Jean-Guy St-Georges and St-Georges Hébert Inc. —
Professional Conduct Decision
What is a professional conduct decision?
An investigation into a Licensed Insolvency Trustees (LIT)'s professional conduct is initiated when there is information to suggest that the LIT has not properly performed the duties of a trustee or there has been improper administration of an estate or lack of compliance with the Bankruptcy and Insolvency Act (BIA).
In some cases, the findings are sufficiently serious to support a recommendation for sanctions against the LIT's licence (cancel or suspend a LIT's licence (subsection 13.2(5) of the BIA) or impose conditions or limitations (subsection 14.01(1) of the BIA)).
The professional conduct decision is deemed to be a decision of a federal board, commission or tribunal and may be judicially reviewed by the federal court.
Holder of an Individual Trustee Licence
St-Georges Hébert Inc.,
Holder of a Corporate Trustee Licence
For the Province of Quebec
Decision Rendered Pursuant to the Bankruptcy and Insolvency Act
Whereas a complaint was filed against the trustees in the Motel Ste-Rose and Les produits chimiques Desmarais files and an audit was carried out at the offices of the trustee St-Georges Hébert Inc. which disclosed several discrepancies;
Whereas these various factors led to instructions being issued to a senior analyst, professional conduct, to investigate the professional conduct of the trustees;
Whereas the follow-up to the audit report showed that the trustees had not corrected the said discrepancies and that new breaches were discovered, which led to the issuing of conservatory measures on ;
Whereas on this senior analyst filed a report on the trustee's conduct, which discussed several discrepancies in the administration of the estates by the trustees Jean-Guy St-Georges and St-Georges Hébert Inc., some of which were serious, in that:
- in the Motel Ste-Rose file, the trustee:
- did not promptly provide reasons for dismissing a creditor's claims;
- failed to disclose the fee guarantee and third party deposit;
- left an inspectors' meeting before it ended;
- after being replaced, failed to submit accounts to the Court forthwith;
- falsely told the Court that the fee guarantee was mentioned at the first creditors' meeting;
- in the Les Produits chimiques Desmarais file, the trustee:
- issued or caused to be issued a bankruptcy notice before filing the assignment of the business, which constituted a false indication of bankruptcy: the investigation disclosed that similar breaches had taken place in five other files;
- caused an inventory to be drawn up including a date which he knew, or should have known, was false;
- did not promptly send a complete balance sheet, failing to attach a list of the debts payable to the estate: the investigation disclosed that similar breaches had taken in five other files;
- the professional conduct report mentioned the breaches noted in the audit report, which raised the following discrepancies:
- the trustee had no fidelity insurance;
- non-compliant administration of third party deposits;
- use of non-compliant [TRANSLATION] "filing fee" bank account;
- use of non-compliant bank account [TRANSLATION] "for GST";
- use of general trustee account for filing receipts and payment of estate disbursements;
- disbursements not supported by documentation;
- cashing final fees prior to taxation;
- taking inventory not in compliance with requirements;
- lack of audit of certain statutory balance sheets of bankrupts and failure to realize on assets in certain files;
- the professional conduct report mentioned the fact that the follow-up to the audit revealed the following discrepancies;
- illegal offset of banking costs from interest income;
- failure to respond to request by the Senior Assistant Superintendent;
- failure to file third party deposits in the appropriate account;
- the professional conduct report also referred to the fact that the trustee had not opened a trust bank account or kept a cash card for 77 ordinary estate files;
Whereas the licence of the corporate trustee St-Georges Hébert Inc. was cancelled for non-renewal on ;
Whereas the trustee Jean-Guy St-Georges admitted all the acts and infractions set out above, except those concerning the Motel Ste-Rose and Les Produits chimiques Desmarais files;
Whereas the trustee nevertheless decided not to challenge the content of the report;
Whereas the investigation disclosed that several of the aforesaid infractions had been commented on by the Office of the Superintendent of Bankruptcy in the past;
In view of, among other things, the trustees' inability to account to the Superintendent's satisfaction for the administration of the 77 files for which they were appointed as trustee;
Whereas the Office of the Superintendent of Bankruptcy, even before discovering this very serious breach, had already issued conservatory measures against the estates administered by these trustees in order to safeguard them;
Whereas Jean-Guy St-Georges sold the St-Georges Hébert Inc. files to another corporate trustee, and the latter trustee has undertaken to account for the administration of these estates;
Whereas Jean-Guy St-Georges is now employed by a new corporate trustee and has even asked the Office of the Superintendent of Bankruptcy to limit his individual licence so he will only be able to work on the closing of files and can no longer file new bankruptcies;
In view of the trustee's age;
Whereas the parties have submitted to me the text of this decision, which in the circumstances of this case appears to be fair, reasonable and not contrary to public order;
For These Reasons:
I the undersigned, Perry Meyer, Q.C., delegate of the Superintendent of Bankruptcy, pursuant to the powers delegated to me under section 14.01 of the Bankruptcy and Insolvency Act,
Suspend the licence of the trustee Jean-Guy St-Georges for a period of 21 months, the said suspension to take effect two days after signature of this decision, a period during which he may file no new estate bankruptcies pursuant to the BIA.
As the licence of St-Georges Hébert Inc. has already been cancelled, it may not be reactivated until the suspension of the licence of Jean-Guy St-Georges has expired.
Orders that the trustee Jean-Guy St-Georges, if he resumes practice as a trustee after the suspension is lifted, shall submit to the Official Receiver during the first twelve months after he resumes his trustee practice;
- proof of the opening of a bank account in trust for all ordinary files within ten days of its opening;
- proof of deposit of the fee guarantee or third party deposit in accordance with Directive 5R dealing with third party deposits and guarantees within ten days of the deposit;
- a copy of all agreements on third party deposits and fee guarantees within ten days of their signature;
Maintains the conservatory measures applicable to the two general trustee accounts;
Order that the measures not be lifted until after a bank reconciliation of the two general trustee accounts, acceptable to the signatory of the conservatory measures, Michel Leduc, has been conducted by Jean-Pierre Lapratte of the firm Lafond, Lapratte for the period from to the date of signature of this order;
Order that the said bank reconciliation be made within four months of the date this order comes into effect;
Notes that any failure by the trustee to comply with the orders and conditions set out above shall cause the trustee to be in breach of section 13.2(5) of the Act.
Signed at Montréal on
Hon. Perry Meyer, Q.C., delegate of Superintendent of Bankruptcy
This document has been reproduced as submitted by the delegate of the Superintendent of Bankruptcy.
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