An Act to amend the Bankruptcy and Insolvency Act, the Companies’ Creditors Arrangement Act, the Wage Earner Protection Program Act and chapter 47 of the Statutes of Canada, 2005 (S.C. 2007, c. 36)
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Assented to 2007-12-14
R.S., c. C-36COMPANIES’ CREDITORS ARRANGEMENT ACT
66. Sections 11.51 and 11.52 of the Act, as enacted by section 128 of chapter 47 of the Statutes of Canada, 2005, are replaced by the following:
Marginal note:Security or charge relating to director’s indemnification
11.51 (1) On application by a debtor company and on notice to the secured creditors who are likely to be affected by the security or charge, the court may make an order declaring that all or part of the property of the company is subject to a security or charge — in an amount that the court considers appropriate — in favour of any director or officer of the company to indemnify the director or officer against obligations and liabilities that they may incur as a director or officer of the company after the commencement of proceedings under this Act.
Marginal note:Priority
(2) The court may order that the security or charge rank in priority over the claim of any secured creditor of the company.
Marginal note:Restriction — indemnification insurance
(3) The court may not make the order if in its opinion the company could obtain adequate indemnification insurance for the director or officer at a reasonable cost.
Marginal note:Negligence, misconduct or fault
(4) The court shall make an order declaring that the security or charge does not apply in respect of a specific obligation or liability incurred by a director or officer if in its opinion the obligation or liability was incurred as a result of the director’s or officer’s gross negligence or wilful misconduct or, in Quebec, the director’s or officer’s gross or intentional fault.
Marginal note:Court may order security or charge to cover certain costs
11.52 (1) On notice to the secured creditors who are likely to be affected by the security or charge, the court may make an order declaring that all or part of the property of a debtor company is subject to a security or charge — in an amount that the court considers appropriate — in respect of the fees and expenses of
(a) the monitor, including the fees and expenses of any financial, legal or other experts engaged by the monitor in the performance of the monitor’s duties;
(b) any financial, legal or other experts engaged by the company for the purpose of proceedings under this Act; and
(c) any financial, legal or other experts engaged by any other interested person if the court is satisfied that the security or charge is necessary for their effective participation in proceedings under this Act.
Marginal note:Priority
(2) The court may order that the security or charge rank in priority over the claim of any secured creditor of the company.
Marginal note:1997, c. 12, s. 124
67. Subsections 11.8(1) and (2) of the Act are replaced by the following:
Marginal note:No personal liability in respect of matters before appointment
11.8 (1) Despite anything in federal or provincial law, if a monitor, in that position, carries on the business of a debtor company or continues the employment of a debtor company’s employees, the monitor is not by reason of that fact personally liable in respect of a liability, including one as a successor employer,
(a) that is in respect of the employees or former employees of the company or a predecessor of the company or in respect of a pension plan for the benefit of those employees; and
(b) that exists before the monitor is appointed or that is calculated by reference to a period before the appointment.
Marginal note:Status of liability
(2) A liability referred to in subsection (1) shall not rank as costs of administration.
Marginal note:Liability of other successor employers
(2.1) Subsection (1) does not affect the liability of a successor employer other than the monitor.
68. Section 12 of the Act, as enacted by section 130 of chapter 47 of the Statutes of Canada, 2005, is replaced by the following:
Marginal note:Fixing deadlines
12. The court may fix deadlines for the purposes of voting and for the purposes of distributions under a compromise or arrangement.
69. Section 19 of the Act, as enacted by section 131 of chapter 47 of the Statutes of Canada, 2005, is replaced by the following:
Marginal note:Claims that may be dealt with by a compromise or arrangement
19. (1) Subject to subsection (2), the only claims that may be dealt with by a compromise or arrangement in respect of a debtor company are
(a) claims that relate to debts or liabilities, present or future, to which the company is subject on the earlier of
(i) the day on which proceedings commenced under this Act, and
(ii) if the company filed a notice of intention under section 50.4 of the Bankruptcy and Insolvency Act or commenced proceedings under this Act with the consent of inspectors referred to in section 116 of the Bankruptcy and Insolvency Act, the date of the initial bankruptcy event within the meaning of section 2 of that Act; and
(b) claims that relate to debts or liabilities, present or future, to which the company may become subject before the compromise or arrangement is sanctioned by reason of any obligation incurred by the company before the earlier of the days referred to in subparagraphs (a)(i) and (ii).
Marginal note:Exception
(2) A compromise or arrangement in respect of a debtor company may not deal with any claim that relates to any of the following debts or liabilities unless the compromise or arrangement explicitly provides for the claim’s compromise and the creditor in relation to that debt has voted for the acceptance of the compromise or arrangement:
(a) any fine, penalty, restitution order or other order similar in nature to a fine, penalty or restitution order, imposed by a court in respect of an offence;
(b) any award of damages by a court in civil proceedings in respect of
(i) bodily harm intentionally inflicted, or sexual assault, or
(ii) wrongful death resulting from an act referred to in subparagraph (i);
(c) any debt or liability arising out of fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity or, in Quebec, as a trustee or an administrator of the property of others;
(d) any debt or liability resulting from obtaining property or services by false pretences or fraudulent misrepresentation, other than a debt or liability of the company that arises from an equity claim; or
(e) any debt for interest owed in relation to an amount referred to in any of paragraphs (a) to (d).
70. Subsection 20(3) of the Act, as enacted by section 131 of chapter 47 of the Statutes of Canada, 2005, is repealed.
71. Section 22 of the Act, as enacted by section 131 of chapter 47 of the Statutes of Canada, 2005, is replaced by the following:
Marginal note:Company may establish classes
22. (1) A debtor company may divide its creditors into classes for the purpose of a meeting to be held under section 4 or 5 in respect of a compromise or arrangement relating to the company and, if it does so, it is to apply to the court for approval of the division before the meeting is held.
Marginal note:Factors
(2) For the purpose of subsection (1), creditors may be included in the same class if their interests or rights are sufficiently similar to give them a commonality of interest, taking into account
(a) the nature of the debts, liabilities or obligations giving rise to their claims;
(b) the nature and rank of any security in respect of their claims;
(c) the remedies available to the creditors in the absence of the compromise or arrangement being sanctioned, and the extent to which the creditors would recover their claims by exercising those remedies; and
(d) any further criteria, consistent with those set out in paragraphs (a) to (c), that are prescribed.
Marginal note:Related creditors
(3) A creditor who is related to the company may vote against, but not for, a compromise or arrangement relating to the company.
Marginal note:Class — creditors having equity claims
22.1 Despite subsection 22(1), creditors having equity claims are to be in the same class of creditors in relation to those claims unless the court orders otherwise and may not, as members of that class, vote at any meeting unless the court orders otherwise.
72. (1) Subparagraph 23(1)(a)(ii) of the Act, as enacted by section 131 of chapter 47 of the Statutes of Canada, 2005, is replaced by the following:
(ii) within five days after the day on which the order is made,
(A) make the order publicly available in the prescribed manner,
(B) send, in the prescribed manner, a notice to every known creditor who has a claim against the company of more than $1,000 advising them that the order is publicly available, and
(C) prepare a list, showing the names and addresses of those creditors and the estimated amounts of those claims, and make it publicly available in the prescribed manner;
(2) Paragraphs 23(1)(d) to (f) of the Act, as enacted by section 131 of chapter 47 of the Statutes of Canada, 2005, are replaced by the following:
(d) file a report with the court on the state of the company’s business and financial affairs — containing the prescribed information, if any —
(i) without delay after ascertaining a material adverse change in the company’s projected cash-flow or financial circumstances,
(ii) not later than 45 days, or any longer period that the court may specify, after the day on which each of the company’s fiscal quarters ends, and
(iii) at any other time that the court may order;
(d.1) file a report with the court on the state of the company’s business and financial affairs — containing the monitor’s opinion as to the reasonableness of a decision, if any, to include in a compromise or arrangement a provision that sections 38 and 95 to 101 of the Bankruptcy and Insolvency Act do not apply in respect of the compromise or arrangement and containing the prescribed information, if any — at least seven days before the day on which the meeting of creditors referred to in section 4 or 5 is to be held;
(e) advise the company’s creditors of the filing of the report referred to in any of paragraphs (b) to (d.1);
(f) file with the Superintendent of Bankruptcy, in the prescribed manner and at the prescribed time, a copy of the documents specified in the regulations;
(f.1) for the purpose of defraying the expenses of the Superintendent of Bankruptcy incurred in performing his or her functions under this Act, pay the prescribed levy at the prescribed time to the Superintendent for deposit with the Receiver General;
(3) Paragraph 23(1)(j) of the Act, as enacted by section 131 of chapter 47 of the Statutes of Canada, 2005, is replaced by the following:
(j) make the prescribed documents publicly available in the prescribed manner and at the prescribed time and provide the company’s creditors with information as to how they may access those documents; and
(4) Subsection 23(2) of the Act, as enacted by section 131 of chapter 47 of the Statutes of Canada, 2005, is replaced by the following:
Marginal note:Monitor not liable
(2) If the monitor acts in good faith and takes reasonable care in preparing the report referred to in any of paragraphs (1)(b) to (d.1), the monitor is not liable for loss or damage to any person resulting from that person’s reliance on the report.
73. Section 26 of the Act, as enacted by section 131 of chapter 47 of the Statutes of Canada, 2005, is amended by adding the following after subsection (2):
Marginal note:Agreement to provide compilation
(3) The Superintendent of Bankruptcy may enter into an agreement to provide a compilation of all or part of the information that is contained in the public record.
74. (1) Subsection 29(2) of the Act, as enacted by section 131 of chapter 47 of the Statutes of Canada, 2005, is replaced by the following:
Marginal note:Rights
(2) For the purpose of the inquiry or investigation, the Superintendent of Bankruptcy or any person whom he or she appoints for the purpose
(a) shall have access to and the right to examine and make copies of the books, records, data, documents or papers — including those in electronic form — in the possession or under the control of a monitor under this Act; and
(b) may, with the leave of the court granted on an ex parte application, examine the books, records, data, documents or papers — including those in electronic form — relating to any compromise or arrangement in respect of which this Act applies that are in the possession or under the control of any other person designated in the order granting the leave, and for that purpose may under a warrant from the court enter and search any premises.
(2) Subsection 29(3) of the French version of the Act, as enacted by section 131 of chapter 47 of the Statutes of Canada, 2005, is replaced by the following:
Marginal note:Personnel
(3) Le surintendant des faillites peut retenir les services des experts ou autres personnes et du personnel administratif dont il estime le concours utile à l’investigation ou l’enquête et fixer leurs fonctions et leurs conditions d’emploi. La rémunération et les indemnités dues à ces personnes sont, une fois certifiées par le surintendant, imputables sur les crédits affectés à son bureau.
75. (1) Subsection 30(3) of the Act, as enacted by section 131 of chapter 47 of the Statutes of Canada, 2005, is replaced by the following:
Marginal note:Summons
(3) The Superintendent of Bankruptcy may, for the purpose of the hearing, issue a summons requiring the person named in it
(a) to appear at the time and place mentioned in it;
(b) to testify to all matters within their knowledge relative to the subject matter of the inquiry or investigation into the conduct of the monitor; and
(c) to bring and produce any books, records, data, documents or papers — including those in electronic form — in their possession or under their control relative to the subject matter of the inquiry or investigation.
(2) Subsection 30(4) of the English version of the Act, as enacted by section 131 of chapter 47 of the Statutes of Canada, 2005, is replaced by the following:
Marginal note:Effect throughout Canada
(4) A person may be summoned from any part of Canada by virtue of a summons issued under subsection (3).
76. Section 32 of the Act, as enacted by section 131 of chapter 47 of the Statutes of Canada, 2005, is replaced by the following:
Marginal note:Disclaimer or resiliation of agreements
32. (1) Subject to subsections (2) and (3), a debtor company may — on notice given in the prescribed form and manner to the other parties to the agreement and the monitor — disclaim or resiliate any agreement to which the company is a party on the day on which proceedings commence under this Act. The company may not give notice unless the monitor approves the proposed disclaimer or resiliation.
Marginal note:Court may prohibit disclaimer or resiliation
(2) Within 15 days after the day on which the company gives notice under subsection (1), a party to the agreement may, on notice to the other parties to the agreement and the monitor, apply to a court for an order that the agreement is not to be disclaimed or resiliated.
Marginal note:Court-ordered disclaimer or resiliation
(3) If the monitor does not approve the proposed disclaimer or resiliation, the company may, on notice to the other parties to the agreement and the monitor, apply to a court for an order that the agreement be disclaimed or resiliated.
Marginal note:Factors to be considered
(4) In deciding whether to make the order, the court is to consider, among other things,
(a) whether the monitor approved the proposed disclaimer or resiliation;
(b) whether the disclaimer or resiliation would enhance the prospects of a viable compromise or arrangement being made in respect of the company; and
(c) whether the disclaimer or resiliation would likely cause significant financial hardship to a party to the agreement.
Marginal note:Date of disclaimer or resiliation
(5) An agreement is disclaimed or resiliated
(a) if no application is made under subsection (2), on the day that is 30 days after the day on which the company gives notice under subsection (1);
(b) if the court dismisses the application made under subsection (2), on the day that is 30 days after the day on which the company gives notice under subsection (1) or on any later day fixed by the court; or
(c) if the court orders that the agreement is disclaimed or resiliated under subsection (3), on the day that is 30 days after the day on which the company gives notice or on any later day fixed by the court.
Marginal note:Intellectual property
(6) If the company has granted a right to use intellectual property to a party to an agreement, the disclaimer or resiliation does not affect the party’s right to use the intellectual property — including the party’s right to enforce an exclusive use — during the term of the agreement, including any period for which the party extends the agreement as of right, as long as the party continues to perform its obligations under the agreement in relation to the use of the intellectual property.
Marginal note:Loss related to disclaimer or resiliation
(7) If an agreement is disclaimed or resiliated, a party to the agreement who suffers a loss in relation to the disclaimer or resiliation is considered to have a provable claim.
Marginal note:Reasons for disclaimer or resiliation
(8) A company shall, on request by a party to the agreement, provide in writing the reasons for the proposed disclaimer or resiliation within five days after the day on which the party requests them.
Marginal note:Exceptions
(9) This section does not apply in respect of
(a) an eligible financial contract within the meaning of subsection 11.05(3);
(b) a collective agreement;
(c) a financing agreement if the company is the borrower; or
(d) a lease of real property or of an immovable if the company is the lessor.
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