What is a conservatory measure?
The Superintendent of Bankruptcy puts in place conservatory measures when a bankruptcy or insolvency estate needs protection. It might be in cases of Licensed Insolvency Trustee (LIT) malfeasance or if serious wrongdoing on the part of a LIT puts estate files at risk. Conservatory measures may also be put in place if a LIT becomes ill or dies without a valid succession agreement. Finally, conservatory measures may be put in place if a LIT, for whatever reason, has allowed the administration of his or her practice to become substandard.
In the matter of:
Henry Sztern & Associés inc.
Directions for Conservatory Measures
(section 14.03 of the Bankruptcy and Insolvency Act)
Whereas the Bankruptcy and Insolvency Act (Act) provides the Superintendent with the general power to supervise the administration of all estates and matters to which the Act applies;
Whereas the Superintendent of Bankruptcy may and must, for the protection of an estate, exercise the powers referred to in subsection 14.03(1) of the Act in the circumstances stipulated in subsection 14.03(2) of the Act;
Whereas on April 3, 2003, for the above mentioned reasons and with a view to protecting the estates, the undersigned issued conservatory measures which enjoined the financial institution where, according to information given by the trustees, estate funds had been deposited, to no longer honour bills of exchange, transfers of funds, payments or otherwise, unless they be co-signed by a representative of the Office of the Superintendent of Bankruptcy;
Whereas these measures also enjoined the Official Receiver to stop appointing the trustees to new files and also enjoined a representative of Industry Canada to make a copy of the trustees' computerized accounting system and of the accounting data pertaining to the estates;
Whereas subsequent to the issuance of these conservatory measures, the investigation concerning the trustees revealed that the trustees misled representatives of the Office of the Superintendent of Bankruptcy by making false statements and by knowingly providing incomplete, erroneous and false documents;
Whereas on April 14, 2003, for reasons also mentioned therein, the undersigned issued a second series of conservatory measures through which, among other things, all files of trustees Henry Sztern & Associés inc. and Henry Sztern open as of April 14, 2003 are now administered by H.H. Davis & assoc. inc. as agent of the Superintendent of Bankruptcy;
Whereas certain actions must be taken to complete the administration of estate files not affected by these conservatory measures as a result of the trustee's discharge from these estates on or before April 14, 2003;
Whereas the Superintendent of bankruptcy has delegated to the Deputy Superintendent (Policy, Programs and Standards, now Programs, Standards and Regulatory Affairs) in accordance with subsection 14.01(2) of the Act, in certain situations mentioned in subsection 14.03(2), his powers as specified at subsection 14.03 (1) of the Act, copies of which delegation are attached along with copies of subsections 14.01(2) and 14.03(1) to (4) of the Act ;
Whereas subsections 14.03(1)a) and b) of the Act apply;
I, Alain Lafontaine, in my capacity as Deputy Superintendent (Programs, Standards and Regulatory Affairs), direct:
Gilles-Normand Lavallée, official receiver, or in the event he is unable to act, Bernadette Blain, also an official receiver, to take any necessary action in order to complete the administration of bankruptcy estates formerly administered by Henry Sztern & Associés Inc. and Henry Sztern and not affected by the directions for conservatory measures issued by the undersigned on April 14, 2003 as a result of the trustee's discharge from these estates as of that date. These individuals are hereby invested with all the necessary powers for this purpose, and without limiting the generality of the foregoing, to sign all judicial proceedings, legal documents, contracts, notices, and certificates provided for in the Act, open the appropriate bank accounts and use them to make any transactions necessary to complete the administration of these estates. These individuals may seek assistance from any other official receiver in order to carry out these directions.
These directions take effect immediately and will stay in place until further notice or until a decision is rendered under section 14.01 of the Act;
In accordance with subsection 14.03(3) of the Act, these directions bind their addressee, who must comply with them;
In accordance with subsection 14.03(4) of the Act, a person who complies with the present directions is not liable for any act done only to comply with them.
Signed, in the City of Ottawa, Ontario, May 6, 2003
Programs, Standards and Regulatory Affairs
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