the business of insolvency and bankruptcy act system prevails
introduction
the administration of the Canadian insolvency and bankruptcy
Governor in Council appoints the superintendent of bankruptcy superintendent to hold office during good behavior for a
term of not more than 5 years.
current superintendent
The OSP is a self-funding federal government agency.
They must fund itself from the insolvency process in system in Canada.
The fees charged for the licensing of individual and corporate licensed insolvency trustees trustees in bankruptcy
trustee.
Filing fees for the registration of insolvency files in Canada.
a lot of dividends paid to creditors by a trustee to help defray the insolvency ACT RSC 1985 cb300r
Is how the government business side of the Canadian insolvency and bankruptcy act system works?
The rate of Levi is a sliding scale.
full Administration bankruptcy
5% if the amount of payments is $1000000 or less.
5% of the first $1000000 plus one and one-quarter percent of the amount in excess of $1000000 if the amount of payments
exceeds $1000000 but is not more than 2 million dollars.
5% of the first $1000000 1 one-quarter percent of the second $1000000 plus 1/4 of 1% of the amount in excess of $2000000
if the amount of payments exceeds $2000000.
The Proposal the Levee is the same as above except for distributions over 2 million dollars. There is no further Levy
collected on EXs.
the rate of Life payable for a streamline personal bankruptcy Administration
100% if the amount of payments is $200 or less or
100% of the first $200 plus 0% of the amount in excess of $200 if the amount of payments exceeds $200 the challenge to the
levy.
I want to describe to you the case of superintendent of Business Development.
This is an appeal to the court of appeal of Manitoba.
Thompson flexible packaging limited. The insolvent is a bankrupt company.
The trustee made a payment from the sale of assets to the secured creditor Business Development Bank of Canada BDC on
account of its secured debt.
lower court judge on
the superintendent appeal that decision
The superintendent's position. Was that the lower quarter to deciding that the trustee was not required to hold back the
table to the superintendent from the funds paid to BBC.
history
solvent first filed a notice of intention to make a proposal
Those proceedings the court issued orders.
the cast in place of the gas that's in the trustee how the cash pending the determination as to who is entitled to the
money and then what priority
Ultimately, the insolvent could not make a viable proposal and wisdom to a file to an assignment in bankruptcy.
After falling into bankruptcy the trustee paid over the net proceeds from the deals to BBC as well as Royal Bank of Canada
another secured creditor RBC.
The trustee also kept back the lab. That should be paid.
the Bee Gees emotion
Ultimately BBC filed motion materials on its application to the court that the levy in favor of the superintendent.
the approval investing orders
The lower court made the following findings end table.
When it made the repayments to BBC at RBC the trustee was acting neither as a representative for North trustee in
bankruptcy of the insolvent. This secured credit cards were being kept in escrow for the secured creditors subject only to
determine who is priority for payment is between
This Lower Court decision is just plain wrong.
From my perspective the issue was decided many years ago.
USBS position through its directive number 10, which is been updated over the years is quite clear.
the OSP directive on this point is its directive number 10 r
The directives are not law. They do outline the osp's interpretation and position on issues.
This directive states that the levy is payable on all distributions made with only two exception.
the exemptions are
When the trustee has actually functioned as the Agent P R receiver in a separate but related engagement for a secured
creditor.
When the trustee actually redeems or buys out the security within the definition of section 128 3 of the beer.
Either of those exceptions took place in this case.
The Appellate Court look at section 147 of the directive.
the Appellate Court said that parliament's objective is for all secured creditors that get payments from an insolvency
proceeding under the squid from the application of s
147 such a provision would have been included in the statute.
No, such exception exist.
The appeal court also went through a very thorough analysis or previous case law.
That level of detail is beyond the scope of my Brandon's blog.
You can read the appeal court decision by clicking here.
the appeal court decision
The appeal Courts at the lower court judge.
The first mistake was in finding that the net sale proceeds were being held by the trustee and escrow as opposed to in its
role as trustee in bankruptcy.
The second mistake is highlighted by the fact that you made no findings concerning the nature of the relationship produced
by it.
Or exactly how the arrangement might bypass the requirements for the trustee to deduct the Levee and remitted to the OSB
the appeal court. Therefore allow the OSB xappeal in the trust. He will have to remit the levy to the OSB on payments made
to be DC and RBC.
There was always a simple fix.
simple fixes really easy
Bankruptcy trustee needs to obtain an independent legal opinion by creditors claiming to be secured.
The trustee should get that opinion is early out in the bankruptcy Administration as possible.
Once the trustee has the opinion that the security is good the trust he can approach the secured creditors to see if they
wish to retain The Firm.
That is a separate appointment of the insolvency and bankruptcy.
Once appointed separately by the secured creditor the payment made to the secured creditor by a page into a receiver does
not attract the Levee.
The secured creditor did not rely on the bankruptcy process to produce the payment to it. So no Levi is payable. This has
been our standard well-established way of dealing with such a situation forever.
summary for insolvency and bankruptcy Act
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