Glossary of Bankruptcy Definitions
These definitions below are provided solely for the purpose of facilitating the reader’s understanding of the terms used on this website. They are general interpretations only and are not to be considered legal definitions. If you have a specific question please let us know. If you would like to use our questions for educational, institutional, or business purposes please let us know. For additional information please call us at 416-665-3328 or email.
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.
A voluntary written declaration of facts affirmed or sworn under oath before an authorized officer such as a Notary Public or Commissioner of Oaths.
Assignment in Bankruptcy
A voluntary assignment by an insolvent person of all of his property to a trustee for the general benefit of creditors.
Bankruptcy and Insolvency Act, a federal statute governing bankruptcy and insolvency in Canada, which is applicable to all provinces and territories.
Canadian Association of Insolvency and Restructuring Professionals is the national professional organization representing trustees in bankruptcy, receivers, agents, monitors and consultants in insolvency matters.
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.
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.
See Provable Claim.
See Discharge From Bankruptcy .
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).
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 theBankruptcy and Insolvency Act.
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.).
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.
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.
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.
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.
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.
Rules created pursuant to the Bankruptcy and Insolvency Act for the administration of this statute.
A person (see definition of “person“) who takes on financial responsibility for another’s debt.
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.
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.
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.
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.
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.
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.
The order in which creditors are ranked for payment of claims provable under the Bankruptcy and Insolvency Act.
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.
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.
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.
An Officer of a provincial court appointed by the Chief Justice with the powers and jurisdiction as specified under the Bankruptcy and Insolvency Act.
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.
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.
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.
See Discharge from Bankruptcy .
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).