Directions to the Royal Bank of Canada
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: Douglas Jon Kovack
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 Douglas Jon Kovack (the trustee) is the holder of an individual license as trustee in bankruptcy;
Whereas a Practice Review commenced in November of 2008 has revealed a number of banking and financial deficiencies detailed below;
Whereas the trustee has failed to comply with the provisions of Directive 5R2, Estate Funds and Banking, which sets out the minimum standards for the accounting for and proper custody of estate trust funds, particularly by:
- failing to maintain up-to-date books and records showing all disbursements and receipts of estate funds.;
- failing to maintain complete banking records for estate accounts.
Whereas the trustee has failed to comply with the provisions of Directive 8, Unclaimed Dividends and Undistributed Funds, which sets out guidelines for the distribution of undistributed funds, particularly by:
- failing to distribute funds in the estate accounts for seventeen closed estates.
Whereas the trustee has since January 22, 2008 failed to maintain professional liability insurance coverage which is a condition of maintaining his trustee license and performing professional engagements per the provisions of Directive 13R, Trustee Licensing.
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)(b), a copy of which delegation is attached, along with copies of section 14.01, 14.02 and 14.03 of the Act;
I, Darrin Ulley, in my capacity as delegate for the Superintendent, direct the Royal Bank of Canada (245 Ouellette Avenue, Windsor, Ontario, N9A 7J2) that, pursuant to section 14.03(1)(b) and (c) of the Act:
- it consider, upon receipt of the present directions, Kyla Nauman, an employee of the Office of the Superintendent of Bankruptcy, as the only authorized co-signatory as relate to any operations of the funds credited to the estates of bankruptcies and proposals administered by Douglas Jon Kovack;
- it make no debit, payment or transfer of funds credited to, or which ought to have been credited to, the estates of bankruptcies and proposals administered by Douglas Jon Kovack without the countersignature of Kyla Nauman;
- it not pay out of these accounts: cheques, bills of exchange, bank drafts or other instruments, issued before the receipt of these directions which are presented for payment after the receipt of these directions, without these cheques, bills of exchange, bank drafts or other instruments being countersigned by Kyla Nauman;
- it submit all statement of accounts, accepted cheques and other documents or information having to do with the above-mentioned estate trust bank accounts, to Kyla Nauman, Senior Bankruptcy Analyst, Office of the Superintendent of Bankruptcy, 303 – 451 Talbot Street, London, Ontario, N6A 5C9;
That these directions take effect immediately and will stay in place until such time as the undersigned is satisfied that the estates no longer require protection;
That in accordance with section 14.03(3) of the Act, these directions bind the Royal Bank of Canada, which 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 Hamilton, Ontario, this 28th day of November, 2008
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