An Act to amend the Bankruptcy and Insolvency Act, the Companies' Creditors Arrangement Act, the Wage Earner Protection Program Act and chapter 47 of the Statutes of Canada, 2005
| Amendments to the Bankruptcy and Insolvency Act (BIA) | Clauses of Bill C-12 | Sections |
|---|---|---|
| Public Policy Exception | 81 | s.61(2) |
| Regulation Making Authority | 82 | s.62 |
| Investments in Government Securities | 95 | s.25(1.4) |
| Directions to Interim Receiver | 96 | s.47(2) |
| Directions to Interim Receiver | 97 | s.47.1(2) |
| Vote on Proposals | 98 | s.54 |
| Payment of Equity Claims in a Proposal | 99 | s.60(1.7) |
| Mediation Request | 100 | s.170.1 |
Bill Clause No. 81
Section No. CCAA s.61(2)
Topic: Public Policy Exception
Proposed Wording
61.(2) Nothing in this Part prevents the court from refusing to do something that would be contrary to public policy.
Rationale
Chapter 47 amended the Act by including the principles of the United Nations Commission on International Trade Law's Model Law on Insolvency. The amendment clarifies that courts should consider Canadian public policy when determining whether it would be appropriate to cooperate with a foreign court. Public policy is broader than strictly in "compliance with the laws of Canada". The Model Law uses the concept of public policy, not legal compliance, when setting out the requirements on courts to cooperate.
Present Law
As enacted by Chapter 47, Clause 131:
61.(2) Nothing in this Part requires the court to make any order that is not in compliance with the laws of Canada or to enforce any order made by a foreign court.
Bill Clause No. 82
Section No. CCAA s.62
Topic: Regulation Making Authority
Proposed Wording
62. The Governor in Council may make regulations for carrying out the purposes and provisions of this Act, including regulations
Rationale
Authority to make regulations was originally provided to the Minister of Industry. The Act is amended to provide that authority to the Governor in Council. This is in keeping with the current practice.
Present Law
As enacted by Chapter 47, Clause 131:
62. The Minister may make regulations for carrying out the purposes and provisions of this Act, including regulations
Bill Clause No. 95
Section No. BIA s.25(1.4)
Topic: Investments in Government Securities
Proposed Wording
Subsection 20(3) of Chapter 47 of the Statutes of Canada, 2005 is repealed.
Rationale
The Chapter 47 amendment was redundant because the Superintendent of Bankruptcy issued Directives already to allow trustees to invest funds as described in the subsection.
Present Law
As enacted by Chapter 47, Clause 20(3):
25.(1.4) A trustee may, with the permission of the court, invest the funds in short-term securities of the Government of Canada or the government of a province held in trust for the estate.
Bill Clause No. 96
Section No. BIA s.47(2)
Topic: Directions to Interim Receiver
Rationale
Clause 30(2) of Chapter 47 is superseded by Clause 14 of this Bill.
Present Law
As enacted by Chapter 47, Clause 30(2):
Subsection 47(2) of the Act is amended by adding the word "and" at the end of paragraph (a), by striking out the word "and" at the end of paragraph (b) and by repealing paragraph (c).
Bill Clause No. 97
Section No. BIA s.47.1(2)
Topic: Directions to Interim Receiver
Rationale
Clause 31(3) of Chapter 47 is superseded by Clause 15 of this Bill.
Present Law
As enacted by Chapter 47, Clause 31(3):
Subsection 47.1(2) of the Act is amended by adding the word "and" at the end of paragraph (b), by striking out the word "and" at the end of paragraph (c) and by repealing paragraph (d).
Bill Clause No. 98
Section No. BIA s.54
Topic: Vote on Proposals
Proposed Wording
Subsection 37 of the Act is repealed.
Rationale
Clause 37 of Chapter 47 is superseded by Clauses 19 and 20 of this Bill.
Present Law
As enacted by Chapter 47, Clause 37:
54.(1)(a)(i) all unsecured creditors, other than a creditor having a claim against the debtor arising from the rescission of a purchase or sale of a share or unit of the debtor - or a claim for damages arising from the purchase or sale of a share or unit of the debtor, and 60.(1.7) No proposal that provides for the payment of an equity claim is to be approved by the court unless the proposal provides that all claims that are not equity claims are to be paid in full before the equity claim is to be paid.
Bill Clause No. 99
Section No. BIA s.60(1.7)
Topic: Payment of Equity Claims in a Proposal
Proposed Wording
60.(1.7) No proposal that provides for the payment of an equity claim is to be approved by the court unless the proposal provides that all claims that are not equity claims are to be paid in full before the equity claim is to be paid.
Rationale
The amendment is intended to clarify that holders of equity claims are to be subordinate to holders of other claims. As ownership interests, equity interests should be subject to the risks of insolvency.
Subsection (1.7) was added to ensure that equity claims are subordinated to all other claims. It will prevent the possible abuse of "hostage voting," where a person with an equity claim and a non-equity claim uses the leverage of the non-equity claim to obtain beneficial treatment for the equity claim.
Present Law
None.
Bill Clause No. 100
Section No. BIA s.170.1
Topic: Mediation Request
Proposed Wording
170.1(1) If the discharge of a bankrupt individual is opposed by a creditor or the trustee solely on grounds referred to in either one or both of paragraphs 173(1)(m) and (n), the trustee shall send an application for mediation, in the prescribed form, to the official receiver within five days after the day on which the bankrupt would have been automatically discharged had the opposition not been filed or within any further time after that day that the official receiver may allow.
(2) A mediation is to be in accordance with prescribed procedures.
(3) If the issues submitted to mediation are not resolved by the mediation or the bankrupt failed to comply with conditions that were established as a result of the mediation, the trustee shall without delay apply to the court for an appointment for the hearing of the matter — and the provisions of this Part relating to applications to the court in relation to the discharge of a bankrupt apply, with any modifications that the circumstances require, in respect of an application to the court under this subsection — which hearing is to be held
- (a) within 30 days after the day on which the appointment is made; or
- (b) at a later time that is fixed by the court.
(4) If the bankrupt complies with the conditions that were established as a result of the mediation, the trustee shall without delay
- (a) issue to the bankrupt a certificate of discharge in the prescribed form releasing the bankrupt from their debts other than those referred to in subsection 178(1); and
- (b) send a copy of the certificate of discharge to the Superintendent.
(5) Documents contained in a file on the mediation of a matter form part of the records referred to in subsection 11.1(2).
Rationale
Subsection (1) was amended to clarify under what circumstances a trustee is obligated to send an application for mediation.
Subsection (2) was amended to modernize the language.
Subsection (3) was amended to reflect the changes that were made to section 170.1 in Chapter 47, specifically that the trustee no longer makes a recommendation as to whether or not the bankrupt should be discharged subject to conditions.
Subsection (4) was amended to reflect the changes that were made to subsection (3).
Present Law
As enacted by Chapter 47, Clause 103:
170.1(1) If the discharge of an individual bankrupt is opposed by a creditor or the trustee in whole or in part on a ground referred to in paragraph 173(1)(m) or (n), the trustee shall send an application for mediation, in the prescribed form, to the official receiver within five days after the day on which the bankrupt would have been automatically discharged had the opposition not been made, or within any further time after that day that the official receiver may allow.
(2) A mediation shall be in accordance with prescribed procedures.
(3) Where the issues submitted to mediation are not thereby resolved or the bankrupt has failed to comply with conditions that were established by the trustee or as a result of the mediation, the trustee shall forthwith apply to the court for an appointment for the hearing of the matter, which hearing shall be held
- (a) within thirty days after the day the appointment is made, or
- (b) at such later time as may be fixed by the court,
and the provisions of this Part relating to applications to the court in relation to the discharge of a bankrupt apply, with such modifications as the circumstances require, in respect of an application to the court under this subsection.
(4) Where the bankrupt complies with the conditions imposed on the bankrupt by the trustee in relation to the discharge of the bankrupt or as a result of mediation referred to in this section, the trustee shall
- (a) issue to the bankrupt a certificate of discharge in the prescribed form releasing the bankrupt from all debts other than a debt referred to in subsection 178(1); and
- (b) send a copy of the certificate of discharge to the Superintendent.
(5) Documents contained in a file on the mediation of a matter under this section form part of the records referred to in subsection 11.1(2).