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 Absolute
Discharge
See
Discharge from
Bankruptcy .
Act of Bankruptcy
An act committed by a debtor as defined under the Bankruptcy and
Insolvency Act. One of the most common is if a debtor ceases to
meet his liabilities generally as they become due. A creditor with a
provable claim of $1000 and over may file a petition for a receiving
order if the debtor has committed such an act within the six months
preceding the filing of the petition.
Administrator
A person designated by the Superintendent of Bankruptcy, responsible for
the administration of a consumer proposal under the Bankruptcy and
Insolvency Act.
Affidavit
A voluntary written declaration of facts affirmed or sworn under oath
before an authorized officer such as a Notary Public or Commissioner of
Oaths.
Arm's Length
Describes dealings between two parties who, amongst other things, are
not related by blood or marriage and are presumed to have roughly equal
bargaining power.
Assets
In the context of bankruptcy it means all the property of the debtor
available for distribution for the general benefit of creditors
(available for paying debts).
Assignment in Bankruptcy
A voluntary assignment by an insolvent person of all of his property to
a trustee for the general benefit of creditors.
Automatic Discharge
See Discharge from
Bankruptcy.
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Bailiff
A person who acts on behalf of any other person in the repossession or
seizure of property
Bankrupt
A natural person or corporation who has made a voluntary assignment in
bankruptcy or against whom a receiving order has been made.
Bankruptcy
The state of being bankrupt or the fact of becoming bankrupt.
BIA
Bankruptcy and Insolvency Act, a federal statute governing
bankruptcy and insolvency in Canada, which is applicable to all
provinces and territories.
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CAIRP
Canadian Association of Insolvency and Restructuring Professionals is
the national professional organization representing trustees in
bankruptcy, receivers, agents, monitors and consultants in insolvency
matters.
CRA
Canada Revenue Agency (formerly known as Canada Customs and
Revenue Agency (“CCRA”)
Certificate of Full Performance of
Proposal
A document issued by the trustee or administrator once a debtor has
fully performed his or her obligations under the proposal.
Charge
An encumbrance, lien or financial obligation attached to property.
CCAA
Companies' Creditors Arrangement Act.
CIRP
Chartered Insolvency and Restructuring Professional; a professional
designation given by CAIRP to those who meet the Association's standards
for admission, complete the prescribed course of study and pass the
required examinations.
Claim, Provable
See
Provable Claim
.
Collateral
Property that is pledged as security against a debt.
Conditional Discharge
See
Discharge From
Bankruptcy .
Conditional Sale
The sale of goods where the buyer receives possession of goods or
property, but does not receive title to them until specific conditions
are fulfilled.
Consolidation Order
In specific provinces, an order handed down by a provincial court to
combine the debts of an insolvent person pursuant to the Orderly Payment
of Debt Regulations in Part X of the Bankruptcy and Insolvency Act.
(See Voluntary Deposits
Scheme).
Consumer Proposal
A simplified process to make a proposal for repayment of debt to
creditors, available under the Bankruptcy and Insolvency Act to
a consumer debtor whose aggregate debts, excluding any debts secured by
the person's principal residence, do not exceed the amount prescribed in
the Bankruptcy and Insolvency Act.
Contingent Claim
A provable claim in bankruptcy that may or may not become a debt
depending upon the result of some future event.
Corporation
A legal entity (usually a business), distinct from its shareholders,
which has the authority to act as a natural person.
Counselling
A process under which services of a qualified counsellor are made
available to assist and educate bankrupts and/or relatives of bankrupts,
or consumer debtors, on good financial management, including prudent use
of consumer credit and budgeting principles; in developing successful
strategies for achieving financial goals and overcoming financial
setbacks; and at any time, where appropriate, making referrals to deal
with non-budgetary causes of insolvency (e.g.: gambling, addiction,
marital and family problems, etc.).
Creditor
One to whom a debt is owed; in insolvency matters, a person (see
definition of “Person”)
having a claim provable under the Bankruptcy and Insolvency Act.
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Debt
A specific sum of money due by agreement or otherwise.
Debtor
One who owes money to another.
Deemed Trust
A trust established by statute. For example, income tax deducted at
source as prescribed by the Income Tax Act is deemed to be held in trust
for the Crown.
Default
Failure to pay or perform a legal or contractual obligation.
Discharge From Bankruptcy
The release of a debtor from the obligation to repay his or her debts. A
bankrupt's discharge may be automatic, suspended, conditional or
absolute. A bankrupt may also be refused discharge.
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Automatic Discharge
A first time bankrupt whose discharge is not opposed by the
Superintendent, a trustee or a creditor and who has not refused or
neglected to receive counselling, is automatically discharged on the
expiration of the nine month period immediately following the
bankruptcy.
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Order of Absolute Discharge
This official document issued by the court relieves the debtor of
the debts incurred before the debtor declared bankruptcy, taking
under consideration the exceptions provided in the Act.
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Order of Conditional Discharge
The court may impose certain conditions that must be met before a
person's discharge becomes absolute. For example, the Court may
require you to pay an amount to your trustee for distribution to
your creditors.
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Order of Suspended Discharge
The court orders a delay so that the discharge will not be effective
until a certain date.
Dividend
The proportional share of a bankrupt's estate paid out by the trustee to
creditors who have proven claims against that estate.
Duties of a Bankrupt
Obligations that must be performed by a bankrupt. For example, provide
the trustee with a statement of the bankrupt's affairs showing the
particulars of his or her assets and liabilities, the name of all his
creditors etc.
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Encumbrance
A claim or liability that is attached to property or some other right
that may lessen its value, eg. a lien or mortgage.
Equity
The difference between the market value of an asset and the secured debt
against it.
Estate
All the property of a person; the file in bankruptcy
Examination
Questioning of the bankrupt under oath with respect to the bankrupt's
conduct, causes of bankruptcy and disposition of the bankrupt's
property. The examination may be conducted by an Official Receiver, a
trustee, a creditor or other interested person in accordance with
conditions prescribed in the Bankruptcy and Insolvency Act.
Exempt Asset
Assets defined as exempt by provincial legislation that are not
available to the trustee for the benefit of creditors.
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Garnishment
A legal process whereby a creditor requires a third party to turn over
to the creditor, a debtor's property such as wages or bank accounts.
General Rules
Rules created pursuant to the Bankruptcy and Insolvency Act for
the administration of this statute.
Guarantor
A person (see definition of “Person”)
who takes on financial responsibility for another's debt.
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Hypothec
A right on property given to a creditor as performance for an
obligation. The creditor then has a right to follow the property even if
it undergoes successive changes of ownership.
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Inspector
Inspectors are appointed by creditors to represent them before the
trustee during the administration of proposals and bankruptcies. They
are expected to assist the trustee by virtue of their experience and are
required to supervise certain aspects of the trustee's administration.
Insolvency
The condition of being unable to pay debts as they become due, or in the
ordinary course of business, or having liabilities that exceed the total
value of assets.
Interim Receiver
A trustee appointed by the court to safeguard the estate assets and
perform such other functions as the court may order for such time period
as the court may determine.
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Joint and Several Liability
The liability of more than one individual that may be enforced against
them all by a joint action or against any one of them by an individual
action.
Judgment
A formal decision issued by a court on a matter under its consideration.
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Levy
An fee payable to the Superintendent of Bankruptcy for the purpose of
defraying the expenses of the supervision by the Superintendent in the
administration of estates.
Liabilities
Financial obligations or debt of an individual or a business, including
unpaid taxes, salaries, accounts payable etc.
Lien
A legal right or interest that a creditor has in a debtor's property,
lasting usually until the debt that it secures is satisfied.
Liquidation
The act of converting assets to cash, especially in bankruptcy or in the
dissolution of a business.
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Mortgage
A lien against property, which is registered on title, that is granted
to secure an obligation such as a debt.
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Notice of Intention to Enforce Security
A legal document under the Bankruptcy and Insolvency Act
whereby a secured creditor provides 10 days notice to an insolvent
debtor of its intention to enforce its security.
Notice of Intention to File a Proposal
A legal document filed with the Official Receiver stating that the
debtor intends to file a proposal. The document is to include the name
and address of the licensed trustee who has consented in writing to act
as the trustee under the proposal and the names of the creditors who are
owed $250 or more and the amounts of their claims. The filing of this
document triggers the protection afforded to insolvent debtors under the
Bankruptcy and Insolvency Act.
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Offences
The offences and sanctions provisions are contained in Part VIII of the
Bankruptcy and Insolvency Act. These are criminal or
quasi-criminal violations of law; a person guilty of an offence is
liable to a fine or imprisonment.
Official Receiver
The Official Receiver is a federal government employee in the Office of
the Superintendent of Bankruptcy and appointed by the Governor in
Council. The Official Receiver, among other things, accepts the
documents that are filed in proposals and bankruptcies, examines
bankrupts under oath and chairs meetings of creditors.
Orderly Payment of Debts
A procedure prescribed in Part X of the Bankruptcy and Insolvency
Act , governed by provincial courts, which allows a person to pay
debts.
Ordinary Resolution
A resolution carried by the majority of votes (one vote for each dollar
of debt) of claims of creditors at a meeting of creditors; disallowed
claims do not have votes.
OSB
Office of the Superintendent of Bankruptcy, an agency of Industry
Canada. The Office of the Superintendent of Bankruptcy supervises the
administration of the Bankruptcy and Insolvency Act. The OSB
has Division Offices throughout Canada.
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Person
Includes a natural person (human being), a partnership, and a
corporation that is recognized by law as having the same rights and
duties as a natural person.
Petition for Receiving Order
An application to a court of law made by creditors in order to put the
debtor in bankruptcy.
Power of Attorney
A legal instrument (document) setting out explicitly an individual's
authority to act as the agent of the person giving the power of
attorney.
Preference
The payment of money or the granting of security by an insolvent debtor
that benefits one or more creditors to the detriment of the other
creditors.
Preferred Creditor
A creditor who has been given priority under the Bankruptcy and
Insolvency Act over other creditors in the distribution of
dividends.
Priority
The order in which creditors are ranked for payment of claims provable
under the Bankruptcy and Insolvency Act.
Proof of Claim
A creditor's written statement that is submitted to prove the creditor's
claim; used as the basis for paying dividends, if accepted by the
trustee.
Provable Claim
Any liability of the debtor for a debt incurred before the date of the
bankruptcy.
Property
Includes money, goods, land and every description of property, whether
real or personal, situated in Canada or elsewhere.
Proposal
An offer to creditors to settle debts under conditions other than the
existing terms. It is a formal agreement under the Bankruptcy and
Insolvency Act.
Proxy
A document signed by a creditor granting another person the authority to
represent them at creditors' meetings. The proxy holder can exercise the
creditor's right to vote.
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Quorum
The minimum number of creditors who must be present in person or by
proxy to conduct business or to take a vote. At a meeting of creditors,
one creditor present, in person or by proxy, who has duly proven a claim
with the trustee prior to the meeting, constitutes a quorum.
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Receiver
A person who has taken possession pursuant to a security agreement of
substantially all of the inventory, accounts receivables or the other
property of the debtor. "Receiver" also includes a person who has been
appointed privately pursuant to a security agreement or by an order of
the court for the protection or collection of property that is the
subject of diverse claims, usually to seize and sell the property of the
debtor.
Registrar
An Officer of a provincial court appointed by the Chief Justice with the
powers and jurisdiction as specified under the Bankruptcy and
Insolvency Act.
Related Persons
Persons who are connected by a blood relationship, marriage, adoption or
common law partnership; while so related, they are deemed not to deal
with each other at arm's length. The Act provides that the definition of
related persons extends to corporations, shareholders and directors in
certain specified situations.
RESP
Registered Education Savings Plan
RHOSP
Registered Home Ownership Savings Plan
RRSP
Registered Retirement Savings Plan
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Secured Creditor
A person holding an instrument such as a mortgage or a lien on or
against the whole or part of the property of a debtor as security for a
debt due him from the debtor.
Security
Property or asset given or pledged to guarantee the fulfillment of an
obligation, eg. for the payment of a loan.
Seizure
The act of taking possession of property by legal right or process.
Sheriff
Includes bailiff and any officer charged with the execution of a writ or
other process under the Bankruptcy and Insolvency Act or any
other Act or proceeding with respect to any property of a debtor.
Special Resolution
A resolution decided by a majority in number and three-fourths in value
of the creditors with proven claims present, personally or by proxy, at
a meeting of creditors and voting on the resolution.
Statement of Affairs
The bankrupt's financial statement or a balance sheet of assets and
liabilities showing the estimated value of assets and the names and
addresses of creditors and the amounts owed.
Statement of Receipts and Disbursements
A statement detailing the receipt and disbursement of funds, interest
received, fees charged by the trustee, all the dividends distributed to
the creditors and particulars of property that is not sold.
Stay of Proceedings
A bar against any creditor for the recovery of a claim provable in
bankruptcy against the insolvent person or the insolvent person's
property. No creditor shall start or continue any action, execution or
other proceeding for the recovery of such claims.
Superintendent of Bankruptcy
A federally appointed official who oversees the administration of the
Bankruptcy and Insolvency Act in Canada.
Surplus Income
The portion of an individual bankrupt's income that is required to be
paid into the bankruptcy estate during the bankruptcy as per standards
established by the OSB.
Suspended Discharge
See
Discharge from
Bankruptcy
.
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Taxation of Accounts
Application for court approval of the fees and disbursements of the
trustee, interim receiver or legal counsel.
Trust
A property interest held by one person at the request of another for the
benefit of a third party.
Trustee in Bankruptcy
A person licensed by the Superintendent of Bankruptcy to administer
bankruptcy and proposal estates.
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Unsecured Creditor
A creditor who advances credit without taking any rights against the
property of the debtor.
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Voting Letter
A document in which a creditor with a provable claim registers his vote
for or against a proposal.
Voluntary Deposits Scheme
For the residents of Québec, a proceeding where the debtor makes a
monthly payment based on his income and number of dependents to the
court who will distribute theses payments to the creditor. (See
Consolidation Order
).
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Warranty
A written guarantee of performance from a vendor to a purchaser stating
that the item being sold is good and fit for its intended use by the
purchaser. |
