Don Allen - Bankruptcy Trustee & Receiver
Trustee & Receiver
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Act of bankruptcy

An act or event done or suffered by a debtor within the last six months, which are grounds for an application by creditors, with provable claims of at least $1,000, for a bankruptcy order to be made against the debtor’s estate.

Arm’s length

At a distance; not under the influence or control of another; not related by blood or marriage.

Assignment (in bankruptcy)

A transfer by an insolvent person to a Trustee of all his property for the general benefit of his creditors.


A person who, for remuneration, acts or assists any person to act, or represents to any person that he is acting on behalf of another person, in repossessing, seizing, or distraining upon any chattel, or in evicting any person from property.


A natural person or corporation who has, or is deemed to have, made an assignment, or against whom a bankruptcy order has been made under the Bankruptcy and Insolvency Act; also used as a reference to the legal status of such a natural person or corporation.

Bankrupt estate

All assets of the bankrupt which vest in the Trustee for the benefit of creditors.


A legal process governed by the Bankruptcy and Insolvency Act; the state of being bankrupt or the fact of becoming bankrupt, voluntarily or involuntarily.

Bankruptcy and Insolvency Act (“BIA”)

The federal statute with respect to bankruptcy and insolvency.


See Canadian Association of Insolvency and Restructuring Professionals.


See Companies’ Creditors Arrangement Act.


An encumbrance, lien, or financial obligation that is attached to property; e.g., a person who files a lien against a piece of property may be considered to have a charge against that property; or alternatively, a commission, expense, or cost.


Moveable property; or any property other than freehold land.

Chattel Mortgage

An instrument conveying conditional title to personal property in order to secure payment of a debt, or performance of a contract, normally taken as security by a person lending money or selling an asset. Any personal property that can be sold can be mortgaged. Chattel mortgages must be registered to be enforceable against third parties. See mortgage.

CIRP – Chartered Insolvency and Restructuring Professional

Chartered Insolvency and Restructuring Professional; the certification mark used by members of the Canadian Association of Insolvency and Restructuring Professionals in association with insolvency administration services, services of conducting business reviews, corporate restructuring services, services relating to the turnaround of under-performing businesses, and related advisory services.

Claim provable

Any claim or liability provable by a creditor in proceedings under the Bankruptcy and Insolvency Act.


Additional or confirming; e.g., collateral security; security pledged for the payment of a loan; in commercial transactions, property subject to a security interest.

Companies’ Creditors Arrangement Act (CCAA)

The federal statute regulating commercial reorganizations, which facilitates compromises and arrangements between companies and their creditors; only invoked by companies having at least $5,000,000 in debt; alternative statute to the Bankruptcy and Insolvency Act.


Goods delivered to an agent (consignee) for sale, with title being held by the consignor until a sale is made.

Consumer goods

Goods that are used or acquired for use primarily for personal, family, or household purposes.

Consumer proposal

A simplified form of proposal available to debtors owing less than an amount prescribed under the Bankruptcy and Insolvency Act.


Dependent upon other circumstances not yet certain. A contingent claim in a bankruptcy proceeding is one which has not yet accrued and which is dependent on some future event that may or may not occur.


The setting off of a mutual debt; opposite side of an account; e.g., to contra an account is to reduce it with reference to an equivalent amount in an opposite account.


To assist and educate bankrupts and relatives of bankrupts, or consumer debtors, on good financial management, including prudent use of consumer credit and budgeting principles; to 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.


The Court having jurisdiction in bankruptcy or a Judge thereof, and includes a Registrar when exercising the powers of the Court conferred upon a Registrar under the Bankruptcy and Insolvency Act. The Supreme Court or Court of Queen’s Bench of the applicable provinces hear matters concerning bankruptcy and receivership.


A person to whom money, goods or services is owed; in insolvency matters, a person having a claim, secured, preferred or unsecured, provable as a claim under the Bankruptcy and Insolvency Act.

Date of initial bankruptcy event

The earliest of the date of filing or making of (a) an assignment ; (b) a proposal; (c) a notice of intention to make a proposal; (d) the first application for a bankruptcy order.


Money, goods, or services owing from one person to another; a liability; a legal obligation.


A person who owes money, goods or services to another; an insolvent person who is not bankrupt.

Debtor-in-possession (DIP) financing

Court-approved financing provided to the restructuring corporation during CCAA or BIA Proposal proceedings; DIP lender is often granted “super-priority” over pre-existing charges.

Deemed trust

A trust that is established by statute for certain claims, and deemed to be in effect even though there may not be any actual assets or monies held in that trust. For example, the provisions of the Income Tax Act create a deemed trust for employee source deductions. The amounts deducted are deemed to be held in trust for the Crown (CRA), whether or not the funds have been kept separate and apart from the property of the employer, and notwithstanding any security interest in the property or proceeds thereof. The proceeds are to be paid to the Crown in priority to all security interests.


Misappropriation of money held by an employee, official, Trustee, or other fiduciary; embezzlement.


Persons elected by the shareholders of a corporation to manage or supervise the management of the affairs and business of the company.


To cancel or relieve a person of an obligation or responsibility; may be absolute, suspended, or conditional.


A claim on property or chattels, usually a registered charge held by a secured creditor.

Exempt assets

Any asset owned by the bankrupt which is exempt from execution, garnishment, or seizure, under federal or provincial legislation, and does not vest in the Trustee in Bankruptcy for the benefit of creditors.

Exigible assets

Any asset owned by the bankrupt which is exempt from execution, garnishment, or seizure, under federal or provincial legislation, and does not vest in the Trustee in Bankruptcy for the benefit of creditors.

Ex parte

By or for one party; done on behalf of, or upon the application of, one party only without notice to the adversary, often when urgent action is required, as when the debtor is thought to be absconding assets.

Fair market value

The hypothetical value of an asset, given a willing purchaser and a willing vendor, and a reasonable amount of time for the property to be exposed for sale, and no unusual circumstances, such as liquidation.

First meeting (of creditors)

Meeting required to be called by the Trustee to consider the affairs of the bankrupt, or the proposal filed by a debtor, to affirm the appointment of the Trustee, to appoint inspectors, and to give such directions to the Trustee as the creditors may see fit.


A legal proceeding commenced after a mortgage is in default, permitting the mortgagee to seize and sell the property to satisfy the debt. This remedy forecloses the mortgagor’s right of redemption, the rights of subsequent creditors from enforcing security interests, and the rights of the mortgagee to pursue any deficiency realized upon sale of the property.


Deceit, trickery; a deliberate act of deception or misrepresentation with intent to deprive another of property or a right, or in some manner to do him injury; an intentional perversion of the truth.

Fraudulent preference

The preferring by a debtor of one creditor over others. Remedies exist under various federal and provincial statutes.


To attach property, monies, earnings, or receivables belonging to a debtor while in the hands of a third party; can be accomplished with a Garnishee Order issued by the Court or by the Canada Customs and Revenue Agency (CRA), without a Court Order.

General benefit of creditors

For the overall good of all creditors; an insolvent person makes an assignment of all his property for the general benefit of creditors pursuant to the Bankruptcy and Insolvency Act.

General security agreement

A contract under which all the personal property of a debtor is pledged as security to a lender.


One who is answerable and financially responsible on behalf of someone else, who is primarily responsible. After paying a debt, the guarantor can become the legally recognized creditor.


The inability to pay debts as they become due, in the usual course; or, having liabilities in excess of a reasonable market value of assets held. It is not synonymous with bankruptcy.

Insolvent person

A person who is not bankrupt and whose liabilities exceed his assets and/or ability to pay. The Bankruptcy and Insolvency Act defines an insolvent person as – “a person who is not bankrupt and who resides, carries on business, or has property in Canada and whose liabilities to creditors provable as claims under this Act amount to $1,000.00 and who is, for any reason, unable to meet his obligations as they generally become due, who has ceased paying his current obligations in the ordinary course of business as they generally become due, or the aggregate of whose property is not, at a fair valuation, sufficient or, if disposed of at a fairly conducted sale under legal process, would not be sufficient to enable payment of all his obligations, due and accruing due”.


A creditor or creditor representative appointed to participate in insolvency proceedings. The method of appointment and the duties of inspectors differ depending on whether the appointment is pursuant to the Bankruptcy and Insolvency Act, Companies’ Creditors Arrangement Act, or Winding-up and Restructuring Act. Under the BIA, an inspector is a person appointed by creditors at the first or subsequent meeting of creditors, to act as a member of a committee of inspectors, to supervise and give direction to the Trustee with respect to the administration of the estate of the bankrupt, or pursuant to the provisions of a proposal.

Joint and several liability

The liability of more than one person may be enforced against them all by a joint action or against any one of them by an individual action.


A formal decision given by a Court; sentence or Order of a Court of Justice.

Judgment creditor

A creditor that is entitled to enforce execution under a judgment.

Judgment debtor

A person against whom a judgment ordering him to pay a sum of money stands unsatisfied, and who is liable to have his property taken in execution under the judgment.


To impose or collect by legal authority; an assessment imposed by the Superintendent of Bankruptcy, to assist with the costs of his office in the administration of the Bankruptcy and Insolvency Act, on all distributions made by the Trustee to creditors on their claims, except the costs of the first execution creditor. The rate of levy payable in a bankruptcy or in a proposal is prescribed by the Act.


A right to enforce a claim upon, or retain possession of, a debtor’s asset until the claim is satisfied, usually arising by operation of law rather than express contract between the parties.

Locality of the debtor

The principal place where the debtor has carried on business or resided, during the year immediately preceding his bankruptcy, or where the greater portion of the property of the debtor is situated.

Monitor under CCAA

Officer of the Court appointed pursuant to the Initial Order with the powers and duties set out in the Initial Order and the CCAA; these powers and duties typically include monitoring the company’s business and financial affairs, assisting the company in the preparation of its restructuring plan and reporting to the Court from time-to-time.


The instrument whereby land or a chattel is in any manner conveyed, assigned, pledged, or charged as security for the payment of money or monies which will be re-conveyed, reassigned, or released on satisfaction of the debt. Mortgage does not include an agreement for sale, a right to purchase land, or an interest in land. The person who mortgages his property is called the mortgagor. The person to whom the mortgage is given is the mortgagee. See chattel mortgage.

Notice of intention to enforce security

The statutory notice required by the Bankruptcy and Insolvency Act to be sent by a secured creditor to an insolvent debtor ten days before the security agreement can be enforced and any of the debtors’ assets seized.

Notice of intention to file a proposal

The legal document filed with the Official Receiver that provides an insolvent debtor protection from his creditors, and begins the process under the Bankruptcy and Insolvency Act whereby the debtor makes a proposal to his creditors or becomes bankrupt.


Bankruptcy offences and sanctions are set out in Part VIII, sections 198 to 208, of the Bankruptcy and Insolvency Act. The offences are criminal or quasi-criminal and any person guilty of an offence is liable to a fine or imprisonment.

Official Receiver

A person appointed by the Governor in Council and deemed to be an officer of the Court, who reports to the Superintendent of Bankruptcy on the estates originating in his division, and performs statutory duties as specified by the Bankruptcy and Insolvency Act.

Ordinary creditor

A general creditor with no security or priority ranking under the Bankruptcy and Insolvency Act; an unsecured creditor.


Includes a human being (natural person), a partnership, an unincorporated association, a corporation or legal person (artificial person), a cooperative society or organization, and the heirs, executors, administrators, or other legal representatives of a person

Personal property

Property that is not real property; things moveable, also known as chattels.

Personal Property Security Acts

Legislation in force in most Common Law provinces providing a central registry for filing notices of security interests in personal property. The system requires a person to register his interest in the property of another before the security is enforceable against third parties. Searches can be conducted in the registry by a lender when considering taking security on various assets, or by a person contemplating the purchase of an item, to ensure that the assets are free and clear of any prior encumbrances.


The payment of money, granting of security, or other arrangement by an insolvent debtor that benefits one or more of his creditors to the detriment of his other creditors.

Preferred claim

The claims entitled to rank in priority to ordinary unsecured creditors according to the ranking set out in section 136(1) of the Bankruptcy and Insolvency Act.


The order in which the claims provable under the Bankruptcy and Insolvency Act will rank for payment from the proceeds of realization of the assets which come into the possession of the Trustee, free from any encumbrance.

Property (real or personal)

Includes money, goods, things in action, land, and every description of property, real or personal, moveable or immoveable, legal or equitable, and whether situated in Canada or elsewhere, and includes obligations, easements, and every description of estate, interest and profit, present or future, vested or contingent, in, arising out of, or incident to property. See personal property.

Property claim

A claim for return of the property of a third party in the possession of the bankrupt at the date of bankruptcy.


An offer to creditors to settle one’s debts under other than the existing terms. May be an informal contractual arrangement, or a formal proposal under a federal statute, the Bankruptcy and Insolvency Act, Companies’ Creditors Arrangement Act, Winding-up and Restructuring Act.

Provable claim

Any claim or liability provable in proceedings under the Bankruptcy and Insolvency Act by a creditor.

Proven claim

A claim that has been filed in the proper manner with evidence to prove what is owed and accepted by the Trustee in Bankruptcy and used as the basis for the payment of dividends when there are monies available for distribution.

Proxy (general and limited)

A document executed by a creditor authorizing another person to attend meetings of creditors and vote on his behalf. A proxy is also the person exercising the vote. If a proxy is given for a limited purpose, the holder of the proxy cannot exceed or alter the powers given by the proxy.

Purchase money security interest

A superior type of security interest under most provincial Personal Property Security Acts whereby a lender who provides the funds to finance the purchase of an asset obtains the first secured charge on the asset. Does not include a transaction of sale by, and leaseback to, the seller. Colloquially referred to as a “pimsy” (PMSI).


A person appointed privately under an instrument or by Order of the Court for a specific purpose, usually to seize and sell the property of the debtor. Unlike a receiver manager, a receiver cannot carry on the business of a debtor after his appointment. A receiver is also defined in Part XI of the Bankruptcy and Insolvency Act as a person who has been appointed to take, or has taken, possession or control pursuant to a security agreement, or Court Order, of all or substantially all of the inventory, accounts receivable, or other property of an insolvent person or bankrupt used in relation to his business. Receivers have various duties and responsibilities under the Act. See receiver manager.

Receiver manager

A person appointed by a secured creditor pursuant to a security agreement, instrument, or debenture that is in default. The receiver manager takes control of the assets covered by the security and may have certain rights to manage the business of the debtor in order to realize the security. A receiver manager can also be appointed by an Order of the Court with specific duties and powers as contained in the Order. See receiver.


Officer of the Supreme Court of a province appointed by the Chief Justice of the Court for the transaction and disposal of matters as specified by the Bankruptcy and Insolvency Act. Powers include settling and signing Orders, hearing unopposed discharge applications, taxing of fees, the summoning and examining of a bankrupt, substituting for the Official Receiver in case of absence or illness, and the referral of matters to a Judge.

Related persons

A term defined under the Bankruptcy and Insolvency Act, which may differ from that of other statutes. Under the Act, persons are considered to be related to each other, if they are connected by blood relationship, marriage, common-law partnership, or adoption and shall be deemed not to deal with each other at arm’s length while so related.


Registered Education Savings Plan


Registered Retirement Savings Plan

Secured creditor

A person holding a mortgage, hypothec, pledge, charge, lien, or privilege on or against the property of the debtor, or any part thereof, as security for a debt due or accruing due to him from the debtor.

Security agreement

A verbal or written agreement between a secured party and a debtor giving the secured party a security interest in personal property. A written agreement is not necessary if the secured party is in possession of the collateral.

Security/security interest

Something given or deposited as a pledge for the fulfilment of an undertaking or for the payment of a loan, to be forfeited in the case of a failure.


Having assets in excess of liabilities and being able to meet one’s commitments in the normal course.

Statement of affairs

A statement of financial position similar to a balance sheet; a statement of assets and liabilities drawn up to indicate the amounts which may be expected to be realized if the debtor’s property is sold and the manner in which the proceeds of such sale will be distributed, having regard for the interests of secured, preferred, and unsecured creditors.

Statement of receipts and disbursements

A statement detailing the receipt and disbursement of funds and interest received by the Trustee, the remuneration claimed by the Trustee, and full particulars of all property of the bankrupt that has not been sold or realized.

Stay of proceedings

A stopping or postponement of a judicial proceeding, including certain creditors from continuing collection activities.

Summary administration

An estate in which, at the time of filing, unencumbered, realizable assets are valued at $15,000 or less. Certain provisions of the Bankruptcy and Insolvency Act are waived in order to reduce administration time and costs.

Superintendent of Bankruptcy

The person appointed by the Governor in Council to supervise the administration of all estates and matters to which the Bankruptcy and Insolvency Act applies; duties include the review of Trustees’ and debtors’ actions in all aspects of bankruptcy, reviewing the performances of official receivers and senior bankruptcy analysts, and the issuing or renewal of Trustee licences.


Generally a remainder or excess, as in surplus proceeds from the sale of an asset after the secured creditor’s claim is paid.

Taxation (of accounts)

Application to the Court to have certain costs of the Trustee, receiver or legal counsel examined and approved by the Court.

Trustee in Bankruptcy

A person who is licensed or appointed under the Bankruptcy and Insolvency Act to administer a bankrupt estate or a proposal.

Vesting order

An order by a Court to give possession, control or title of property, rights, power, etc. to a person; e.g., a vesting order can provide that clear title to a property be given to a named person on the completion of a sale agreement, where the funds to be realized on the sale are not great enough to retire registered encumbrances on that property.

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