Canada

The Bankruptcy and Insolvency Act (BIA) contains a clause requiring a parliamentary review of the BIA every five years. Previous amendments took place in 1992 and 1997.

In 2002, the Office of the Superintendent of Bankruptcy (OSB) held consultations with stakeholders on a range of insolvency issues.

Consumer insolvency concerns were also examined by the Personal Insolvency Task Force, an independent panel established by the OSB with a membership comprised of the principal stakeholder groups.

In May 2003, the Standing Senate Committee on Banking Trade and Commerce was mandated to examine and report on the administration and operation of the BIA and the Companies Creditors Arrangement Act.

The Committee released its report in November 2003 outlining 53 recommendations for amendments to the BIA. This report can be downloaded from the OSB website. The full title of the report is Debtors and Creditors Sharing the Burden: a Review of the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act.

If the Minister of Industry decides to bring accept the recommendations to amend the BIA, a memo to Cabinet will be prepared, and draft legislation could be available in early 2005.

In August 2003, the OSB commenced an "Initiative for the Orderly and Timely Administration of Insolvency Estates" aimed at ensuring that trustees completed the administration of bankruptcies in a timely manner. More details on the IOTA initiative can be found in the December 2003 OSB Newsletter available on the OSB website.

Key Legislation

• Bankruptcy and Insolvency Act (BIA)
• Companies' Creditors Arrangement Act (CCAA)
• Winding-up and Restructuring Act (WURA)
• Bankruptcy and Insolvency General rules
• Orderly Payment of Debts Regulations
  

Insolvency Procedures

The Bankruptcy and Insolvency Act (BIA) provides a legislative framework for the liquidation of the assets of an insolvent individual, corporation or partnership, and the distribution of the proceeds in a fair and orderly way among the creditors. It provides for the appointment of a trustee to take charge of the assets, sell them and distribute the proceeds. Alternatively, the Act provides ways for insolvent businesses or consumer debtors to avoid bankruptcy by negotiation arrangements with their creditors for the compromise of their debts and the reorganization of their financial affairs.

The Companies' Creditors Arrangement Act (CCAA) provides a legislative framework for the reorganization of insolvent corporate debtors. It enables an insolvent company to seek a court order staying its creditors from taking action against it while it negotiates an arrangement with them for the rescheduling or compromise of its debts.

The Winding-up and Restructuring Act (WURA), provides an alternative framework to the BIA for the liquidation and distribution of an insolvent corporation's assets among its creditors. It is the only legislative vehicle available for the liquidation of major financial institutions, including banks, insurance companies and trust and loan companies, none of which can be liquidated under the BIA.

Roles

Role played by Government

OSB and the Superintendent
The OSB is established under Part 1 of the BIA to supervise the administration of all estates.
The OSB helps to ensure that estates in bankruptcy, commercial reorganizations, consumer proposals and receiverships are administered in a fair and orderly manner.
The OSB also regulates licensed bankruptcy trustees.
The OSB is also responsible for keeping all the public records.
The Superintendent can issue directives under the BIA.

Official Receivers
Each province constitutes a bankruptcy district that may be further divided into bankruptcy divisions. One or more official receivers are appointed to each bankruptcy division. These are officers of the Court who report to the Superintendent on each bankruptcy originating in the division.

Role played by private sector practitioners

The Superintendent licenses individuals and corporations as bankruptcy trustees under the BIA to administer estates.

Role played by the Court

The Court has a general oversight role as well as specific powers under the BIA.

At a Glance

Does the insolvency system in Canada allow for:

1.	Different procedures for the insolvency of individuals and the insolvency of companies?
2.	Creditors to accept an arrangement outside of formal bankruptcy/liquidation proceedings?
3.	Priority payment for employee creditors?
4.	Priority payment for taxation debts?
5.	Automatic disqualification of directors of failed companies from managing other companies?
6.	Recognition of insolvency proceedings being conducted in another jurisdiction?
7.	A government agency to undertake insolvency administration work?
8.	Some form of licensing of private sector practitioners?
9.	A review of the remuneration claimed by an insolvency practitioner by either a court or other government regulator?
10.	A mandatory scale of fees applicable to insolvency practitioner remuneration?
11.	Surveillance of the work of private sector practitioners by a government regulator?
12.	Collation of insolvency statistics by a government regulator?