Conservatory Measures
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: Lloyd W. Murphy and L. W. Murphy Ltd., dba Murphy Associates
Directions for Conservatory Measures
(Section 14.03 of the Bankruptcy and Insolvency Act)
Whereas the Bankruptcy and Insolvency Act (the Act) provides the Superintendent of Bankruptcy (the Superintendent) with the general power to supervise the administration of all estates and matters to which the Act applies;
Whereas Lloyd W. Murphy (the trustee) is the holder of an individual license as trustee in bankruptcy;
Whereas L. W. Murphy Ltd., dba Murphy Associates is the holder of a corporate licence as trustee in bankruptcy;
Whereas the trustee is the sole practitioner of L. W. Murphy Ltd., dba Murphy Associates;
Whereas Mr. William Millar from the Office of the Superintendent of Bankruptcy (OSB) was informed by the trustee that he had obtained a $300,000 line of credit from the Canadian Imperial Bank of Commerce (CIBC);
Whereas in January 2009 the CIBC advised the trustee that he no longer fit the bank's profile of desired clients and asked him to seek financing elsewhere;
Whereas the trustee has been unable to find financing;
Whereas the CIBC issued to the trustee a 10 day notice of demand to enforce security on , requiring the trustee to pay, in full, the outstanding balance of the loan;
Whereas the trustee has advised the OSB that he is not in a position to repay the bank in full without waiting a significant period of time to allow for income tax refunds to be generated on the estates, thereby indicating that the trustee has become insolvent;
Whereas the trustee has contacted another bankruptcy trustee for the purpose of filing a Notice of Intention to Make a Proposal, if necessary, thereby corroborating the trustee's insolvency;
Whereas the trustee's file inventory totals 280 estates with an aggregate amount of approximately $700 000 in the trust bank accounts;
Whereas I believe on reasonable grounds that the estates require protection;
Whereas the Superintendent may, for the protection of an estate, exercise the powers set out in subsection 14.03(1) of the Act, in the circumstances referred to in section 14.03(2) of the Act;
Whereas the Superintendent has delegated to me, in accordance with section 14.01(2) of the Act, the powers of the Superintendent as specified at section 14.03(1) of the Act, in the circumstance referred to in section 14.03(2), a copy of which delegation is attached, along with copies of sections 14.01, 14.02 and 14.03 of the Act;
Whereas paragraphs 14.03(1)(b) and (c) and 14.03(2)(e) of the Act apply;
I, Wayne McMullen, in my capacity as delegate for the Superintendent, direct:
Ms. Colleen Bond to ensure the validity and justification of all payments for expenses, fees, remuneration, etc. from the estate accounts administered by Lloyd W. Murphy and L. W. Murphy Ltd., dba Murphy Associates that are presented for payment subsequent to the issuance of these directions, and if said payments are justified, to co-sign all cheques, bills of exchange, bank drafts, certificates of deposit and fund transfers payable out of the estate trust bank accounts administered by Lloyd W. Murphy and L. W. Murphy Ltd., dba Murphy Associates.
That these directions take effect immediately and will remain in effect until such time as the undersigned is satisfied that they are no longer required;
That in accordance with section 14.03(3) of the Act, these directions bind the addressee who must comply with them;
That, pursuant to section 14.03(4) of the Act, a person who complies with this direction is not liable for any act done by that person only to comply with this direction.
Signed at the City of Edmonton, Alberta, this
Wayne McMullen
Assistant Superintendent of Bankruptcy