Glossary of Terms
Bankruptcy / Proposal / Financial Glossary |
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| Term | Definition |
| absolute | Complete; perfect; final; without a condition or encumbrance. |
| act | A bill which has passed through the various legislative steps and, hence, has become law. |
| 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 $1,000 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. |
| adjournment | To suspend hearing of a case or a meeting of creditors to another time or place or indefinitely. |
| Administrator of Consumer Proposal | A trustee or a person appointed or designated by the Superintendent of Bankruptcy to administer consumer proposals. |
| affidavit | A statement by a person in which the person states that to the best of his or her knowledge, the facts in question are true. An affidavit is sworn before a Notary, Commissioner for Oaths, lawyer or some other judicial officer who can administer oaths. |
| after Acquired Property | The property of a bankrupt that was acquired after the date of bankruptcy but before the date of discharge. |
| annul | To reduce to nothing; to make void; for example: a discharge of bankruptcy or a proposal can be annulled under certain circumstances. |
| appeal | An application or proceeding for review by a higher Court. |
| application | The act of making a request usually of the Court, for example, an application to have a bankrupt discharged. The making of a request for something, for example, an application to the Court for an Order discharging the bankrupt or Trustee. |
| appointment | The act of designating or placing in office. or a meeting arranged in advance |
| arm's length | At a distance; not under the influence or control of another; not related by blood or marriage. The act of dealing with a person who is not a relative but an independent third party. |
| arrangement | An agreement, such as a proposal, made between an insolvent person or bankrupt and his creditors. |
| arrears | The amount of money by which a contract or obligation is in default. |
| assessment | The valuing of a thing or property. |
| Assessment Interview | An interview conducted by a trustee or an administrator of a consumer proposal before a bankruptcy or a consumer proposal is made. Its purpose is to evaluate the debtor's financial situation, explain the options available and discuss the merits and the consequences of the debtor's choice. |
| asset | A thing, chattel, resource or item or piece of property owned or controlled by a person or company. |
| assign | To give or to transfer a right or interest to another. |
| Assignment into Bankruptcy | The act of a person who places himself or his company into bankruptcy pursuant to the Bankruptcy and Insolvency Act. A transfer by an insolvent person to a Trustee of all of his property for the general benefit of his creditors. |
| auction | A public sale in which articles are sold to the highest bidder. |
| Automatic Discharge | First-time bankrupts receive an automatic discharge nine months after they became bankrupt unless it is opposed by a creditor, the trustee or the Superintendent of Bankruptcy. In order to be eligible for the automatic discharge a debtor must complete all required obligations. |
| bailiff | A person who, for remuneration, will act or assist any other person to repossess, seizing or distraining or in evicting any person from property pursuant to conditions set out in various Acts. |
| bankrupt | A natural person or corporation who has, or is deemed to have, made an assignment or against whom a receiving order has been made under the Bankruptcy and Insolvency Act; or the legal status of such a natural person or corporation. |
| bankruptcy | The state of being bankrupt. Can be voluntary or involuntary. |
| Bankruptcy and Insolvency Act | The federal statute with respect to bankruptcy and insolvency. |
| Bankruptcy Order | (Receiving Order): An Order handed down by the Court following the successful petition to have a person or company placed into bankruptcy. |
| Beneficial Ownership | Where a person has the right of enjoying use and advantage of another's property. |
| beneficiary | The person who is in receipt, or will be in receipt, of some asset, thing, or thing of value. For example, a person can make a will naming someone as beneficiary of their estate. |
| Bona Fide | In good faith; genuine; without fraud or deceit. |
| CAIRP : | The Canadian Association of Insolvency and Restructuring Professionals is the national professional organization representing trustees in bankruptcy, receivers, agents and consultants in insolvency matters. The Association is a non-profit corporation, established in 1979 to "advance the practice of insolvency administration and the public interest related to it". The CAIRP website is: http://www.cairp.ca/ |
| Case Law | That body of Court decisions that act as precedents in the interpretation of various Acts. In some cases, the rule is not in statute books but can be found as a principle of law established by a judge in some recorded case. |
| caveat | A formal warning. A notice that a particular party has a certain interest, and that certain actions are prohibited without advising the party or giving notice. Normally filed against land titles, a caveat may only be valid for a limited time period in some jurisdictions. |
| CCAA | CCAA - Companies' Creditors Arrangement Act: An Act under which proposals or arrangements or compromising of debt is structured. For a company to be eligible to file under the CCAA, it must have at least $5 million in debt. |
| Certificate of Full Performance of Propo | 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 that is attached to some property. For example, a person who files a lien against a piece of property might say that he has a charge against that property. |
| chattel | Assets that are movable and not attached to land or real property. |
| Chattel Mortgage | An interest that is given by one person in a piece of property to another person to secure a debt. |
| Claim Provable In Bankruptcy | Provable claims are defined by the Bankruptcy and Insolvency Act as all debts and liabilities, present or future, to which the bankrupt is subject to on the date on which the bankrupt becomes bankrupt. Provable claims also include claims that the bankrupt may become subject to before the bankrupt’s discharge by reason of an obligation incurred prior to the date of the bankruptcy. (For example contingent claims, unliquidated claims and claims payable at a future time) |
| collateral | Property that has been given or committed in order to guarantee a loan. |
| Commissioner of Oaths | Commissioner for taking affidavits in a province as authorized by provincial statute. |
| Common Law Partner | Defined by the Bankruptcy and Insolvency Act as an individual who is cohabitating with an individual in a conjugal relationship, having so cohabitated for a period of at least one year. |
| consideration | Under common-law, one of the three criteria that have to be met before a contract is binding. Consideration refers to money or payment of money or some right, interest, profit or benefit accruing to the one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other. |
| Consumer Debtor | A natural person who is bankrupt or insolvent and whose aggregate debts, excluding any debts secured by the person's principle residence, do not exceed $75,000. |
| Consumer Proposal | A simplified form of Proposal available to debtors owing less than $75,000, excluding a mortgage on the principal residence |
| Contingent Claim | A provable claim in bankruptcy that may or may not become a debt depending upon the result of some future event. |
| contract | An oral or written agreement between two or more parties which is enforceable by law. In order to be valid, a contract requires an offer, an acceptance of that offer and, in common-law jurisdictions, consideration. |
| conveyance | The transfer of real or personal property from one person to another by writing or otherwise; includes a gift, encumbrance, or limitation of use. |
| corporation | Includes any company or legal person incorporated, or authorized to carry on business, by or under an Act of Parliament of Canada, or of any of the provinces or territories, that has an office or property in Canada. The Bankruptcy and Insolvency Act specifically excludes building societies, incorporated banks, to which the Bank Act applies, savings banks, insurance companies, trust companies, loan companies or railway companies. |
| 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.).
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| CRA | Canada Revenue Agency (formerly known as Canada Customs and Revenue Agency (“CCRA”) |
| credit rating | Credit reporting agencies are third party reporting agents that collect information about consumers' financial affairs and sell this information to their clients (which include banks and lending institutions). Credit ratings are set by creditors who pass this information to the reporting agencies. A credit rating consists of a nine-point rating scale: Rating What it Means The R stands for Revolving credit (ie. a credit card or line of credit with no defined payment schedule). Accounts are also coded on this scale with the letter I in front of the number rating. This I stands for Installment credit (ie. a loan with a defined payment schedule such as a vehicle loan). |
| Creditor | A person to whom money is owed; in insolvency matters, a person who has a claim, preferred, secured or unsecured, provable under the Bankruptcy and Insolvency Act. |
| Date of the Initial Bankruptcy Event | The earliest of the date of filing or making of:
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| debtor | A person who owes money, goods or services to another. An insolvent person who is not bankrupt. |
| Debts not Released by Order of Discharge | These are found in subsection 178(1) of the Act. They include:
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| deemed | To be adjudged, held or pronounced to be, usually by statute or by Court. |
| deemed Trust | A deemed trust is a trust that is established by statute (law) 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, 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. |
| default | Failure to pay or otherwise perform obligations under a contract. |
| defer | To delay or postpone to a future time. |
| Directive | Subsection 5(4) of the Bankruptcy and Insolvency Act empowers the Superintendent of Bankruptcy to issue directives. Every person to whom a directive is issued must comply with the directive. Directives may be issued concerning: counselling; the carrying out of the purposes and provisions of this Act and General Rules; the criteria to be applied by the Superintendent in determining whether a trustee license is to be issued to a person and governing the qualifications and activities of trustees; and prescribing the form of any document that is to be prescribed by the Act and the information to be given therein. Subsection 68(1) requires that a directive be issued by the Superintendent to establish the standards for determining the portion of total income of an individual bankrupt that exceeds that which is necessary to enable the bankrupt to maintain a reasonable standard of living. This directive governs the calculation and treatment of surplus income. |
| directors | Persons elected by the shareholders of a corporation to manage or supervise the management of the affairs and business of the company. |
| Directors’ Liability | The liability of the directors of the company to the shareholders and others for negligence, fraud, or acts committed outside the scope of their authority. In certain cases, directors are automatically liable for certain debts of a company, including (but not limited to) wages to employees, source deductions, and GST. |
| disallowance | To refuse or to set aside. For example, the Trustee in Bankruptcy, under the Bankruptcy and Insolvency Act, can disallow a claim submitted by a creditor. |
| discharge | To cancel or relieve a person of an obligation or responsibility. |
| discharge of Bankrupt | For bankrupts who do not qualify for the automatic discharge, the trustee is required within one year from the beginning of the bankruptcy to apply to the court for a hearing of the application for a discharge. There are several types of discharge orders that can be granted by the court. At the discharge hearing, the court decides whether to postpone the hearing to a later date, refuse the discharge, or issue any of the following orders: o Absolute discharge order: relieves the bankrupt of the debts incurred before the bankruptcy, except for those that fall under Section 178(1) of the Bankruptcy and Insolvency Act. o Conditional discharge order: certain (specific) conditions must be met before an absolute order of discharge is issued. o Suspended discharge order: the court orders a delay before the discharge becomes effective. This type of discharge is typically issued if it is not a first time bankruptcy. Other reasons for a suspended order include: gambling as a cause of insolvency or other conduct issues. |
| disclaim | The act of denying, refusing, renouncing or repudiating an interest that one might have in some item. |
| dissolution | The act of ending, terminating or winding up of a company or state of affairs. |
| Distress/Distrain | The right that a landlord has to seize the property of a tenant on the premises being rented and sell that property for payment of rent arrears. |
| Dividend | Under the Bankruptcy and Insolvency Act it refers to those monies paid by a Trustee in Bankruptcy or the administrator of a consumer proposal to the creditors. |
| Duties of a Bankrupt: | Obligations that must be performed by a bankrupt. For example, advising the trustee of any material changes to the financial situation or changes of address prior to the discharge from bankruptcy. |
| Effective Date | The date an agreement comes into force. |
| encumbered | An asset is encumbered if it is pledged as security (collateral) to a creditor. |
| encumbrances | Those charges or the security that attaches to any kind of property. For example, if there is a mortgage on a piece of property, then the property is said to be encumbered by that mortgage. |
| equity | This refers to the excess that the value of a piece of property has over any charges or encumbrances against that piece of property. |
| estate | Under the Bankruptcy and Insolvency Act, the name given to the file or bankruptcy estate. |
| ethics | Trustees in Bankruptcy are subject to the Codes of Ethics under: o CAIRP, The Canadian Association of Insolvency and Restructuring Professionals; o The Bankruptcy and Insolvency Act; o Any other professional association they may be a member of. |
| ex parte | For one party only. Ex parte refers to those proceedings where one of the parties has not received notice and therefore is neither present nor represented in a court of law. Often when urgent action is required, as when the debtor is thought to be absconding assets. |
| 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. |
| execution | To carry out. The process under which a judgment is collected, includes a writ of seizure and sale. |
| exempt | Those items that can not be legally seized by any execution creditor to enforce a debt or by a trustee in bankruptcy. These exemptions are determined by the province a debtor resides in at the time of filing of a bankruptcy or proposal. Exempt assets do not vest in the Trustee for the benefit of creditors. |
| exempt assets | Those items that can not be legally seized by any execution creditor to enforce a debt or by a trustee in bankruptcy. These exemptions are determined by the province a debtor resides in at the time of filing of a bankruptcy or proposal. Exempt assets do not vest in the Trustee for the benefit of creditors. |
| exigible assets | Assets which can be seized by creditors, or a Trustee on behalf of creditors. |
| fair market value | The hypothetical value of a piece of property, given a willing purchaser and a willing vendor, and a reasonable amount of time for the property to be exposed to sale and no unusual circumstances, such as liquidation. |
| farm debt mediation act | The federal statute enacted in 1998 to provide for mediation between insolvent commercial farmers and their creditors. |
| final dividend | The last distribution by the Trustee to the creditors of an estate. |
| final statement of receipts and disburse | This document, prepared by the trustee, must contain a complete account of all moneys received by the trustee out of the property of the bankrupt or otherwise, the amount of interest received by the trustee, all moneys disbursed and expenses incurred and the remuneration claimed by the trustee, together with full particulars, description and value of all property of the bankrupt that has not been sold or realized, setting out the reason why the property has not been sold or realized and the disposition made thereof. Once approved by the inspectors (if any inspectors are appointed), it is submitted to the Superintendent for comments. |
| financing statement | Form prescribed under the Personal Property Security Act setting out essential information such as the name of the debtor and the collateral. The secured party must file the financing statement at the Personal Property Registry to perfect a security interest by registration. |
| first meeting of creditors | The meeting called by the Trustee in Bankruptcy 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. Under the Bankruptcy and Insolvency Act, there is not a meeting of creditors required for simple personal bankruptcy cases (referred to as summary administration bankruptcies), unless the Superintendent of Bankruptcy or creditors holding 25% of the proven claims request one. |
| fixed charge | A security interest that charges specific property. |
| fixtures | Those assets that are attached to or are part of a building, or are fixed to land. |
| floating charge | A type of security interest that charges the debtor's property but does not specify particular assets or pieces of equipment until the security interest or instrument is crystallized. The charge hovers over the property and the debtor is entitled to deal with the property in the normal course of business, until default occurs and the creditor takes action to enforce the security and convert the floating charge into a fixed charge. |
| foreclosure | That action that a lender will take to repossess and sell a piece of property for defaults in mortgage payments. This remedy forecloses the mortgagor’s right of redemption, the rights of subsequent creditors from enforcing security interest, and the rights of the mortgagee to pursue any deficiency realized upon sale of the property. |
| fraud | 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 | Under the Bankruptcy and Insolvency Act, this is the preferring by a debtor of one or more creditors over others by the payment to those creditors of some extraordinary amounts of money. Under the Bankruptcy and Insolvency Act, the Trustee can, under certain circumstances, set aside fraudulent preferences up to three months prior to the date of bankruptcy in the case of arm's length parties and one year in the case of non-arm's length parties. The Provinces also have Acts that can set aside these transactions. |
| fungibles | Goods which are comprised of many identical parts. For example, a bushel of grain, a barrel of apples or oil, which can be easily replaced by other identical goods. One of the tests of whether items are fungible or not is whether they can be sold by weight or number. |
| 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 benefit of creditors | For the overall good of all creditors; an insolvent person makes an assignment of all of his property for the general benefit of creditors pursuant to the Bankruptcy and Insolvency Act. |
| general security agreement | General Security Agreement (GSA) A contract under which all the personal property of a debtor is pledged as security to a lender. |
| goodwill | That value attributed to a business that is not tangible, but arises from the reputation, expertise, service or some other intangible that attaches to the business and makes it have more worth than just the value of its assets. |
| guarantee | A promise to perform some duty or contract, or payment of some debt, in case of failure by another person. |
| guarantor | A person who pledges collateral for the contract of another or who guarantees to pay a certain debt of a debtor if the debtor defaults. |
| hearing | A trial of an action before a judge (or Registrar in Bankruptcy). |
| 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. |
| insolvency | 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 the same as bankruptcy. |
| insolvent person | A person who is not bankrupt and whose liabilities exceed his assets and/or ability to pay. The BIA contains a statutory definition that differs from this general definition as follows: "means a person who is not bankrupt and who resides or carries on business in Canada whose liabilities to creditors provable as claims under the Bankruptcy and Insolvency Act amount to at least $1,000.00 and o (a) who is, for any reason, unable to meet his obligations as they generally become due, or o (b) who has ceased paying his current obligations in the ordinary course of business as they generally become due, or o (c) 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." |
| inspector | A person appointed by creditors at the first or subsequent meeting of creditors, as part of a committee, to examine and give direction to the trustee's administration of the estate of the bankrupt. Inspectors may also be appointed pursuant to the provisions of a proposal. |
| instrument | A formal document with legal consequences; e.g., a debenture, mortgage, chattel mortgage. |
| interim dividend | Dividend paid to creditors before the administration of the estate of the bankrupt has been finalized; any dividend that is not a final dividend. |
| interim order | A temporary Court Order intended to be of limited duration, usually until the Court has had an opportunity of hearing the full case and the opportunity of making a Final Order. |
| interim receiver | A person appointed by the Court to be a watchdog regarding the assets of a debtor during that time between the application to the Court for a Receiving Order and the time where the Receiving Order is handed down. An Interim Receiver may also be appointed where a secured creditor is about to send out, or has sent out, a Notice of Demand under the Bankruptcy and Insolvency Act of its intention to enforce its security, or the debtor has filed a Notice of Intention to Make a Proposal or has filed a proposal. |
| inventory | A detailed listing and description of all of the property of the debtor, merchandise or supplies on hand, or in transit at a particular point in time. Can include raw materials, work in progress, and finished goods. |
| invoice | An itemized bill prepared by a seller of goods and services and submitted to the buyer showing goods purchased or services provided, quantities, prices and credit terms. An invoice is a bill of sale. |
| joint and several liability | The liability of more than one person for which each person may be sued for the entire amount of the damages. With joint and several liability each party is 100% responsible for 100% of the debt. |
| joint assignment | Paragraph 155(f) of the Act, provides that in circumstances specified in directives of the Superintendent, the estates of individuals who, because of their relationship, could be reasonably be dealt with as one estate may be dealt with as one estate. |
| joint tenancy | The situation where two or more persons are equally owners of a property. |
| judgement | A formal decision given by a Court; sentence or Order of a Court of Justice. |
| leasing | Leasing is a contract by which a person puts movable property at the disposal of another person for a fixed term and in return for payment. |
| liability | Any legal obligation for which a person or corporation is responsible. |
| lien | 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. |
| litigation | A dispute that results in formal Court action or a lawsuit. |
| locality of debtor | Means the principal place during the year immediately preceding the bankruptcy where the debtor has carried on business or where the debtor has resided, or where the greater portion of the property of the debtor is situated. |
| look see | Slang expression meaning "Business Review". |
| maintenance | The obligation that one person has to contribute in part or in whole to the cost of living of another person. |
| mediation | An alternate dispute mechanism whereby the mediator acts as a facilitator assisting the parties in coming to a mutually agreed settlement. Under the Bankruptcy and Insolvency Act, mediation can be used, for example, if a creditor or the Trustee opposes a bankrupt's discharge. |
| Misappropriation of Funds | The wrongful taking of funds by a person to whom funds are entrusted. |
| misrepresentation | To describe or present incorrectly, improperly or falsely. |
| mortgage | An interest given on real property to guarantee the payment of a debt or execution of some action. |
| negligence | The failure to exercise the standard of care that a reasonable person should, by law, have exercised in the circumstances; the doing of something which a reasonable and prudent person would not do. |
| Notice of Disclaimer - Lease | In a proposal, the company may disclaim a lease or, in other words, state that it does not require that lease and is cancelling it. The proposal must indicate one of the options that is given to the landlord for him to file a claim as follows actual losses resulting from the disclaimer or the lesser of (i) three years rent, or (ii) the aggregate of the rent provided for in the lease for the first year of the lease following the date on which the disclaimer becomes effective and 15% of the rent for the remainder of the term of the lease after that year. |
| 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 | 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. |
| oath | A solid affirmation to tell the truth, oftentimes sworn in front of a Notary or Commissioner for Taking Oaths. |
| 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. |
| order | A command of a Court or Judge. |
| Orderly Payment of Debts | A scheme governed by Provincial Court to allow a debtor to pay his debts in accordance with the sections under Part X of the Bankruptcy and Insolvency Act. Often referred to as a Consolidation Order. |
| Ordinary Creditor | A general creditor with no priority or security. |
| 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. |
| perfection | The requirement necessary before a security interest attaches; achieved either by taking physical possession of the collateral or by proper registration of the security document, as prescribed by the provincial Personal Property Security Acts. |
| person | Includes a natural person (human being), a partnership, an unincorporated association, a corporation or legal person (artificial person), a co-operative society or organization, and the heirs, executors, liquidators, administrators, or other legal representatives of a person. |
| personal property | Property that is not real property; things moveable, also known as chattels. |
| Possessory Lien | Charge for an unpaid debt, enforced by having physical custody of the asset to which the lien applies. |
| postponement | To place after in order of importance; to put off to a later time. |
| PPSA | Personal Property Security Act: The system, in most common-law provinces, whereby a person is required to register any interest that he has in the property of another before the security is valid. The Registry can therefore be used if an institution is considering taking security on various assets or if a person is contemplating purchasing an item such as a vehicle and wants to ensure that he purchases it free and clear of any encumbrances. |
| 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 Creditors | Those creditors, in the Bankruptcy and Insolvency Act specified in Section 136, that rank ahead of ordinary or unsecured creditors. Some preferred creditors are employees for wages, and a landlord for some specified rental arrears. |
| prescribed | The term given to the fact that the information is in a directive issued by the Superintendent of Bankruptcy. |
| priority | The order in which creditors are ranked for payment of claims provable under the Bankruptcy and Insolvency Act. |
| Pro Bono | Provided for free. |
| Pro Rata | To divide proportionately amongst people having a claim. |
| Promissory Note | An unconditional, written, signed promise to pay a certain amount of money on demand or at a certain date defined in the future. |
| Proof of Claim | A prescribed form that will be sent along with the notice of bankruptcy or notice of proposal. Creditors are required to fill out and return this form to the trustee, or to the administrator of the consumer proposal, in order to prove their claim. If a meeting of creditors is called, those creditors wishing to vote at the meeting must file their proof of claim with the trustee before the time set for the opening of the meeting. |
| property | Includes money, goods, things in action, land and every description of property, whether real or personal, 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. |
| Property Claim | A claim for return of the property of a third party in the possession of the bankrupt at the date of bankruptcy. |
| proposal | Under the Bankruptcy and Insolvency Act there are two types of proposals that can be made. A proposal filed under Division I, is applicable to companies or individuals. This type of proposal was designed to facilitate corporate restructurings but is often used by individuals who do not qualify to file a consumer proposal. If the proposal is not accepted by creditors or is annulled by the Court it will result in a deemed assignment in bankruptcy. A proposal filed under Division II (also known as a consumer proposal), is a more simplified proposal that an individual (or individuals in some circumstances) can use to deal with their debts. A consumer proposal can only be filed by a debtor if they do not owe more than $75,000 (excluding mortgages on real property). One of the important features of a consumer proposal is that if the creditors do not accept the proposal, the person is not automatically bankrupt. |
| Provable Claims | All those debts of a bankrupt outstanding as of the date of the bankruptcy. |
| Proven Claims | Claims that have been filed in the proper manner with evidence to prove what is owed and subsequently accepted by the Trustee in Bankruptcy and used as the basis for the payment of dividends when there are monies to distribute. |
| proxy | Under the Bankruptcy and Insolvency Act a written statement can be made whereby a creditor appoints another person to act on his behalf in a creditors meeting and any other matters pertaining to that bankruptcy. |
| Purchase Money Security Interest | Purchase Money Security Interest (PMSI - pronounced "pimzee"): A security interest whereby a lender who provides the funds to finance the purchase of an asset obtains the first secured charge on the asset. This type of security interest is superior to other security interests under most provincial Personal Property Security Acts. |
| quantum | Amount. |
| Quit Claim | A deed releasing interest in real property. Sometimes, when a Trustee has real property vested in him pursuant to the bankruptcy and there is no equity in that property, he may quit claim it to the mortgage holder, thereby saving the mortgage holder time and expense. The Trustee should charge the mortgage holder for executing this deed. |
| quorum | Under the Bankruptcy and Insolvency Act there must be one person present, either in person or by proxy, at a meeting of creditors before the meeting is considered to be a properly constituted one and hence can carry on with the business of the meeting. |
| rank | Having a rightful place on the list of claims for a bankrupt estate. |
| Reaffirmation Agreement | An agreement between a debtor and a creditor whereby a debtor revives a pre-bankruptcy debt, for which the debtor was discharged under section 178 of the Act. |
| Real Property | Immovable property such as a building and land. |
| realization | The amount of money received from the sale of assets. |
| Receiver-Manager | Similar to Receiver, except the Receiver-Manager can manage or operate the company. |
| receiver: | A person or corporation appointed by a person who holds a debenture or other security agreement, giving that person authority to take possession of and sell the asset(s) specified in the debenture. |
| redemption | The act of recovering something pledged or mortgaged; especially after proceedings have been commenced by the mortgagee. |
| Redemption of Security | Subsection 128(3) of the Act, allows the trustee to redeem a security on payment to the secured creditor of the debt or the value of the security as assessed, in the proof of security, by the secured creditor. Before doing so, the trustee will ensure that there is a benefit for the estate. |
| registrar | An Officer of the Supreme Court appointed by the Chief Justice and empowered to deal with various matters as set out in the Bankruptcy and Insolvency Act. Powers include settling and signing orders, hearing unopposed discharge applications, taxing of fees, the summoning and examination of a bankrupt, substituting for the Official Receiver in the case of absence or illness and the referral of matters to a Judge. |
| 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. |
| release | To discharge from obligation or responsibility. |
| Remuneration of Trustee | In estates under summary administration and in consumer proposals the trustee's, or administrators, fees and expenses are set by the Bankruptcy and Insolvency Rules. In all other cases, the remuneration of the trustee falls under the provisions of section 39 of the Act. Subsection 39(1) states that the remuneration of the trustee shall be such as is voted to the trustee by ordinary resolution at any meeting of creditors. Where the remuneration is not fixed pursuant to subsection 39(1), subsection 39(2) states that the remuneration shall not exceed seven and one-half per cent of the amount remaining out of the realization of the property of the debtor after the claims of the secured creditors have been paid or satisfied. Subsection 39(5) empowers the court to increase or reduce the remuneration. |
| Repairer's Lien | A mechanic or other person who, by bestowing money, skills or material on any chattel, is entitled to a lien on the chattel, which empowers that person to sell the chattel if he is not paid within a prescribed period of time. |
| RESP | Registered Education Savings Plan. |
| respondent | The party who responds to a claim filed in Court against him by a Plaintiff or the person who is being sued. Another term for the Respondent is the Defendant. |
| retainer | Under the Bankruptcy and Insolvency Act it is common for the Trustee in Bankruptcy to ask for a retainer before he accepts an appointment. There is also a special type of retainer called a Third Party Retainer, whereby funds are put up that secure the fees and disbursements of the Trustee but are returned to the party putting up the funds if the Trustee realizes enough out of the estate to cover the fees and costs and, in the case of a proposal, returned to the party putting up the funds if the proposal is refused by the creditors or not approved by the Court. |
| RRIF | Registered Retirement Income Fund. |
| RRSP | Registered Retirement Savings Plan. |
| Section 170 Report | Trustee's Report on the Bankrupt's Application for Discharge (also known as the Section 170 Report): The trustee must prepare a report in the prescribed form with respect to the affairs of the bankrupt, the causes of the bankruptcy, the manner in which the bankrupt has performed the duties imposed under the Act or obeyed the orders of the court, the conduct of the bankrupt both before and after the date of the initial bankruptcy event, whether the bankrupt has been convicted of any offence under the Act, and any other fact, matter or circumstance that would justify the court in refusing an unconditional order of discharge. This report needs to be approved by the inspectors or provide the reasons why the inspectors did not approve it. The trustee is required to send a copy of this report to the creditors who have requested it. |
| 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, ex. for the payment of a loan. |
| 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. |
| seizure | The act of taking possession of property by legal right or process. |
| settlement | A contract, covenant, transfer, gift, or designation of beneficiary in an insurance contract, to the extent that it is gratuitous or made for merely nominal consideration. Under certain circumstances, settlements are void against the Trustee and are brought back into the bankruptcy estate. |
| shortfall | A dollar realization on assets that is not sufficient to clear the debt completely. |
| Sine Die | Adjourned without giving any future date of meeting or hearing. |
| Small Claims | Small Claims/Small Claims Court: A Court which has simplified rules, thus encouraging non-lawyers to attend at the Court without legal representation. |
| solvent | Having assets in excess of liabilities and being able to meet one’s commitments in the normal course. |
| Special Resolution | A term under the Bankruptcy and Insolvency Act whereby voting is carried out, for example when creditors accept or refuse a proposal. In order for the Special Resolution to pass, of those creditors who vote there must be in excess of 2/3 of the dollars voting in favor and a simple majority in number of the creditors voting in favor. |
| Specific Charge | A lien or security interest in a specific asset; which asset is clearly distinguishable by description or serial number. For example, security over a vehicle. |
| Statement of Affairs | The listing of a debtor's assets and liabilities and sworn under oath by the debtor before a Commissioner for Taking Oaths. |
| Statement of Receipts and Disbursements | A statement prepared in the matter of receivership or agency appointment or a bankruptcy appointment, whereby the realizations and disbursements are set out. |
| Statutory Lien | A charge levied on an asset as a result of a federal or provincial statute. |
| Stay of Proceedings | The stopping or preventing of legal actions undertaken. In the Bankruptcy and Insolvency Act, there is a stay of proceedings in the case of a bankruptcy or in the case of a proposal. This stops all legal actions against the company or person. |
| Summary Administration | Under the Bankruptcy and Insolvency Act a summary administration bankruptcy is a consumer bankruptcy defined as a bankruptcy where the unencumbered, realizable assets are estimated to produce less than $10,000. Summary administration bankruptcies have stream lined procedures, making them less costly to administer. |
| Superintendent of Bankruptcy | A federally appointed official who oversees the administration of the Bankruptcy and Insolvency Act in Canada. The Superintendent is responsible for: supervising the administration of estates in bankruptcy, commercial reorganizations, consumer proposals and receiverships; maintaining a publicly accessible record of bankruptcy and insolvency proceedings; recording and investigating complaints regarding possible wrong doing by someone involved in the insolvency process; licensing of private sector trustees to administer estates and appointing administrators of consumer proposals; setting and enforcing professional standards for the administration of estates. The Superintendent's Web site address is: http://osb-bsf.ic.gc.ca |
| Surplus Income | The Superintendent of Bankruptcy sets standards for surplus income based on the number of people in your household. These standards set out the amount of net family income you can make before you have surplus income. Certain expenses (for example, medical expenses, child care expenses, or necessary employment expenses) are taken into account when establishing your net income. The amount of surplus income payable into the bankruptcy estate is then calculated based on these standards. This amount is subject to change if there are material changes in the personal or family situation of the bankrupt, or if the official receiver so recommends. The Superintendents Standards can be viewed at: http://strategis.ic.gc.ca/epic/site/bsf-osb.nsf/en/br01055e.html#appA. The amount required for payments in a bankruptcy would be discussed with the Trustee appointed to administer the bankruptcy at the time of filing the bankruptcy. |
| tariff | Schedule of fees as specified in the Bankruptcy and Insolvency Act. |
| taxation | Application to the Court to have certain costs of the Trustee, receiver or legal council examined and approved by the Court. |
| tender | An offer in writing to buy or sell. |
| title | Legal right to the possession of property; the instrument constituting evidence of such right. |
| Trade Creditors | Persons, including businesses, to whom a debt is owed for the supply of goods and services in the normal course of business. |
| Trust Funds | Monies, securities, property, etc. held by one person for the benefit of another. Trust funds can not be used for purposes other than that for which they were intended. Trust property held by the bankrupt does not form part of the bankruptcy estate. |
| Trustee | The person under the Bankruptcy and Insolvency Act who administers bankruptcy and proposal estates. |
| Trustee's Report on the Bankrupt's Appli | Trustee's Report on the Bankrupt's Application for Discharge (also known as the Section 170 Report): The trustee must prepare a report in the prescribed form with respect to the affairs of the bankrupt, the causes of the bankruptcy, the manner in which the bankrupt has performed the duties imposed under the Act or obeyed the orders of the court, the conduct of the bankrupt both before and after the date of the initial bankruptcy event, whether the bankrupt has been convicted of any offence under the Act, and any other fact, matter or circumstance that would justify the court in refusing an unconditional order of discharge. This report needs to be approved by the inspectors or provide the reasons why the inspectors did not approve it. The trustee is required to send a copy of this report to the creditors who have requested it. |
| Ultra Vires | Without authority. Any action that is beyond the legal powers of a particular body to take. |
| undertaking | To commit oneself by promise; a pledge or engagement. |
| unliquidated | Assets which have not been converted into cash; a claim against a bankrupt estate that has not been quantified by a dollar amount. |
| Unsecured Creditors | Creditors who do not have any security for the debt owing to them. |
| Usury | Excessive or illegal interest rates. |
| vest | Assets that are owned by the bankrupt and are not exempt or encumbered would vest in the trustee for the benefit of the creditors. What this means is that they would become part of the bankruptcy estate. They would no longer be owned or controlled by the bankrupt. The trustee would be required to take control of the assets and to sell them. The trustee does this on behalf of the unsecured creditors. |
| Vesting of Property in Trustee | Assets that are owned by the bankrupt and are not exempt or encumbered would vest in the trustee for the benefit of the creditors. What this means is that they would become part of the bankruptcy estate. They would no longer be owned or controlled by the bankrupt. The trustee would be required to take control of the assets and to sell them. The trustee does this on behalf of the unsecured creditors. |
| Vesting Order | An Order by the Court that gives to a person, possession, control or title of property. |
| Vexatious | An act done by a person in order to annoy, embarrass or otherwise aggravate that person, and which has no foundation in fact or otherwise. |
| Voting Letter | A document in which a proven creditor registers his vote for or against the acceptance of a proposal. |
| waiver | An intentional relinquishment of some right, interest or the like; an express or written statement of such relinquishment. |
| Warehouseman's Lien | The charge that a warehouseman has on goods left for storage in his care. The warehouseman has the right to hold onto the goods until he is paid or to sell the goods to recover his account. |
| warranty | A written guarantee or performance or state from a vendor to a purchaser, that the thing sold is the vendor’s to sell and is good and fit for such use as the purchaser intends to make of it. |
| without prejudice | Without dismissing, damaging or otherwise affecting a legal interest or demand; without detriment to existing right or claim; relates to fact, not to opinion. This expression is used when a person, in the desire to avoid litigation or dispute without admitting that the other party has a claim, offers to do something he need not do, such as to compromise a claim of his own or to pay when he feels he is not liable. |
| Writ | Form of written notice or command issued by a Court or other official. Can include Writ of Seizure and Sale, Writ of Summons, Writ of Subpoena, Writ of Attachment, Writ of Habeas Corpus, etc. |
| Writ of Summons | Form of written notice prepared by the Plaintiff which is registered at the appropriate Court Registry, giving notice to the defendants that a legal action has been commenced against them and containing details of the Plaintiff's claims. |
| Glossary V2.0 | |