|
Bankruptcy Definitions
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.
Application for Bankruptcy
Order
An application to a court of law made by creditors in order to put
the debtor in bankruptcy.
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.
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.
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
Deposit 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.
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.
Automatic Discharge
A debtor whose discharge is not opposed by the Superintendent
of Bankruptcy, the trustee or a creditor and who has not refused
or neglected to receive counselling, is automatically discharged
after 9, 21, 24 or 36 months, depending on whether it is a first
or second bankruptcy. The discharge also depends on whether or not
the bankrupt is required to pay a portion of his or her surplus
income into the bankruptcy estate per the standard established by
the OSB.
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.
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.
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.
Top
of Page
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.
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.
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.
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.
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.
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.
Mortgage
A lien against property, which is registered on title, that is
granted to secure an obligation such as a debt.
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.
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.
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.
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.
Preferential Treatment
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.
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.
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.
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 fulfilment
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 .
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 licenced by the Superintendent
of Bankruptcy to administer bankruptcy
and proposal estates.
Unsecured Creditor
A creditor who advances credit without taking any rights against
the property of the debtor.
V
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).
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.
|
