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.
Canada
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;
- 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 recent 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 in 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 sections 14.01, 14.02 and 14.03 of the Act;
Whereas subsections 14.03(1)a) and b) and (2)b) of the Act apply;
Whereas on the Official Receiver was directed to "...take possession and control of the property of the bankruptcy and proposal estates and the estate files, and also of accounting and electronic data related to estate files administered by Edward Bryce Quon and Quon and Associates Ltd..." and remit them to Mr. Glenn Steiner, agent of the Office of the Superintendent of Bankruptcy;
Whereas on the Official Receiver and officials of the Office of the Superintendent of Bankruptcy attended at 23 Westmore Dr, Suite 408, Etobicoke, Ontario, served a copy of these Directions on Mr. Edward B. Quon, and took possession of all bankruptcy and proposal estate files that could be identified;
Whereas certain estates, listed in Appendix A, could not be located even though the records of the Office of the Superintendent of Bankruptcy indicate that their administration is not complete;
I, Ann Speers, Assistant Superintendent, Trustee Compliance, in my capacity as delegate for the Superintendent, direct:
Mr. Edward Bryce Quon and Quon and Associates Ltd., to
- remit to the Official Receiver all the assets and files of the estates listed in Appendix A as well as the books, accounting and computer data associated with them and all the titles and documents related to said assets and files;
- remit to the Guardian Trustee any other assets and files of the estates as well as the books, accounting and computer data associated with them and all the titles and documents related to said assets and files now in your possession or which may come into your possession at a subsequent date which, in any way, relates to the bankruptcy estates for which a Guardian Trustee has been appointed.
These directions take effect immediately and will stay in place until further notice.
In accordance with section 14.03(3) of the Act, these directions bind the TD Canada Trust, 100, King St. W., Hamilton, Ontario, L8N 1A8 and TD Canada Trust, 2038 Kipling Avenue, Rexdale, Ontario, M9W 4K1, which must comply with them.
In accordance with section 14.03(4) of the Act, a person who complies with these directions is not liable for any act done by that person only to comply with these directions.
Signed at the City of Toronto Ontario this .
Ann Speers
Assistant Superintendent, Trustee Compliance
Appendix A
The list of estate names and numbers is available upon request to OSB Registry.