Edward Bryce Quon; Quon & Associates Ltd.
Directions for Conservatory Measures to Abubakar Khan—October 7, 2011
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:
Quon and Associates Ltd.
Edward Bryce Quon
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 Edward Bryce Quon (the trustee) is the holder of an individual license as trustee in bankruptcy;
Whereas Quon and Associates Ltd. (the trustee) is the holder of a corporate trustee license;
Whereas the investigations made by the Superintendent pursuant to paragraph 5(3)(e) of the Act revealed that the administration of all the open estates filed under the trustee's licence had been ongoing for a period exceeding three years;
Whereas the investigations made by the Superintendent pursuant to paragraph 5(3)(e) of the Act revealed a number of contraventions in the trust fund banking and general administration aspects of the trustee's administration of his estates;
Whereas the Toronto Division Office of the Superintendent of Bankruptcy conducted a monitoring of Quon and Associates Ltd. on and , 2002 where cash receipts were identified without being deposited to their respective estate trust bank accounts;
Whereas the Toronto Division Office of the Superintendent of Bankruptcy did not receive a satisfactory response from the trustee regarding discrepancies between estate ledgers, cash receipts book records, bank deposit slips and estate bank statements following correspondence exchanged in August 2002;
Whereas the Toronto Division Office of the Superintendent of Bankruptcy requested a special audit of Quon and Associates Ltd to determine the extent of the serious deficiencies discovered during the monitoring visit of August 2002;
Whereas the special audit started on and on , the auditor reported in part that:
- further cash receipts were not deposited to their respective estate trust bank accounts in accordance with the requirements of the Act;
- a significant number of bank accounts are not held in trust; and,
- a significant sum of money is invested in GIC's without being able to match the amount invested to the estate ledgers or estate bank statements;
Whereas a review of the estate files on revealed that the trustee has failed to remedy many of the problems reflected in the earlier audit;
Whereas the trustee has allowed the corporate charter to lapse and has failed to take any steps to rectify the situation as required by the Acting Senior Division Assistant Superintendent in her letter of ;
Whereas the trustee has failed to provide proof of insurance coverage for liability and fidelity or employee dishonesty and this, together with the lapse of the corporate charter, raises serious concerns as to the availability of such insurance, as required under the Bankruptcy and Insolvency Act;
Whereas the trustee has a large number of estates which have remained open for an excessive period of time;
Whereas the trustee failed to submit a Closing Plan, as required by the Acting Senior Division Assistant Superintendent, most recently in her letter of ;
Whereas information has raised concerns that the individual trustee may not be solvent, as required by the Bankruptcy and Insolvency Act;
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 paragraph 14.03(2)(b) of the Act applies;
I, Karen Smith, in my capacity as delegate for the Superintendent direct that pursuant to paragraphs 14.03(1)(a) and (b) of the Act Mr. Abubakar Khan, Guardian Trustee:
- To take the necessary steps to administer all estates and estate files previously administered by either Quon and Associates Ltd. or Edward Bryce Quon, as well as any closed estates that may require further administration and any other of the trustee's files identified by the Official Receiver as requiring further administration;
- To keep the said property and records, deeds, books, documents, computerized data and bank accounts related to such files, to make an inventory of them, to preserve them and to administer them in accordance with the sections of the Act;
- To continue the administration of these files in accordance with the duties and responsibilities incumbent on trustees in bankruptcy according to the Act;
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 Abubakar Khan, 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 Toronto, Ontario, this .
This document has been reproduced as submitted by the delegate of the Superintendent of Bankruptcy.
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