurance,

      • (A) if transfer or reinsurance is not effected as provided in section 162, claims that have arisen under those policies of the company, in accordance with the terms thereof, prior to the date of the filing of the statement of the liquidator in the Office of the Superintendent as provided in subsection 168(1), less any amount previously advanced by the company on the security of those policies, and claims to the value of those policies computed as provided in section 163, or

      • (B) if transfer or reinsurance is effected as provided in section 162, of all or any of the policies of the company,

        • (I) in respect of those policies of the company for which transfer or reinsurance is effected, the consideration payable for the transfer or reinsurance of the policies of the company, and

        • (II) in respect of those policies of the company for which transfer or reinsurance is not effected, claims that have arisen under those policies, in accordance with the terms thereof, prior to the date of the filing of the statement of the liquidator in the Office of the Superintendent as provided in subsection 168(1), less any amount previously advanced by the company on the security of those policies and claims to the value of those policies computed as provided in section 163, and

    • (ii) in the case of policies of insurance other than policies of life insurance and policies of accident and sickness insurance,

      • (A) firstly, claims that have arisen under those policies of the company by reason of the occurrence of the event insured against, in accordance with the terms thereof, prior to the date of the filing of the statement of the liquidator in the Office of the Superintendent as provided in subsection 168(1), less any amount previously advanced by the company on the security of those policies, and

      • (B) secondly, the claims of such policyholders to the value of those policies computed as provided in section 163 or, where transfer or reinsurance is effected as provided in section 162 of all or any of the policies of the company, the consideration payable for the transfer or reinsurance of the policies of the company or, as the case may be, claims that have arisen under those policies of the company by reason of the cancellation of such policies, in accordance with the terms thereof, prior to the date of the filing of the statement of the liquidator in the Office of the Superintendent as provided in subsection 168(1), less any amount previously advanced by the company on the security of the policies so cancelled; and

  • (d) expenses described in paragraph 686(1)(a) of the Insurance Companies Act that were incurred by the Superintendent in respect of the company and assessed against and paid by other companies pursuant to that Act, and interest in respect thereof at such rate as is specified by the Superintendent.

• Marginal note:Claims re life companies — policyholders

  (2) No payment on a claim by a policyholder of a company insuring risks under policies referred to in subparagraph (1)(c)(i) claiming a minimum amount that the company has agreed to pay under a policy in respect of an amount for which a segregated fund is maintained under section 451, subsection 542.03(2) or section 593 of the Insurance Companies Act for a deficiency if the assets of the fund are insufficient to satisfy such a claim, shall be made unless the assets of the company are sufficient to pay the claims referred to in subsection (1) and all of the terms of the policies of policyholders referred to in that subsection have been satisfied in full including any interest component of those policies accruing to the date of payment of the claim.

• Marginal note:Claims re life companies — creditors

  (2.1) No payment on a claim by a creditor of a company insuring risks under policies referred to in subparagraph (1)(c)(i) shall be made unless the assets of the company are sufficient to pay the claims referred to in subsections (1) and (2) and all of the terms of the policies of the policyholders referred to in those subsections have been satisfied in full including any interest component of those policies accruing to the date of payment of the claim.

• Marginal note:Interest component

  (3) For the purposes of subsections (2) and (2.1), the interest component of the claims of policyholders referred to in subparagraph (1)(c)(i) shall be treated as part of the claim that has arisen under the policy in accordance with the terms of the policy.

• Marginal note:Claims re other companies

  (4) No payment on a claim by a creditor of a company insuring risks under policies referred to in subparagraph (1)(c)(ii) shall be made unless the assets of the company are sufficient to pay the claims referred to in subsection (1).

• Marginal note:Subordinated debt holders

  (5) Holders of subordinated indebtedness, within the meaning of subsection 2(1) of the Insurance Companies Act, of a company and other indebtedness that by their terms rank equally or are subordinate to such indebtedness are entitled to receive payment on their claims only if the assets of the company are sufficient to pay the claims referred to in subsections (2), (2.1) and (4).

• Marginal note:Priority of claims of policyholders in foreign companies

  (6) Despite anything in this Part but subject to subsection (8), if a company is a foreign company, no claim, after the payment of costs of liquidation, ranks against the assets other than claims described in paragraphs (a) to (c), and the balance, if any, of the assets remaining after those claims are paid shall be applied by the liquidator in satisfaction of the claims of any other creditors — but not including policyholders and creditors of the foreign company in respect of a class of insurance not specified in the order referred to in paragraph (b) — of the insurance business in Canada of the foreign company in accordance with subsections (2), (2.1) and (4):

  • (a) the preferred creditors referred to in paragraph (1)(b);

  • (b) holders of policies of a class of insurance specified in the order of the Superintendent under Part XIII of the Insurance Companies Act other than holders of a policy exempt from Part XIII by virtue of section 572.1 of that Act; and

  • (c) expenses described in paragraph 686(1)(a) of the Insurance Companies Act, that were incurred by the Superintendent in respect of the company and assessed against and paid by other companies pursuant to that Act, and interest in respect of those expenses at the rate that is specified by the Superintendent.

• Marginal note:Definitions

  (7) In subsection (8),

  assets in Canada

  assets in Canada means assets in Canada, within the meaning of subsection 2(1) of the Insurance Companies Act, of a foreign company; (actif au Canada)

  assets under the control of the chief agent

  assets under the control of the chief agent means the other assets of the foreign company that are held in Canada under the control of its chief agent, within the meaning of section 571 of the Insurance Companies Act, including all amounts received or receivable in respect of its insurance business in Canada. (actif sous le contrôle de l’agent principal)

• Marginal note:Other foreign company priority provisions

  (8) Where a foreign company is authorized to insure in Canada

  • (a) risks falling within the class of life insurance; and

  • (b) risks falling within some other class of insurance, other than accident and sickness insurance, credit protection insurance and other approved products insurance,

    • (i) in the case of the costs of liquidation and the claims of preferred creditors, the costs, portions of expenses and claims shall be paid from the assets in Canada, maintained for the policies referred to in subparagraphs (ii) and (iii), together with the assets under the control of the chief agent, in the proportion that the court considers fair and equitable,

    • (ii) in the case of policies falling within the classes of life insurance, accident and sickness insurance, credit protection insurance and other approved products insurance, claims shall be paid

      • (A) firstly, from the assets in Canada maintained for those policies,

      • (B) secondly, from the assets under the control of the chief agent in such proportion as the court considers fair and equitable, and

      • (C) thirdly, from the balance, if any, of any assets referred to in clauses (iii)(A) and (B) remaining after the claims under subparagraphs (i) and (iii) are paid,

    • (iii) in the case of policies falling within some other class of insurance, claims shall be paid

      • (A) firstly, from the assets in Canada maintained for those policies,

      • (B) secondly, from the assets under the control of the chief agent in such proportion as the court considers fair and equitable, and

      • (C) thirdly, from the balance, if any, of any assets referred to in clauses (ii)(A) and (B) remaining after the claims under subparagraphs (i) and (ii) are paid, and

    • (iv) in the case of expenses described in paragraph 686(1)(a) of the Insurance Companies Act that were incurred by the Superintendent in respect of the foreign company and assessed against and paid by other companies pursuant to that Act, the expenses shall be paid from the balance, if any, of the assets referred to in clauses (ii)(A) and (B) and (iii)(A) and (B) remaining after the claims under subparagraphs (i), (ii) and (iii) are paid.

• Marginal note:Priority of costs, etc.

  (9) For greater certainty, the costs, claims and expenses referred to in subsections (6) and (8) shall be paid in accordance with the priorities set out in subsection (1).

• Marginal note:Release of balance of assets to company

  (10) The liquidator may, with the approval of the court, release to the foreign company any balance of the assets remaining after payment of claims in the order of priority prescribed by subsection (9).

• Marginal note:Payment of liabilities

  (11) Notwithstanding anything in this section, the liquidator may, in carrying on the business of the company pursuant to paragraph 35(1)(b), with the approval of the court, pay liabilities relating to the portion of the business being carried on, where the payment is considered desirable for the retention of goodwill and enhancement of value to the estate of the company.