Glossary
A
Assets: In the context of bankruptcy it means all the property of the debtor available for distribution for the general benefit of creditors (available for paying debts).
Assignment: means the process by which a person voluntarily places themselves in Bankruptcy. Most bankruptcies in Canada are voluntary.
B
Bailiff: means a person who acts on behalf of any other person in the repossession or seizure of property.
Bankrupt: means a person who has made an assignment or means the state of being bankrupt or the fact of becoming bankrupt.
Bankruptcy Estate: all funds received by a Licensed Insolvency Trustee from any source are placed into a trust fund. This would include surplus income payments, funds from the sale of non-exempt assets, tax refunds as appropriate etc. Out of these funds, the trustee is entitled to a set fee as determined by a Government set tariff and then any remaining funds are distributed by the Trustee to the Unsecured Creditors.
C
Claim Provable: includes any claim or liability provable in proceedings under the BIA by a creditor.
Common-law Partner: in relation to an individual, means a person who is cohabitating with the individual in a conjugal relationship, having so cohabited for a period of at least one year.
Creditor: means a person having a claim provable as a claim under the BIA.
D
Debtor: includes an insolvent person and any person who, at the time of an act of bankruptcy was committed by him, resided or carried on business in Canada and, where the context requires, includes a bankrupt.
Director: in respect of a corporation other than an income trust, means a person occupying the position of director by whatever name called and, in the case of an income trust, a person occupying the position of trustee by whatever name called.
Discharge: the release of a debtor from the obligation to repay his or her unsecured debts. A bankrupt’s discharge may be automatic, suspended, conditional or absolute. A bankrupt may also be refused discharge.
Dividend: the amount a creditor receives out of the funds paid into a bankrupt’s estate or through a consumer proposal.
Duties of Bankruptcy: obligations that must be performed by a bankrupt. For example, provide the Trustee with a statement of the bankrupt’s affairs showing the particulars of his or her assets and liabilities, the name of all his creditors etc.
E
Encumbrance: a claim or liability that is attached to property or some other right that may lessen its value, e.g. a lien or mortgage.
Equity: the difference between the market value of an asset and the debt secured against it.
G
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.
Guarantor: a person who takes on financial responsibility for another’s debt.
I
Insolvent Person: means a person who is not bankrupt and who resides, carries on business or has property in Canada, whose liabilities to creditors provable as claims under the BIA to one thousand dollars, 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.
Inspector: inspectors can be appointed by creditors to represent them before the trustee during the administration of proposals and bankruptcies. They are expected to assist the trustee by virtue of their experience and are required to supervise certain aspects of the trustee’s administration.
Interim Receiver: a Trustee appointed by the court to safeguard the estate assets and perform such other functions as the court may order for such a time period as the court may determine.
L
Legal Counsel: means any person qualified, in accordance with the laws of a province, to give legal advice.
Levy: a fee payable to the Superintendent of Bankruptcy for the purpose of defraying the expenses of the supervision by the Superintendent in the administration of estates.
Liability: a financial obligation or debt of an individual or a business, including unpaid taxes, salaries, accounts payable etc.
Licensed Insolvency Trustee: Read our blog
Liquidation: the act of converting assets to cash, especially in bankruptcy or in the dissolution of a business.
N
Notion 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.
O
Official Receiver: the Official Receiver is a federal government employee in the Office of the Superintendent of Bankruptcy. 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, if such meetings are held.
P
Property: means any type of property, whether situated in Canada or elsewhere, and includes money, goods, things in action, land and every description of property, whether real or personal, legal or equitable, as well as obligations, easements and every description of estate, interest and profit, present or future, vested or contingent, in, arising out of or incident to property.
Preferential Treatment: the payment of money or the granting of security by an insolvent debtor that benefits one or more creditors to the detriment of the other creditors.
Priority: the order in which creditors are ranked for payment of claims provable under the Bankruptcy and Insolvency Act.
Proof of Claim: a creditor’s written statement that is submitted to prove the creditor’s claim; used as the basis for paying dividends, if accepted by the Trustee.
Proposal: means
- In any provision of Division I of Part III of the BIA, a proposal made under that Division, and
- In any other provision, a proposal made under Division I of Part III of the BIA or a consumer proposal made under Division II of Part III of the BIA
and includes a proposal or consumer proposal, as the case may be, for a composition, for an extension of time or for a scheme of arrangement.
R
Receiver: a person who has taken possession pursuant to a security agreement of substantially all of the inventory, accounts receivables or the other property of the debtor. “Receiver” also includes a person who has been appointed privately pursuant to a security agreement or by an order of the court for the protection or collection of property that is the subject of diverse claims, usually to seize and sell the property of the debtor.
Registrar: an Officer of a provincial court appointed by the Chief Justice with the powers and jurisdiction as specified under the Bankruptcy and Insolvency Act.
S
Secured Creditor: means a person holding a mortgage, hypothec, pledge, charge or lien on or against the property of the debtor or any part of that property as security for a debt due or accruing due to the person from the debtor, or a person whose claim is based on, or secured by, a negotiable instrument held as collateral security and on which the debtor is only indirectly or secondarily liable.
Shareholder: includes a member of a corporation – and in the case of an income trust, a holder of a unit in an income trust – to which the BIA applies.
T
Transfer at Undervalue: means a disposition of property or provision of services for which no consideration is received by the debtor or for which the consideration received by the debtor is conspicuously less than the fair market value of the consideration given by the debtor.
Trust: a document signed by a creditor granting another person the authority to represent them at creditors’ meetings. The proxy holder can exercise the creditor’s right to vote.
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