Treatment of the Manitoba Public Insurance Rebate under the Bankruptcy and Insolvency Act

Background

The Manitoba Public Insurance (MPI) CorporationFootnote 1 was ordered by the Public Utilities Board (PUB)Footnote 2 to issue to all policyholders, by , a premium rebate of 45 percent of basic vehicle premiums paid in the 2009–10 insurance year. The ruling means that the average Manitoba ratepayer will receive a rebate of $450. PUB, which regulates the MPI Corporation, ordered the rebate after discovering that the MPI Corporation had too much money set aside in its personal injury claims reserves.

Question

The Office of the Superintendent of Bankruptcy (OSB) was asked for its position on the treatment of the Manitoba Public Insurance Rebate in a bankruptcy context. Is the rebate to be considered as income for the purpose of calculating surplus income obligations or is it to be considered as property of the bankrupt and, therefore, forms part of the estate of the bankrupt?

Analysis

Pursuant to subsections 26(1) and 26(2) of The Crown Corporations Public Review and Accountability Act, C.C.S.M. c. C336, PUB has jurisdiction to review and approve the rates for service to be charged by the MPI Corporation and, in particular, the rate bases and premiums charged with respect to compulsory driver and vehicle insurance provided by the MPI Corporation. Furthermore, pursuant to section 28 of The Crown Corporations Public Review and Accountability Act, PUB may make any order to compensate for or to refund any excess amounts collected by the corporation that it considers necessary and appropriate in the circumstances.

To fall under the definition of "total income" in section 68 of the Bankruptcy and Insolvency Act (BIA), the relevant funds must be a substitution for income, akin to income or in the nature of income.Footnote 3 As the rebates do not have any connection to income, salary, wages or remuneration, they do not fall under the definition of "total income" and, therefore, are included as property of the bankrupt as per section 67 of the BIA. The rebate should not be included in "income" for the purpose of calculating surplus income obligations under the BIA.

The enabling legislation does not provide that the Manitoba Public Insurance Rebate payment is exempt from execution or seizure, as the terms are used in paragraph 67(1)(b) of the BIA and in other statutes that provide for similar types of rebates or credits, nor does it stipulate that the rebate payment cannot be assigned under the BIA.

One of the purposes of the BIA is to ensure that all property owned by the bankrupt on the date of bankruptcy or in which the bankrupt may, on that date, have a beneficial interest will, with certain exceptions, vest in the trustee for realization by the trustee for the general benefit of creditors and distribution to creditors. Section 67 of the BIA specifies what property of the bankrupt is divisible and what property is not divisible among creditors. The Manitoba Public Insurance Rebate payment is not captured under the exceptions listed in paragraphs 67(1)(a)(b)(b.1)(b.2) and (b.3) of the BIA, but rather is considered property of the bankrupt that is divisible among creditors as per paragraph 67(1)(c) of the BIA.

Conclusion

It is the OSB's position, subject to Court interpretation to the contrary, that the Manitoba Public Insurance Rebate falls under the scope of paragraph 67(1)(c) of the BIA and, therefore, forms part of the property of the bankrupt that is divisible among his/her creditors.

For more information on the Manitoba Public Insurance Rebate, see the Manitoba Public Insurance website.

Date modified: