- Proof of claim bankruptcy Canada: Introduction
- Proof of claim bankruptcy Canada: The settlement requires Court approval
- Proof of claim bankruptcy Canada: The Robo-signing debacle
- Proof of claim bankruptcy Canada: The USTP comments
- Proof of claim bankruptcy Canada: How to complete form 31 proof of claim
- Proof of claim bankruptcy Canada: What will happen if a false or unsubstantiated claim is made
- Proof of claim bankruptcy Canada: Are claims being made against you or your company?
Proof of claim bankruptcy Canada: Introduction
On September 24, 2018, the US Department of Justice Trustee Program (USTP) that it reached a $5 million settlement with Citibank. As described below, it had to do with the improper preparation and filing of bankruptcy proofs of claim. The purpose of this blog is to explain the issues and discuss what it means when completing a proof of claim bankruptcy Canada.
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Proof of claim bankruptcy Canada: The settlement requires Court approval
The USTP participated in a nationwide negotiation arrangement with Citibank N.A. (Citibank), Department Stores National Bank (DSNB) (jointly Citi), as well as FDS Bank. Citi will pay $5 million to remediate robo-signed evidence of proofs of claim submitted in more than 71,000 consumer bankruptcy files involving Macy’s charge card accounts.
Moreover, the suggested agreement has been submitted to the U.S. Bankruptcy Court for the Northern District of Georgia, where it is subject to court authorization. FDS Bank serviced the accounts and retained certain bankruptcy-related services to outside vendors.
Proof of claim bankruptcy Canada: The Robo-signing debacle
Between 2012 and 2015, tens of thousands of proofs of claim were filed in bankruptcy files throughout the USA for DSNB. These proofs of claim were incorrectly signed, under the penalty of perjury, by employees of an outside vendor who had not reviewed the respective file and proof of claim and/or lacked knowledge of the contents of the proof of claim.
In some cases, the electronic credentials of the vendor’s staff were used to file proofs of claim without being reviewed by that or any other person. These improper practices were identified when Citibank took over the servicing of the accounts in late 2015 from the third parties. Citi self-reported the errors to the USTP.
Proof of claim bankruptcy Canada: The USTP comments
“I am pleased that Citi has acted responsibly by self-reporting these deficient bankruptcy practices and agreeing to remediate affected borrowers to address the errors,” said USTP Director White. “I am also encouraged that Citi has instituted internal bankruptcy procedures to ensure that the vendor’s errors should not be repeated. When creditors fail to comply with the bankruptcy laws and rules, they must be held accountable. The U.S. Trustee Program remains diligent in its effort to ensure that creditors, as well as debtors who disregard the law, will be held accountable for their actions.”
Proof of claim bankruptcy Canada: How to complete form 31 proof of claim
In completing a proof of claim form, for either a personal bankruptcy or corporate bankruptcy in Canada, the person completing the form must state that:
“I have knowledge of all the circumstances connected with the claim referred to in this form.”
A fully completed proof of claim must include details on:
- who the creditor is;
- the amount of the claim;
- what type of claim it is; and
- all contact details.
A proof of claim needs sufficient documentation attached in order for the Trustee to verify the claim.
Proof of claim bankruptcy Canada: What will happen if a false or unsubstantiated claim is made
Section 201(1) of the Bankruptcy and Insolvency Act (Canada) (BIA) states:
“201 (1) Where a creditor, or a person claiming to be a creditor, in any proceedings under this Act, wilfully and with intent to defraud makes any false claim or any proof, declaration or statement of account that is untrue in any material particular, the creditor or person is guilty of an offence punishable on summary conviction and is liable to a fine not exceeding five thousand dollars, or to imprisonment for a term not exceeding one year, or to both.”
The BIA provides for penalties in Canada also. A robo-signing exercise like in the Citi case, in my opinion, is an offence under this section of the BIA. Any false proof of claim will be disallowed, in whole or in part.
I am not aware of any court decisions in Canada on this section of the BIA. Perhaps Canadians as a whole are more truthful than those involved in the Citi matter!
Proof of claim bankruptcy Canada: Are claims being made against you or your company?
Are you or your company experiencing financial difficulties? If yes, call the Ira Smith Team. Our approach for each file is to create an end result where Starting Over, Starting Now takes place. This starts the minute you are in the door.
The earlier you contact us, the more options we will have to implement. Whether it is a corporate restructuring or personal debt settlement through a consumer proposal, the goal is to avoid bankruptcy. However, if bankruptcy turns out to be the best option, we can assist there too.
You’re simply one phone call away from taking the necessary steps to get back to leading a healthy, balanced hassle-free life, recover your money and move on to the next investment opportunity.
