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Brandon Blog Post

RBC ONLINE BANKING: DID WE NOT LEARN FROM THE RUTHLESS EQUIFAX DATA HACK?

rbc online banking sign in
rbc online banking

RBC online banking introduction

I have a story to tell you about how a Royal Bank of Canada online (RBC) customer is out of pocket after a fraud perpetrated on her. The fraud occurred after she used her RBC online banking sign in.

It is something that everybody does and possibly everyone thinks is a secure transaction. It has to do with the system to move money online made use of over a million times a day in Canada. By telling this tale of the RBC online banking hack, I wish you understand 2 points; 1. it might not be as secure as advertised; 2. you need to be alert in doing whatever you can to shield yourself from the cyberpunks.

RBC online banking: What happened

The woman had gone on vacation with a close friend. A couple of days after they got home she sends her close friend some money she owed her from the journey. Her good friend called the following early morning to claim she could not deposit the transfer. When she tried to deposit the cash, a message showed up claiming that the cash had already been transferred! The sender’s initial thought was what a funny friend she had. She cannot get an easy e-transfer and does not know how to use the system. They also laughed about it.

Her pal consistently sends out and gets money by e-transfer. She understands what she is doing. The e-transfer did not work. The lady quickly examined her savings account. The cash was gone.

rbc online banking sign in
rbc online banking

RBC online banking fraud department

They rapidly met with each other and called the RBC online banking fraud division on speakerphone. The women advised of the situation. The fraud department informed them they know the cash really did not go to the good friend. As a matter of fact, they provided the name of the person that got the cash and his email address!

They were stunned by 3 points. First, they never came across anyone with that name or email address. Second, they could not understand that over the telephone, the RBC online banking people would divulge that information. Third, the RBC online banking system did not let the Bank know the name and email address of the friend who was supposed to receive the money.

The woman then said to the RBC online banking fraud department, alright, please reimburse my account. However, RBC would not do that. They told her they couldn’t yet decide who was hacked – the RBC customer or her friend. They suggested she quickly get to her branch to sort it out. As you will read further, she quickly learned that being defrauded in a digital money transfer is not the same as if someone stole and cashed a cheque you wrote that was intercepted in the mail.

RBC online banking: Going to the Bank

She went to the Bank. Her friend went home. She reached the branch within 5 minutes of hanging up the phone. After half-an-hour of talking with the Bank people, they told her that it had not been her that was hacked. Rather, it was her good friend.

So she told her close friend what RBC said. They went together to the local police station and filed a report. She gave a duplicate of the cops’ report to both the RBC online banking fraud group and the RCMP Commercial Crime division.

RBC continues to contend that it was not their customer’s computer or email that was hacked either as part of the RBC online banking sign in or otherwise. Rather, it was her friend’s computer system and email that was hacked. To date, RBC has refunded their customer only half of the amount lost. They stated that it was only as a goodwill gesture and they are not taking any responsibility for the RBC online banking hack.

How we can protect ourselves from an RBC online banking hack?

There are a few more facts that I have saved for this section of the blog. The reason I did that is that it will show us what additional things we can do ourselves to better protect all of us. Hopefully, can all learn from this RBC online banking sign-in and Interac e-money transfer debacle.

The obvious first step is having up to date and proper anti-virus security on all of our computers. This security must also extend to our mobile devices, as so much of banking is now done that way. Many people use the RBC online banking mobile banking app. If you are not an RBC customer, I am sure that you use your Bank’s mobile banking app. For mobile, this would require us to be using a virtual private network (VPN). Consumer VPN systems are so easy to set up and inexpensive. They protect our private and sensitive information from hackers.

When someone sends an e-transfer of money, you are sending it either to someone on your approved list and therefore the money is automatically deposited. If it is to an email address not on your approved list, then you have to set a security question. The security question is either something only the person you are sending the money to would know or, you have to provide them with the answer. Without the proper answer, they cannot obtain their money.

In this case, the woman’s security question was something that her friend knew. The security question was “who is my favourite Beatle?”. Sounds simple, right? Well not if you have been hacked, there are only 4 possible answers and the e-transfer system gives you 4 tries to get it right!

So it was very simple for the hacker. The whole universe of possible correct answers was 4 and the system gives you 4 tries. The woman would not have known that the system gives you 4 attempts to answer properly. What this shows us is we need to establish a more complicated question and answer that a stranger hacker could not possibly know.

Cybercrime is an ongoing problem. The Equifax data hack is a case of a large corporation being hacked. The reality is that our home computers are so simple to protect. It is the large complicated systems that are more vulnerable. That is unless you have done nothing to protect your home computer from hackers.

RBC online banking conclusion

I hope this sad story has helped you gain a better understanding of what to do to better protect ourselves from cybercrime. Question: Have you or your company been the victim of a hacker, including identity theft? Has something like the RBC online banking data breach ever caused you to lose money and now you have trouble making your monthly payments? Is your business dealing with financial challenges that require to be addressed immediately?

Call the Ira Smith Team today if so. We have years and generations of experience helping people and businesses seeking financial restructuring or a debt negotiation strategy. As a licensed insolvency trustee (formerly known as a bankruptcy trustee), we are the only specialists acknowledged, accredited and overseen by the federal government to supply insolvency advice and implement solutions to help you to remain free from bankruptcy.

Call the Ira Smith Team today so you can end your anxiety, anxiousness, and discomfort today. With the roadmap we establish one-of-a-kind to your scenario, we will promptly return you right into a well balanced, healthy and carefree life.

You can have a no-cost evaluation to help you to fix your credit and debt difficulties. With you, we will discover your monetary pain factors and make use of an approach to free them from your life. This will definitely enable you to start with a clean slate, Starting Over Starting Now.

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Brandon Blog Post

ONTARIO COMMERCIAL LEASE AGREEMENT: INSOLVENT COMMERCIAL TENANT

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Introduction

I reviewed a Court decision out of Alberta that was rendered on April 4, 2019. The case is Royal Bank of Canada v. Parkland Properties Ltd., [2019] A.J. No. 412, from the Alberta Court of Queen’s Bench. In reviewing this case about an insolvent tenant, who later became a bankrupt commercial tenant, the same would hold true in Ontario. I thought it would be helpful to review the principles in this decision, and how it would relate to an Ontario Commercial Lease Agreement.

Background

Unlike Ontario, there is no commercial tenancy act in Alberta. However, there are various other provincial statutes and a Supreme Court of Canada decision, that provides guidance for commercial landlords and tenants in Alberta.

If a commercial lessee breaches a business lease in Alberta, similar to Ontario law, a landlord has various alternatives. For a properly worded commercial tenancy agreement, the main alternatives include distraining on the tenant’s assets located on the leased commercial premises or terminating the commercial tenant’s lease. Suing for any damages, including rent arrears and for the unexpired duration of the lease, may also be part of the landlord’s rights.

Distraint or distress is the seizure of the commercial tenant’s property in order to acquire the repayment of rent arrears and various other amounts owed. Distraint normally includes the seizure of goods belonging to the lessee on the premises by the landlord to market them for the settlement of the amount owing at that point in time under the lease.

In a properly conducted distraint, no Court order is required. The landlord must also be careful when advising the tenant of the distraint, to also notify the lessee that the lease is not being ended. This way, the landlord may recoup further unpaid amounts or other damages in the future. On a practical basis, if the tenant does not bring the lease into good standing and allows the distraint to be completed, the business is probably over anyway.

Under the Alberta Civil Enforcement Regulation, the landlord would hire a bailiff to carry out the distraint and sale of the assets. This is what happened in the Royal Bank of Canada v. Parkland Properties Ltd. case I recently reviewed.

The facts and decision of the case

The facts are pretty simple. The landlord began and completed distraint proceedings against its tenant. At the time of the seizure, the insolvent tenant was $79,586 behind in rent. The landlord’s bailiff completed the sale of the assets. After taking its fee, the bailiff paid over to the landlord the amount of $223,990. The tenant became a bankrupt company after the funds were paid to the landlord.

Royal Bank of Canada (RBC) was a secured creditor of the tenant. At the date of bankruptcy, RBC was owed $498,799. RBC took an action that originally was an action that could be taken by the licensed insolvency trustee (formerly known as a bankruptcy trustee). It did so under section 38 of the Bankruptcy and Insolvency Act (Canada) (BIA). The Trustee was either unwilling or unable to launch the action. The action RBC launched was for the repayment of the amount realized by the landlord as a preferential payment under section 95 of the BIA.

The Court ruled partly in favour of RBC. It ordered that the landlord could retain the amount of $79,586. The balance of $144,404 could not be kept by the landlord and had to be paid over to RBC.

Ontario commercial lease agreement: The same decision would be reached in Ontario

I am satisfied that the same decision would be reached in Ontario. As I mentioned above, distraint is not a termination of the lease. Although the practical effect would be to end the tenant’s business, the lease continues and so does the tenant’s obligations to the landlord. The commercial tenant’s rights under its Ontario commercial lease agreement also remain. Distraint is a mutually exclusive remedy from termination of the lease.

The Court determined that Section 95 of the BIA does not apply to set aside distraint proceedings by a landlord under a commercial tenancy agreement in arrears. That section just included payments made by an insolvent party. The Court also stated that Section 70 of the BIA protects the landlord’s distraint because the distraint was fully completed by payment to the landlord.

However, the Court did find that the payment to the landlord was extreme. As you will recall, the distraint is based on the arrears at the time of effecting the distraint. In this case, the amount outstanding at that time was $79,586. However, the amount paid to the landlord, after the costs of distraint, was $223,990. Commercial lease landlord responsibilities include providing proper accounting. Therefore, the Court ordered that the excess over what the landlord was owed, $144,404, had to be paid to the plaintiff, RBC.

If there were no secured creditors and the Trustee launched the application, the result would have been the same. The only difference would be that the excess funds would have to be paid over to the Trustee. The result in Ontario would be the same as in this Alberta case.

Is your company insolvent?

Is your company behind in its rent payments under its Ontario commercial lease agreement? Does it not have enough cash to continue its operations?

If so, call the Ira Smith Team today. We have decades and generations of experience assisting people and companies trying to find financial restructuring or a financial debt negotiation strategy. As a licensed insolvency trustee (formerly called a bankruptcy trustee), we are the only professionals licensed, recognized and supervised by the federal government to supply bankruptcy and insolvency advice and carry out strategies to aid you to stay clear of bankruptcy.

Call the Ira Smith Team today so you can cut the stress, anxiousness and pain from your life that your financial issues have caused. With the special roadmap, we establish just for you, we will immediately return you right into a healthy and hassle-free life.

You can have a no-cost analysis so we can help you fix your company’s debt troubles. Call the Ira Smith Team today. This will allow you to go back to a new healthy and balanced life, Starting Over Starting Now.ontario commercial lease agreement

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Brandon Blog Post

BORROW WELL REVIEW GUIDE: BORROWELL REVIEW FREE CREDIT SCORE METHOD

borrow well review

If you would prefer to listen to the audio version of this Brandon’s Blog Borrow Well Review please scroll to the bottom and click on the podcast

Introduction

Have you ever before wondered what your credit score is and what your credit history looks like? I’m certain if you ever before looked for a home mortgage, a loan, to rent a home or apartment or applied for an insurance policy, you recognize that your credit rating ends up being crucial. The loan provider, landlord or insurance provider will certainly decide on you based upon your credit history. This Brandon’s Blog is about the totally free credit report system of Borrowell Inc.; a Borrow Well review.

Inspecting your credit rating has actually generally been a really laborious job and nobody really liked to do it. With the surge of consumer FinTech over the last couple of years, two businesses have actually seen a method to produce an on the internet industry for personal loans in Canada; 1. Credit Karma Canada; and 2. Borrowell Inc. Credit Karma Canada is owned by its United States parent. Borrowell is a 100% Canadian owned firm.

Borrow Well review

I have previously blogged about Credit Karma Canada. Borrowell runs in a comparable way. Borrowell’s goal is quite straightforward. They wish to assist Canadians to make fantastic choices concerning credit and debt. They began life as a consumer lender. Borrowell thought that customers wanted personal loans. They started the firm making loans for people with excellent credit.

Borrowell discovered that it was pricey to obtain customers. Their customer acquisition cost was very high. It was a tough issue to fix. What they did was come to be the 1st business in Canada to supply credit scores absolutely free. They assumed this would be a wonderful method to obtain clients and promote what Borrowell did. They thought that it would certainly be an excellent method to make loans.

How it works

The trouble was that they were thousands of people a week inspecting their credit report, however, few of them either desired or fit the Borrowell standards for, loans. Borrowell found that people desired various financial products and not everyone had good credit. So they invested most of 2017 in developing a marketplace.

They developed an online forum for around 40 various financial institutions and other lenders. That enabled a person to get their credit score with Borrowell, and then they can after that be taken into the sales funnel. Borrowell would after that advise of products, solutions, and pointers customized for every person from their forum of lender members. Borrowell earns a fee on loans made and other financial product sales.

They wound up discovering a high level of product market fit for roughly half a million direct customers that first examine their credit report with Borrowell. Canadians now had a very easy way to regularly see their credit score and inspect their credit history.

Utilizing the Borrowell system does not influence your credit report, unlike when you apply for a loan and the potential lender performs a credit check on you. In order to ask you the setup questions, and to have the ability to provide you with your cost-free credit report and record, Borrowell acquires information from one of our two credit reporting companies, Equifax.

Borowell additionally browses particular public document data sources to try to find various other details such as:

  • Bankruptcy: A legal process used by people and companies looking for particular relief from all or some their debt.
  • Civil Judgment: A non-criminal judgment in a court, calling for the person or company to make full or partial restitution.
  • Registered Items: Other things found in public documents, like a lien against your car or truck or a home mortgage or other loan registered against your house.

Know that you are in the Borrowell sales funnel

In order to stay top of mind, Borrowell updates you on your credit rating on a monthly basis and if it has actually changed for better or for worse. This is, obviously, advantageous for any person trying to enhance their credit history. Borrowell will inform you monthly the result of the activities you are taking to boost your credit score.

Borrowell will also help you recognize what variables are affecting your credit score. In this way, they inform you what you need to do to boost your credit rating. This is particularly great for anybody trying to learn about finances and general money matters. Borrowell also provides recommendations on just how to improve your credit rating.

So their system helps you to learn about:

  • payment history
  • credit usage
  • bad comments on your credit report
  • account inquiries
  • your credit score and report
  • tips for improvement

Borrowell offers you a very easy way to see just how you’re doing financially, just how much money you have invested between credit cards and automobile and various other loans. It likewise

To learn what goes into calculating your credit score and what it all means, check out my blog, WHAT IS A GOOD CREDIT SCORE IN CANADA? THE UNTOLD CREDIT SCORE SECRETS.

Is there any drawback to the Borrowell app?

The positive side is that this is a very easy and effective method of looking into yourself in a reliable way none of our Canadian banks have actually done. Nonetheless, I likewise have some worries.

The financial partners in the Borrowell financial marketplace have to pay a fee. That charge needs to be accounted for in the price of the financial products sold. If there is competition amongst marketplace financial members, this may keep pricing consistent and competitive within the various credit score buckets. Perhaps this marketplace also gives people access to financial products they otherwise may not be able to find or get on their own.

It is safe to presume that people using this system are working on boosting their credit score. The financial partners might be costing their products for those that have actually not attained sufficient credit strength to go and negotiate the price they will be paying with any Bank. So for those with a good credit rating, this may mean that the cost of any kind of financial product via the Borrowell portal could be greater than otherwise readily available to them if they spent the time investigating.

My main concern is more generic. It would be the same as with any system like this. They maintain a great deal of highly personal and sensitive information on Canadians which they regularly update.

There are many criminals around the world who would like nothing better than to hack the Borrowell database in order to get at this information to further their devious and illegal schemes. Stealing your identity, or identity theft is, of course, the big one.

Think no further than September 7, 2017, when Equifax announced that months-long illegitimate access to its credit-report databases had led to the breach of personally identifiable information of over 148 million people, nearly all in the USA. That is the real danger I am talking about. As I mentioned, that is a danger with any computerized system storing highly sensitive information, not just a Borrowell issue.

Borrow Well Review: Do you have a negative credit report?

I hope this Borrowell review has helped you gain a better understanding. Question: Have you lost the ability to borrow because of a bad credit score? Are you having trouble making your monthly payments? Is your business dealing with financial challenges that require to be addressed immediately?

Call the Ira Smith Team today if so. We have years and generations of experience helping people and businesses seeking financial restructuring or a debt negotiation strategy. As a licensed insolvency trustee, we are the only specialists acknowledged, accredited and overseen by the federal government to supply insolvency advice and implement solutions to help you to remain free from bankruptcy.

Call the Ira Smith Team today so you can end your anxiety, anxiousness, and discomfort today. With the roadmap we establish one-of-a-kind to your scenario, we will promptly return you right into a well balanced, healthy and carefree life.

You can have a no-cost evaluation to help you to fix your credit and debt difficulties. With you, we will discover your monetary pain factors and make use of an approach to free them from your life. This will definitely enable you to start with a clean slate, Starting Over Starting Now.

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Brandon Blog Post

BANKRUPTCY CANADA NEW EVENTS (2019)

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Introduction

There has been two recent bankruptcy Canada new events that I believe are important to discuss. I believe you will hear more about it over the next few months. The two are unrelated.

One deals with the insolvency of oil and gas companies. The other with the rights of retired people and their company pensions and health benefits when their former employer goes into insolvency proceedings.

Bankruptcy Canada – The Redwater decision fallout

I have previously written about the Supreme Court of Canada decision in the Redwater Energy Corporation matter. On January 31, 2019, the top Federal Court released its decision in the case of Orphan Well Association v. Grant Thornton Ltd. The Supreme Court reversed 2 Alberta lower Court decisions. It is now the law of the land that, prior to lenders or creditors getting any type of repayment, the receiver or trustee will need to invest the funds from the sale of assets on the environmental remediation costs on all orphaned wells, that provincial legislation may need.

The decision made it clear that the receiver or trustee does not need to spend cash it does not have from the sale of assets or other recoveries. However, whatever amount it recoups from the sale of assets, on a net basis, will initially need to go to provincially mandated clean-up costs of the financially troubled company’s wells. This is before secured or unsecured creditors see a penny.

Trident Exploration Corp.

Now for the fallout. Natural gas producer Trident Exploration Corp. (Trident) ceased operations on April 30, 2019. On May 3 on application to the Court by the Alberta Energy Regulator’s Orphan Well Association, Trident was placed in receivership.

Its staff and contractors have been terminated and its 3,600+ wells are being transitioned to the Alberta regulator.

The company claimed it had functioned openly and collaboratively with its lenders and the regulator since February. It further reported that it was unable to see that a successful restructuring could be accomplished in a timely fashion. Therefore, Trident’s lender stopped supporting the business. Due to this, Trident does not have the funds to run its infrastructure or enter into insolvency proceedings. Consequently, they have determined to walk away, leaving greater than 3,600 sites, a number of them active, without an operator.

The regulator then issued its order for the sites to be properly decommissioned and capped off. On April 30, Trident, without replying to the regulator’s order or addressing their environmental obligations, the Directors ceased operations, terminated its staff and contractors. The Board then resigned. Trident’s wells will soon be transferred to the Orphan Well Association.

The Redwater effect

Trident blamed the recent Redwater Supreme Court decision which ruled that capping of orphan oil and gas wells and environmental remediation should take priority over lenders when a business goes bankrupt and leaves behind orphan wells.

Trident also said that the Redwater decision, regulatory uncertainty and current low pricing has developed a treacherous setting for energy companies that dare to risk their capital in Canada.

Trident estimates that its total abandonment and improvement obligations are about $329 million. They estimate that with those costs, any recovery by secured lenders is unsure and there would be no funds for either unsecured creditors or shareholders.

The Redwater effect is that the Court’s decision has had the unintended result of increasing Trident’s financial distress and accelerating the abandonment of its wells, has it had no funds to live up to its obligations.

Only time will tell if other insolvent energy producers take the route of Trident by just shutting down and abandoning its business and leaving its wells for the regulator to deal with.

Bankruptcy Canada – Retiree pension and health benefit rights protection in insolvency proceedings

Another topic I have previously written about is the lack of protection for retirees for pension and health benefit payments when the former employer enters insolvency proceedings. Rank-and-file members of the United Steelworkers (USW) from across Canada were on Parliament Hill to consult with MPs and requesting a commitment to legislate protection for retired workers. The USW very much want to make this a 2019 federal election issue.

The 2019 federal budget plan was very quiet on any type of commitment to shield workers and retirees by treating them as protected or priority creditors in our insolvency laws.

As a result of high-profile cases such as Nortel in Ottawa, Stelco in Hamilton and Sears, the USW is committed to campaigning for retirees to have a safe future.

Retirees understand just how unsecure their pension plans and benefits might be if a firm gets into restructuring under the Companies’ Creditors Arrangement Act (CCAA) or any proceeding under the Bankruptcy and Insolvency Act (Canada) (BIA).

Pensions are delayed earnings and, by the time financial institutions as well as various other creditors are paid, there is nothing left for workers for any shortfall or benefit payments. The USW feels that all Canadians ought to be outraged by the treatment of retired Canadians in corporate insolvency matters.

This is why they met with MPs Senators. They want to focus on a collection of recent Bills presently before the House of Commons and the Senate. Two are before the House of Commons but they have not progressed. One is sponsored by the New Democratic Party, and the other by the Bloc Québecois. They are focused on reforming the CCAA and the BIA to offer top priority to claims by workers arising out of an underfunded pension plan and the removal of benefits.

An additional Bill, presented in the Senate late last year by now-retired Senator Art Eggleton, likewise aims to grant secured standing for pension claims.

It will be interesting to see if the Conservative Party picks up on this important debate and turns it into an election issue. The Liberal Party had promised to deal with this issue in the last four years, but alas, they have not delivered.

Bankruptcy Canada – Summary

Corporations that cannot afford to properly shut down their business and retirees losing out on benefits they worked their whole life for are important issues in insolvency. Does your company not have enough cash to continue its operations? Did you not receive all amounts you are entitled to and now are facing personal financial problems?

If so, call the Ira Smith Team today. We have decades and generations of experience assisting people and companies trying to find financial restructuring or a financial debt negotiation strategy. As a licensed insolvency trustee, we are the only professionals licensed, recognized and supervised by the federal government to supply insolvency advice and carry out strategies to aid you to stay clear of personal bankruptcy.

Call the Ira Smith Team today so you can cut the stress, anxiousness and pain from your life that your financial issues have caused. With the special roadmap, we establish just for you, we will immediately return you right into a healthy and hassle-free life.

You can have a no-cost analysis so we can help you fix your debt troubles. Call the Ira Smith Team today. This will most certainly allow you to go back to a new healthy and balanced life, Starting Over Starting Now.

 

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Brandon Blog Post

ESTATE TRUSTEE ONTARIO REMOVAL ISSUES

Estate trustee

If you would prefer to listen to the audio version of this Brandon’s Blog, please scroll down to the bottom and click on the podcast.

Estate trustee Introduction

One of the most popular Brandon’s Blog article is:

WHAT HAPPENS TO DEBT WHEN YOU DIE CANADA: ARE YOU FREE OF DEBT

That led me to start looking more deeply into deceased estate matters, past the insolvency issues. So a few months ago I wrote a series of blogs on estate trustee matters. The series of blogs are:

In one blog I wrote how the duties and responsibilities of an estate trustee (formerly called either an executor or executrix) are very similar to the fiduciary duties and activities are undertaken all the time by a licensed insolvency trustee. In another, I wrote about the Court’s ability to remove and replace the estate trustee. In a third blog, I wrote about how all children are not fit to be an estate trustee.

A recent Court decision

I recently became aware of an Ontario Court decision about the removal and replacement of an estate trustee. The decision was handed down a couple of weeks after I wrote my blogs.

The recent decision is a very interesting case. Many of the issues I wrote about are all there. So, I thought it would be interesting to provide the information to you as it is a real-life example that actually took place, of many of the things I previously wrote about that could take place.

The case citation is Lanari V. Kay, 2019 ONSC 1506. It was heard in the Ontario Superior Court of Justice. The deceased was Patricia Anne Kay. She had eight children. Tragically, one daughter predeceased her. Of the seven remaining, in her will, three were appointed trustees. Along with the remaining four children, Ms. Kay’s granddaughter, the child of her dead daughter, was asserting that she was entitled to be a beneficiary.

The Applicant

The applicant insists five reasons to get rid of the estate trustees: (1) conflict of interest; (2) misbehaviour, violation of trust fund as well as violation of fiduciary responsibility; (3) animosity between the trustees; (4) conflicts between the trustees and the beneficiaries; and (5) delay and wastage of the assets.

The respondents

The trustees insist that:

  1. Any kind of conflict of interest can be relieved by guaranteeing the trustee with a conflict will not take part in any decision making in connection with the matter or thing where there is that conflict.
  2. There is no displeasure between the trustees, and there never was.
  3. Any bitterness between trustees and beneficiaries is not a sufficient ground to get rid of trustees.
  4. There has been no significant hold-up in the management of the estate and they have properly provided the necessary disclosure.
  5. From a functional viewpoint, the elimination of current trustees will increase expenses in this modest estate.

The Trustee Act

As I discussed in my earlier blogs, under the Trustee Act, R.S.O. 1990, c. T. 23 (the Act), the court can remove trustees and select brand-new trustees.

The basic concept adhered to in an estate and trust matter by the Court for removal applications like this one is that a Court will not easily remove an estate executor, executrix or trustee picked by the testator. Nevertheless, where there is a clear instance of conflict of interest, elimination is a suitable course of action. The well-being of the beneficiaries has to be an important factor to consider. Also, conduct by the trustee that jeopardizes the estate property or that reveals a lack of honesty or absence of proper ability to carry out the trustee’s duties and obligations are a basis for removal.

The Judge and his ruling

Therefore, the Judge kept in mind that the estate trustees have actually insisted in written documents that the estate might lack sufficient property to disperse if estate litigation continues. He found that the trustees’ activities have actually resulted in unnecessary litigation. The significant legal costs which have actually been sustained are partly due to the unreasonable positions taken by the trustees. This was a major variable to think about.

The Judge stated that:

  1. Bitterness between a beneficiary and a trustee might not be sufficient to cut a trustee.
  2. When that displeasure influences the management of the estate, it is a significant problem.
  3. If the animosity has actually been created by the failure to supply disclosure, it increased the time spent by the respective lawyers on behalf of the trustees and the beneficiaries.
  4. The additional time spent as a result of the lack of disclosure is matched by a matching boost in legal costs which might be the obligation of the estate.

The Judge felt that the problems in this situation have and remains to raise the costs associated with the estate management. He additionally stated that bitterness between the trustees might also exist.

Ultimately, the Judge determined that he was satisfied that the estate trustees have to be removed and he ordered that. The Judge assigned an independent person as the alternative estate trustee and approved a specific hourly rate to be billed by the brand-new trustee. Trustee compensation, just like that of a licensed insolvency trustee acting in Court matters, is subject to taxation by the Court.

Finally, the Judge referred to the various other disputes between the parties back to the Judge seized with this estate litigation.

Our role in estate matters

As I mentioned in one of the earlier blogs, my Firm had successfully completed a mandate as Court-appointed Estate Asset Manager. In that file we had to find common ground between two beneficiaries who could not agree on anything. We were able to do that. So, on consent, our plan to prepare for sale and then sell the assets and distribute the cash to the beneficiaries, on consent, was done. Our fee and that of our lawyer was also approved by the Court without any objection from the beneficiaries.

We were recently appointed by the Court in another estate matter. We will be receiving funds from a party purchasing the only real asset in the estate and attempting to find a missing beneficiary. Based on the results of our hunting, we will then prepare a distribution plan for the Court to approve.

As I have previously written and state above, a licensed insolvency trustee is an officer of the Court. We have the necessary skill set to act as either an estate trustee or perform many potential roles in estate matters. This is in addition to our normal work in the insolvency field.

If you are involved in a messy estate matter, call the Ira Smith Team today. We work cooperatively with lawyers and other professionals.

As a licensed insolvency trustee, we are natural problem solvers. We will be able to create a plan unique to your circumstances so that we can end the pain, stress and anxiety that you are feeling. This will allow you to reduce your overall costs and return to living a stress-free life.

Call the Ira Smith Team today for your free consultation. We will reduce your overall costs and end your pain points, Starting over Starting Now.

 

 

 

 

 

 

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FINANCIAL SECURITY REPORT: HALF OF CANADIANS CAN’T MAKE ENDS MEET

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Financial security Introduction

Brand-New Ipsos study findings were released on April 22, 2019, simply 2 days prior to the next Bank of Canada interest rate announcement. This brand-new survey shows exactly how Canadians really feel about their financial security or its absence. Ipsos claims almost fifty percent of Canadians cannot make ends meet on a monthly basis.

Fifty percent of Canada is worried about the effect of increasing rates of interest on their financial resources. They feel even worse about their debt load from just a couple of months back.

Canadians maxed out on debt

Canadians are maxed out on debt with 48% of Canadians on the edge of bankruptcy. They claim that they go by the end of every month to within $200 or less far from financial insolvency.

In regards to Canadians and their beliefs, people are worried about their debt levels and financial security. Forty-eight percent of those questioned claim they cannot make ends meet. They understand that they are most likely to take on even more debt at the end of each month to pay all of their expenditures. So practically fifty percent of all Canadians need to handle even more debt to satisfy their current expenses, which in part includes existing debt repayments!

It’s no longer about purchases – that ship has already sailed!

It ends up from the survey that this isn’t about the fact that we’re in a low-interest-rate atmosphere any longer. It also isn’t about people making high-end or lifestyle new purchases that are considered unnecessary.

They have actually already done all that. Especially people in Toronto and Vancouver that have stretched to buy costly houses, home furnishings and appliances. They used the low-interest rate mortgages and home equity credit lines to do it.

New debt on top of old debt

So now they understand that they better not take on even more debt. However, guess what? It is currently far too late for almost half of Canada. People are claiming they currently just cannot make ends meet. Therefore, they have no choice but to take on even more debt.

Brand-new debt to make old debt repayments! Undoubtedly, these individuals stay in a hazardous downward spiral. People are questioning whether can continue in this way and are thinking about personal bankruptcy.

It is true that the survey has a small sample size. This Ipsos survey reveals growing tension and grief. Nevertheless, personal bankruptcies remain historically low in this nation. Undoubtedly, there are local distinctions. Albertans are experiencing far more personal insolvencies as a result of the slowness in the energy market.

I think there are 2 really basic reasons for almost half of Canadians dealing with financial insolvency yet personally bankruptcy levels are down. First, financially troubled Canadians are utilizing the consumer proposal arrangements section of the Bankruptcy and Insolvency Act (Canada) (BIA). This is a good thing because they are avoiding bankruptcy.

Second, people still have adequate equity in their houses. So, they are still able to borrow for brand-new debt to satisfy old debt payments other living costs. This is not a good thing. The thing Canadians do not seem to be doing yet is tightening their belts and lowering month-to-month expenses.

Bank of Canada

The Bank of Canada (BOC) increased its overnight interest rate 5 times since mid-2017. At the end of 2018, everyone, including the BOC assumed that fad was most likely to continue. Nevertheless, in its first 2019 interest rate announcement, the Bank altered its signals and currently appears completely satisfied to hold steady on the interest rate for what might be for the rest of 2019.

On April 24, 2019, the BOC announced that it was maintaining the overnight bank rate target at 1 ¾ percent. The BOC did so based on its observations of the Canadian and global economies.

Their statement included, that in Canada:

  • economic development throughout the very first half of 2019 is anticipated to be slower than was forecast for in January 2019.
  • The oil price decrease and recurring transport restrictions have actually suppressed financial investment and exports in the oil industry.
  • Financial investment and exports outside the oil market, at the same time, have been adversely impacted by unpredictability and the global downturn.
  • Beyond the oil and gas market, the financial investment will be sustained by high prices of other commodities and exports will broaden with reinforcing international need.

As far as the global market, the BOC stated:

  • The global economy reduced by greater than the Bank projected in its January Monetary Policy Report.
  • Continuous unpredictability connected to trade disputes has weakened business views.
  • Stagnation throughout many countries has resulted.
  • In reaction, several reserve banks have reported a slower speed of monetary plan normalization.

As a result, the BOC kept its target for the overnight rate at 1 3/4 percent.

Financial questions for Canadians

Virtually fifty percent of Canadians currently are sorry for the debt they have. I believe what this does is brings recognition for you to have a serious discussion in your home. The discussion requires to be about:

  • Exactly how near the margin are you living?
  • What household costs could you drop?
  • Could you survive if one of you were to lose your job?
  • If not, what can you do now to prepare for that if it were to one day happen?
  • Have you filed all your income tax returns and paid all your tax obligations?
  • Did you get a tax refund and what are you most likely to do with that cash to help with your situation?
  • Are your Christmas gifts expenses all paid or are you still rolling those costs on your credit card bill every month?

Despite that the job market has seen wage strength, the Canadian economic situation has not produced great financial signals. There are spots that seem to be a little murkier. Our rising cost of living is nearing 2% on an annualized basis and we’re paying much more for gas at the pump. We’re paying a lot more for produce. So there are things that are costing us even more simple to manage. So if income is increasing a bit, costs are climbing much more.

So Canadians are currently really feeling a little sweaty. They aren’t certain what is most likely to take place. Currently, there appears to be a little bit of a rest on the interest rates.

Canadians need to set up a proper household budget

I would certainly suggest that not everybody has taken a hard look at their financial situation. There’s plenty of presumptions that can take place due to the fact that you just do not understand your numbers. I see that occurring all the time.

So perhaps people really feel a little even worse off than they actually are due to the fact that they do not understand their numbers. They understand they stay in difficulty, however, do not have the capability to assemble a roadmap for saving themselves.

A truth check is needed instantly. Most likely fifty percent of those that claim they cannot make ends meet can save themselves without turning to an insolvency process. If they just recognized their realities about their very own money situation. The other half of the half, or 25% of Canadians, probably do meet the financial insolvency definition and need professional help.

The trick might just be that Canadians need to promptly get a good handle on what their month-to-month income and expenses truly are. Share that info with the entire household and make and follow a household budget that has everybody’s agreement. Your financial security in retirement may depend upon it.

Readers of my Brandon’s Blog will know that I always state the advantages of correct budgeting. To check out this budgeting topic you can look as far back as my collection of blogs that began late in 2014 with A BALANCED BUDGET IS TO FINANCIAL HEALTH WHAT A BALANCED DIET IS TO PHYSICAL HEALTH. You can additionally check my more recent 2019 blogs, USEFUL TIPS FOR SAVING MONEY CANADA: THIS PRO ATHLETE TEACHES US and also MY BILLS ARE HIGH: 6 THINGS TO IMMEDIATELY DO.

What about you or your company?

Do you have way too much debt? Are you having difficulty making your month-to-month expenses? Is your company having a hard time handling its economic difficulties that you cannot figure how to get out of?

If so, call the Ira Smith Team today. We have decades and generations of experience assisting people and companies looking for financial restructuring or a debt settlement plan. As a licensed insolvency trustee, we are the only experts recognized, accredited and supervised by the federal government to provide insolvency advice and carry out alternatives to aid you to stay clear of bankruptcy.

Call the Ira Smith Team today so you can end your tension, stress and anxiety that your financial problems have triggered. With the special roadmap, we develop unique for you, we will right away return you right into a healthy and well-balanced hassle-free life.

You can have a no-cost evaluation so we can help you repair your debt difficulties. Call the Ira Smith Team today. This will most certainly permit you to return to a brand new healthy life, Starting Over Starting Now.financial security

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THE HONEST TO GOODNESS TRUTH ON BANKRUPTING A CORPORATION

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If you would prefer to listen to the audio version of this Brandon’s Blog, please scroll to the bottom and click on the podcast

Bankrupting a corporation: Introduction

I have blogged on personal and corporate insolvency matters for just over 6 years now. I have covered many topics. During a recent corporate bankruptcy consultation, I realized that I have never written about what the steps are for bankrupting a corporation. An important issue arising from this topic would be what the Directors of a corporation going into bankruptcy should know.

There are 3 ways for a company to be bankrupt

Like in all bankruptcy matters, there are three methods that result in bankrupting a corporation in Canada. The first way is being pushed, and the second way is jumping in with both feet voluntarily (I know, corporations don’t have feet!). The third way is to have the company’s creditors vote down a corporation’s attempt to restructure under a Proposal under the Bankruptcy and Insolvency Act (Canada) (BIA). In this Brandon’s Blog, I will focus on describing the first two methods.

Bankruptcy application – an involuntary bankruptcy

Being pushed means that one or more unsecured creditors, owed in total at least $1,000, has made a motion before the Court asking that a Bankruptcy Order be made against the company. The motion is called a Bankruptcy Application.

In order to do so, the unsecured creditor(s) have to:

  • retain a bankruptcy lawyer.
  • gotten the consent of a licensed insolvency trustee (formerly called a bankruptcy trustee) (Trustee) to administer the corporate bankruptcy.
  • In addition to proving the debt owing, the applicant(s) also have to prove that at least one act of bankruptcy was committed by the company within the 6 months before the filing of the bankruptcy application.

There are various acts of bankruptcy listed in Section 42(1) of the BIA. Commonly seen acts of bankruptcy are fraudulent transfers of property, allowing a lawful seizure of some or all of their property by a creditor under a lawful process, and the catch-all ceasing to meet many liabilities as they come due.

Jumping in with both feet – a voluntary bankruptcy

By this term, I mean filing an Assignment in Bankruptcy. In this case, rather than someone going to Court, the Directors call a Directors’ meeting. At the meeting, the Directors resolve that the company is experiencing financial difficulty and cannot continue to run. The Directors also reserve that the company should file an assignment in bankruptcy and it gives authority to one Director to sign all the necessary documents.

The Director who has the authority to sign the bankruptcy documents is called the Designated Officer. Before the documents are ready for signing, the Trustee who is selected must get enough information to prepare the documentation.

Whether bankrupting a corporation in Ontario or elsewhere in Canada and regardless if it is a result of a Bankruptcy Order or an Assignment in Bankruptcy, the information the Trustee requires is the same.

Information and documents a Trustee needs

The Trustee requires a great deal of information before being able to properly administer a voluntary or involuntary corporate bankruptcy. Sometimes company officials can provide it and in other cases, the Trustee has to dig through the books and records of the company.

Here is the lengthy list of what is needed:

  • Exact corporate name and address of head office, details of any other locations, copy of any premises leases.
  • Minute book and corporate seal.
  • Bankruptcy Order or the resolution of the Directors.
  • Full description of the nature of the business.
  • Names of Officers and Directors and their addresses.
  • Date of incorporation of the company.
  • The date the company ceased operations, if prior to the date of bankruptcy.
  • The greatest number of employees employed in the last 12 months.
  • All employees – listing of names, addresses, social insurance number, amounts owing for each of severance, termination, wages, vacation pay, commissions and expenses.
  • Employee T4’s & ROE’s for current year employees (employer should issue to all employees for the year of bankruptcy and earlier if unissued).
  • Creditors’ listing (accounts payable) – details consisting of name, address, account number(s), and respective amounts owing classified as follows:
    • Secured – banks, leasing company, source deductions, etc.
    • Preferred – wages owing, rent to landlords, government remittances outstanding:
    • Workers Compensation Board, if applicable.
    • Municipal authorities: e.g. business taxes and realty taxes.
    • Employer’s health tax.
    • Unsecured – trade suppliers; Hydro; Bell Canada (quote telephone number(s); gas, etc.
    • Details of any unsecured private party loans, shareholder loans or advances due to the company.
  • Details of any unions, if applicable, including name, address, account number.
  • Details of contingent liabilities and pending legal action, if any.
  • Accounts receivable – aged trial balance and detailed backup documentation (invoices, delivery slips, purchase orders, etc.) to support collection efforts. From the aged trial balance, classify the accounts as good, doubtful, bad to equal the total balance.
  • Inventory – detailed information on inventory cost and the company’s assessment of estimated realizable values.
  • Machinery, equipment and plant – detailed listing providing original cost, if possible and estimated realizable value.
  • Office furniture & fixtures – detailed listing providing original cost, if possible and estimated realizable value.
  • Real estate – all details of real estate owned, including deeds, legal descriptions, original costs, appraisals (if any), an estimated fair market value.
  • Vehicles – provide descriptions including year, model, VIN, kilometres, original costs and estimated realizable value. Note if any vehicles are leased/financed and provide copies of the lease/finance documentation.
  • Other assets – details of other assets such as prepaid expenses, deposits, goodwill, intangibles, shares or any investments, patents, trademarks.
  • Bank accounts – details of all bank accounts, including name, address, account number and approximate balance in the accounts.
  • Last 12 months of accounting records, bank statements and cancelled cheques (for all accounts maintained).
  • Financial statements – most recent.
  • Corporate solicitor – name and address.
  • Listing of leased equipment (copy of leases) – vehicles, office and any other equipment.
  • Insurance policy(ies).
  • A brief narrative of management’s opinion as to cause(s) of insolvency.
  • Disclosure of any sale or disposition of assets, outside of the ordinary course of business, in the last year.

The Trustee’s job

In a corporate bankruptcy, the Trustee, with certain exceptions, takes possession of the assets of the company. If the Trustee is aware that there are deemed trust claims against the assets, or there is a secured creditor, like a Chartered Bank, the Trustee must be careful. If there are, the Trustee should have already had a conversation with those parties prior to the bankruptcy, to decide what rights, if any, the Trustee may have against such property.

Assuming there are assets not subject to the valid claim of third parties, the Trustee must at least:

  1. Establish whether the value of the assets will be enhanced if the Trustee operates the company’s business.
  2. Take into account what obstacles exist in running the business and how to reduce risk if it is beneficial or necessary to run the business.
  3. Decide what are the very best means to sell the properties? En bloc as one parcel or individually or at least several parcels?
  4. Determine if there are any 3rd party owned assets on the company’s premises?
  5. Identify if there are any company assets on the property of 3rd parties?
  6. Prepare the required reporting to Service Canada so that the former employees will be able to make their Wage Earner Protection Plan Act claims.
  7. See if there are proper insurance coverage and proper physical security over the assets?
  8. Identify any inventory been delivered in the 30 days prior to the date of bankruptcy? What rights of revindication might exist?
  9. Circularize the creditors requesting claims to be filed to understand what the depth and breadth of claims against the company are. This way, the Trustee can formulate a distribution to creditors, in priority, with the net funds available from the sale of assets.

What the Directors should be concerned about

Directors should have two concerns when contemplating bankrupting a corporation. First, they should be concerned about any decisions they have made or senior management actions they have ratified.

For example, Sears in the United States recently lodged a claim versus its previous CEO Eddie Lampert and a string of its top-level previous Directors. This includes Eddie Lampert’s previous Yale roomie Treasury Secretary Steven Mnuchin. The allegation is that the Directors condoned and approved Eddie Lampert’s actions for presumably swiping billions of dollars from the once-storied merchant.

Second, there are various types of claims against the corporation that are also personal claims against Directors. The list includes Director liability for unpaid:

  • Wages
  • HST
  • Source deductions
  • Certain environmental offences
  • Cybersecurity risks

In general, there is a relatively short list of things Directors can be personally liable for. In many cases, there will be Director and Officer Insurance to be relied upon. Directors may also have a due diligence defence.

A Director resigning their position will not protect them against any liability that would be a personal Director liability prior to their resignation.

Are you a Corporate Director?

Are you a Director of a corporation that has too much debt? Is your company’s capital insufficient to fulfill every one of its economic responsibilities and may be insolvent? Are you worried that your firm’s major secured lender will soon pull its financing completely and demand repayment in full which the company will not be able to do?

If you responded yes to any of these questions, call the Ira Smith Team today so we can kill off the stress and anxiety that these financial troubles have activated. We will create a strategy for the Directors unique for your company’s problems so that it can avoid bankruptcy and become profitable and continue to employ many people.

Call the Ira Smith Team today. We have decades and generations of experience restructuring and turning around companies seeking financial restructuring or a debt negotiation strategy. As a licensed insolvency trustee, we are the only specialists recognized, certified and monitored by the federal government to offer insolvency guidance to save businesses.

You can have a no-cost assessment so we can fix your company’s debt problems. Call the Ira Smith Team today. This will absolutely allow you to return to being efficient, healthy and balanced, Starting Over Starting Now.

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MOVE FAST TO OBJECT TO AN ONTARIO RECEIVERSHIP COURT ORDER

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What is a receiver in insolvency?

A recent case heard in the Court of Appeal for Ontario clarifies what the time limit is to object to an order made in a Court-appointed receivership of a company in Ontario. The bottom line is you better move fast. Before I describe this very interesting decision, I should first remind newer readers on some receiver 101 basics.

What is it?

A receivership is a remedy for secured creditors to enforce their security. In the event, the company defaults on its loan agreement, normally by non-payment, the secured creditor. There are two types of these proceedings in Canada; 1) privately appointed or; 2) court appointed. A receiver might additionally be selected in an investor dispute to complete a task, liquidate assets or market a business.

Typically, the process begins with the secured creditor consulting with a Receiver. If it is decided that there should be a receiver appointed, the secured creditor then makes a choice. They can either appoint the receiver by written appointment letter (privately appointed) or make a motion to the Court for an Order appointing the receiver (court-appointed).

The Bankruptcy and Insolvency Act (Canada) (BIA) states that only a licensed insolvency trustee (formerly called a bankruptcy trustee) can act as a receiver. A privately appointed receiver acts on behalf of the appointing secured creditor. A court-appointed receiver has a duty of care to all creditors.

What are the duties of a receiver?

The receiver’s first duty is to take possession and control of the assets covered by the secured creditor’s security in a private appointment, or all the assets indicated in the court order in a court appointment. The receiver must decide whether it can get a higher value for the assets if it operates the business. Alternatively, the receiver may decide that the risk of operating the business is not worth it in terms of any meaningful increase in the value of the assets.

The receiver then develops a plan to on the running of the business and for the eventual sale of the assets. The type of business and the nature of the assets will dictate what approach the receiver will take. In the meantime, the receiver must inventory all the assets, protect them and make sure there is adequate insurance in place for what the receiver wishes to do in terms of running the business and selling the assets.

In a private appointment, the receiver needs to get the approval of the secured creditor before embarking on the business and asset plan. In a court appointment, the receiver requires the approval of the court.

What happens when a company goes into receivership?

When the company goes into receivership, senior management and the Directors lose most of their authority for decision making. The Directors’ general corporate duty of maintaining corporate records continues, but any decision-making about the running of the business or its assets will not be effective. This is especially true in a court appointment. The subject of Director liability is too broad to start mentioning in this Brandon’s Blog. i am planning to soon write a blog on that topic.

Management’s and employees’ responsibilities about the business in a practical sense will stop upon the appointment of the receiver. Their advice and help are only required if requested by the receiver. They certainly will not be paid for any efforts unless the receiver agrees in writing to make money available for their pay.

Court of Appeal for Ontario says you better move fast

Why the confusion? Isn’t the process for an appeal of a court order straightforward? The confusion comes about because, in the standard model Appointment Order of the Commercial List of the Ontario Superior Court of Justice, the court-appointed receiver is appointed under two statutes:

  1. Section 101 of the provincial Ontario Courts of Justice Act, RSO 1990, c C.43 (CJA).
  2. The federal BIA, section 243(1).

The applicant, in this case, was the purchaser of assets from a court-appointed receiver of a company. One of the standard provisions in the Appointment Order is that anyone wishing to take legal action against the receiver must first get the approval of the court to do so.

They brought an application for authorization to sue the receiver over a disagreement arising from the purchase of the assets from the receiver under the asset purchase agreement. On May 17, 2018, the lower court judge dismissed the application, finding that their allegations were not supported by the evidence. On November 8, 2018, the same judge refused their demand to resume the application based on new evidence.

The applicant filed appeals from both decisions. Its notices of appeal were on time under the provincial CJA, under which there is a 30-day time limit for commencing an appeal. They were late under the federal BIA, which imposes a 10-day time limit.

The lower court judge dismissed the appeals. He held that the BIA was the governing authority for the appeal, not the CJA. He stated that the origin of authority under which the receiver was appointed was section 243( 1) of the BIA and therefore appeals are governed by the BIA, not the CJA. He further went on to say that the appointment also under the CJA did not have the result of ousting the BIA as the source of authority. He further held that it also cannot supersede the federal BIA holds paramountcy over the provincial CJA.

receivership

Business Development Bank of Canada v. Astoria Organic Matters Ltd., 2019 ONCA 269

The Court of Appeal for Ontario decision was released on April 8, 2019. The appeal court found that this was a very narrow issue to decide so that it did not have to get into the merits of the case of the purchaser wanting to sue the receiver over a disagreement arising from the purchase of the assets from the receiver under the asset purchase agreement.

The Court of Appeal rejected the applicant’s appeal and did not find that the chambers judge made any errors. They said that when the order sought to be appealed was made in reliance on jurisdiction under the BIA, the proper appeal path is the BIA.

The lower court, the Ontario Superior Court Justice Commercial List, rejected the purchaser’s demand to sue the receiver, which is the decision the applicant wishes to appeal. The requirement to get leave of the court to sue the receiver comes from the Appointment Order. The court’s authority to include that arrangement order comes from the statutory power to appoint a receiver under s. 243( 1) of the BIA.

The Court of Appeal agreed that the legal power to appoint a receiver is also found in s. 101 of the CJA. But considering that authority for the leave to take legal action against the receiver comes from the BIA in spite of that the receiver was appointed under both laws, the appeal is governed by the BIA as a matter of paramountcy.

Therefore the Court of Appeal for Ontario dismissed the applicant’s appeal and awarded costs against them.

Does your company need to move fast?

Does your company have way too much debt? Is your company’s cash flow not enough to meet all of its financial obligations? Are you afraid that your company’s main secured creditor is about to demand repayment of its loan in full and you just can’t move fast enough to save your company?

If you answered yes, call the Ira Smith Team today so we can end the tension and anxiousness that these financial problems have triggered. We will develop a plan special for your company, to save it from extinction.

Call the Ira Smith Team today. We have years and generations of experience restructuring and saving companies looking for financial restructuring or a debt settlement approach. As a licensed insolvency trustee, we are the only professionals acknowledged, accredited and supervised by the federal government to provide insolvency advice to save companies.

You can have a no-cost analysis to aid you so we can repair your company’s debt problems. Call the Ira Smith Team today. This will certainly allow you to get back to Starting Over Starting Now.

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WILL JULIAN ASSANGE FACE CANADIAN BANKRUPTCY LAWS?

canadian bankruptcy laws

If you would prefer to listen to this Brandon’s Blog, please scroll down to the bottom and click on the podcast

Canadian bankruptcy laws Introduction

I got your attention with this silly Brandon’s Blog title, didn’t I? The answer to the question “will Julian Assange face Canadian bankruptcy laws?” is of course, no. He may face the justice systems of Britain, Sweden or the United States, or all three. But as far as I know, he isn’t wanted by the Canadian authorities.

However, there are many Canadians having problems paying all of their debts. Many have actually quit satisfying their financial commitments. If this is where you find yourself, then you are in financial difficulty and may even be insolvent.

I tell everyone that bankruptcy should be your last option. There are many ways to avoid bankruptcy. It really depends on how early on in your situation you consult a professional for advice and guidance.

The purpose of this Brandon’s Blog is to answer what seems to be the 10 essential problems bothering people thus far in 2019 for people facing financial challenges and considering filing for bankruptcy.

What happens if I declare bankruptcy in Canada?

When you declare bankruptcy, you must assign or hand over your assets to the licensed insolvency trustee (previously called a bankruptcy trustee) (Trustee). Each province regulates what assets are exempt from seizure.

So in bankruptcy, you will not lose all your assets. There is a listing of things that are excluded from seizure in Ontario:

  • Necessary clothing for you and your dependents.
  • Home furnishings and appliances that are of a worth not more than $13,150.
  • Tools and various other personal effects not worth more than $11,300, made use to earn revenue from your business. If you are an Ontario farmer, this amount increases to $29,100 for everything, including your livestock.
  • One car or truck that is worth not more than $6,600.
  • The cash surrender value of life insurance if your beneficiary is what is called a “Designated Beneficiary”.
  • Your Registered Retirement Savings Plan (RRSP), Registered Retirement Income Fund (RRIF) or Deferred Profit Sharing Plan (DPSP) other than for any amounts contributed in the 12 months immediately preceding your date of bankruptcy.
  • $10,000 of equity in your home but only if your share of the equity is less than $10,000 in total.

Earnings are not impacted by bankruptcy yet you will need to submit a monthly Income and Expense Form providing your household revenue and expenditures; this becomes part of your budgeting procedure. If your earnings go beyond specific criteria developed by the Office of the Superintendent of Bankruptcy (OSB), you will certainly have to pay part of the excess into the bankruptcy estate via the Trustee. This is called surplus income.

When you declare bankruptcy, the assets that are not exempt from seizure must be turned over to your Trustee. Those assets will be offered for sale and the cash gained from the sale of your possessions will be available for the Trustee to pay a dividend to your creditors.

Also, see below the discussion of will you lose your house and car in bankruptcy, as these assets may be handled differently.

How much does it cost to file bankruptcy in Canada?

The irony is that it does cost money for an insolvent person to file bankruptcy in Canada. The cost of a no asset, no surplus income administration is in the $1,800 to $2,000 range. If you have neither assets nor income, then you or someone on your behalf will have to make satisfactory arrangements with the Trustee for payment of this cost.

If there are assets and/or surplus income, this will most likely change the calculation of the amount the Trustee is entitled to charge for administering your insolvency file. However, the Trustee is entitled to take the Court approved fee from the funds obtained through the sale of assets and/or the surplus income payments received. In this case, the cost of your proceeding to you may very well be no extra charge!

Will I lose my house and car if I file bankruptcy in Canada?

A complete discussion of the issues involved can be found in my April 2019 blogs:

The Trustee is entitled to your equity in your home and car when you file for bankruptcy. As these other blogs of mine discuss, if someone can purchase the value of your equity, subject to the Ontario exemptions, then the Trustee will not have to take possession of your house and car.

Can you file bankruptcy and keep your credit cards?

The issue of a bankrupt keeping his or her credit cards is governed by Section 158(a. 1) of the Bankruptcy and Insolvency Act (Canada) (BIA) and Directive No. 3 issued by the Superintendent of Bankruptcy (OSB). The title of Directive No. 3 is, “Duties of the Bankrupt to Deliver Credit Cards to the Trustee”. It is provided to define under what conditions a bankrupt shall supply to the Trustee, for cancellation, all charge cards issued to and in the ownership or control of the bankrupt.

In all conditions, the Trustee shall require that the bankrupt supply to the Trustee, for termination, all credit cards issued to and in the ownership or control of the insolvent person with one exception. Except for those bank cards discussed in the next paragraph, in a bankruptcy, all credit cards must be given to the Trustee. This is regardless that there may be a zero balance on that charge card.

There is only one exception to this requirement. The insolvent person need not supply to the Trustee a credit card in the possession and control of the bankrupt where the primary cardholder is a third party (e.g., employer, spouse, friend, parent) and the primary cardholder has obtained a supplementary card in the name of the insolvent and about to be bankrupt person.

How long does bankruptcy last Canada?

The length of time you will be an undischarged bankrupt will rely on mainly three factors:

  1. Is this is your first time or is it your 2nd or more time in bankruptcy?
  2. Do you have a surplus income amount?
  3. Have you given one or more of your creditors, or your Trustee, reason to oppose your discharge?

If this is your 1st filing with no surplus income and nobody opposes your discharge application, your bankruptcy will last for 9 months. If this is your 1st time and you do have surplus income and no one opposes your discharge, it will last 21 months.

If this is your 2nd time and you do not have any surplus income, you are not eligible for a bankruptcy discharge for 24 months. However, you should consider if there is something in your pre-filing affairs that will give rise to someone opposing your discharge. For example, if the reason for your 2nd time is the same as your 1st time, your Trustee will be bound to oppose your discharge.

If you are a 2nd timer and you do have surplus income, then you will not be eligible for a discharge for at least 36 months. Again, consider your pre-filing conduct to estimate the likelihood of opposition.

In the case of an opposition, either by one or more of your creditors or by your Trustee, then it becomes a Court process. A discharge hearing will be scheduled in Court. The timing is then driven by the Court process. If your discharge is being opposed, you would be wise to consult with a bankruptcy lawyer.

Does bankruptcy ruin your credit forever?

A person that declares bankruptcy is given the lowest possible credit score. For a first time bankrupt, the information that negatively impacts your credit rating is inevitably gotten rid of approximately 6 years after your discharge from bankruptcy.

One of the purposes of the Canadian bankruptcy system is financial rehabilitation. Once you are discharged from bankruptcy, you can begin to repair and rebuild your credit.

Two easy ways are:

  1. Get a secured credit card. This is one where you put funds on deposit to equal your credit limit. The secured credit card issuer reports your activity to the two Canadian credit agencies monthly. By paying the balance off every month, you start to rebuild and repair your credit.
  2. Take out an RRSP loan and invest the money in your RRSP. Pay the loan off over the next 12 months and then rinse and repeat. By borrowing money in a manner the Bank will lend to you through the RRSP loan and paying the loan off in a year, you are rebuilding and repairing your credit. By the way, you also enjoy the tax benefit of the RRSP deduction and you are starting to build your retirement savings.

Do you have to declare your bankruptcy after 7 years?

This question was recently asked of me. At first, I didn’t quite understand what the person meant. After some further discussion, it became clear that what the person was really asking was two questions as follows:

  1. Will my bankruptcy filing show up on my credit report after 7 years?
  2. After 7 years, do I have to report the fact that I was bankrupt?

The first question is answered both above and below. As far as reporting the fact that you filed for bankruptcy, there are several issues. First, you don’t need to tell anyone unless you are specifically asked. Second, you will only be asked on an application for a loan or credit card, a job where handling cash and/or bonding is required, on an insurance application or in connection with a professional license that you hold. Sometimes the question may be limited, such as, “in the last 5 years”. You have to read the question carefully and answer truthfully.

Does a bankruptcy automatically come off?

When you file bankruptcy, Canadian bankruptcy laws require your Trustee to inform your creditors, the Canada Revenue Agency (CRA), credit rating coverage firms and the OSB. The OSB maintains a database of insolvency filings that anyone can search. So the fact you filed for bankruptcy is public. That information exists forever.

Your filing will also show up in your credit report. For personal bankruptcy, as indicated above, it will remain on your credit report for about 6 years after you get your bankruptcy discharge.

Additionally, specific insolvencies, both for personal and corporate bankruptcy call for a legal notice to be placed in a local newspaper.

What are the disadvantages of filing for bankruptcy?

There are certain disadvantages of filing for bankruptcy. In no particular order:

  • Your non-exempt assets will be handed over to the Trustee to be sold in order to obtain the value in cash so that a distribution can be paid to your creditors.
  • As indicated above, your bankruptcy will certainly show up on your credit report for about 6 years after you get your discharge from bankruptcy. This could be for as much as 7-10 years from your date of bankruptcy.
  • A bankruptcy drops you to the lowest possible credit score rating.
  • You have to turn over all of the credit cards in your control or possession where you are the primary cardholder. The credit card companies will also cancel any card you may have forgotten to give to your Trustee.
  • A bankruptcy might impede your capacity to get a home mortgage or a loan for several years.
  • If you did not have adequate life insurance before you filed for bankruptcy, your ability to obtain life insurance without being rated will be difficult.
  • If your employment requires you to be bonded, a bankruptcy could affect your job.
  • Although your discharge from bankruptcy operates to discharge you from your debts, there is a list of debts that are not discharged.

They are:

    • secured loans – home mortgage or vehicle loan;
    • certain student loans (remember the 7-year rule I just mentioned?);
    • penalties or fines enforced by the court;
    • spousal support and alimony you have to make in your separation agreement or divorce proceedings; and
    • any debts from fraud.

It is for these reasons that I always advise people that filing for bankruptcy should be a last resort. There are many options to avoid bankruptcy. Which ones might work, depends on how long you have waited to see me and how severe your situation has become. Various options to avoid bankruptcy are:

Do I need to retain a bankruptcy lawyer near me?

In simple situations, I would say it is not necessary. When you have an initial free consultation with a Trustee, he or she can tell you whether or not they believe it would be in your best interest to consult with a bankruptcy lawyer.

Remember that there is no such thing as Trustee-bankrupt confidentiality. In fact, as part of the documentation for an insolvency filing, you will have to acknowledge your understanding that under the Personal Information Protection and Electronic Documents Act (S.C. 2000, c. 5), certain information will be disclosed and will be public.

So, if your situation is complicated, or if you require advice on a matter you need to be kept confidential, you should retain a bankruptcy lawyer. That way you can discuss those issues and obtain the advice you need and be assured of confidentiality.

BONUS ISSUE: Can I get a credit card during bankruptcy?

I thank you for getting this far along in my blog. So here is an 11th bonus question that I am asked from time to time – can I get a credit card during bankruptcy?

Applying for a credit card is just like applying for a loan. You are asking a lender to advance you money that you promise to repay. Under Section 199 of the BIA, it is a bankruptcy offense to obtain a credit of $1,000 or more from any person without telling the lender that you are an undischarged bankrupt.

Once you make that disclosure, or they find out otherwise, I highly doubt they will approve of you. There may be some companies that will give a car loan to an undischarged bankrupt, but, the amount you can borrow will result in your not getting a very good car. Also, the fees and interest rate that they will charge you will be extremely high.

The only exception is that you could apply for a secured credit card. As I noted above, a secured credit card is a good way to start rebuilding your credit.

Canadian bankruptcy laws summary

If you have too much debt and are facing financial challenges, I hope this Brandon’s Blog has provided some insight for you. The above questions are what I have found to be the 10 essential problems bothering people thus far in 2019 when facing financial challenges and considering Canadian bankruptcies laws.

If you are one of the many Canadians facing debt problems and not knowing what to do about them, call the Ira Smith Team today. We have decades and generations of experience aiding people and companies trying to find and work through a successful financial restructuring or debt settlement approach. As a licensed insolvency trustee, we are the only experts recognized, approved and supervised by the Federal government to provide insolvency help and solutions to help you to avoid bankruptcy.

Call the Ira Smith Team today so you can do away with the stress and nervousness debt concerns produce. With the distinct roadmap we develop special to you, we will rapidly return you right into a balanced, healthy and carefree life.

You can have a no-cost evaluation to aid you so we can repair your debt issues. Call the Ira Smith Team today. This will definitely enable you to go back to being productive, healthy and balanced, Starting Over Starting Now.

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Brandon Blog Post

CAN YOU FILE BANKRUPTCY AND KEEP YOUR HOME AND CAR? [2019 CAR EDITION]

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Can you file bankruptcy and keep your home and car? Introduction

We are often asked the question, can you file bankruptcy and keep your home and car? In my last Brandon’s Blog, I described the circumstances to answer the question can you keep your house if you file bankruptcy in Canada. Here is the link to the blog, IF I FILE FOR BANKRUPTCY ONTARIO WILL I LOSE MY HOME? [2019 EDITION]. In this blog, I will tell you what happens to your automobile when you file bankruptcy.

Can you file bankruptcy and keep your home and car? Do they take your car if you file bankruptcy?

Can I keep my car if I file bankruptcy in Ontario is also a common question. The answer is if you need to or want to and can afford to, then yes. Let me explain. The most common range of situations involving a person filing for bankruptcy and their car are:

If the wheels are owned by an employer, then there is no issue. If you file for bankruptcy, the employment continues and access to the company automobile also does.

If the auto is owned by your spouse, then it is not your asset and is not directly impacted by your bankruptcy. In the case of a leased automobile, the vehicle is owned by the lessor, not you. So again, a leased car is not directly impacted by your bankruptcy.

However, if the car is leased, do you really need that specific car? Can you keep up with your lease payments? If you fall behind in payments, the lessor can retrieve its vehicle, bankruptcy or no bankruptcy.

In the case of where your car is financed, whether it is owned by you or your spouse, the same question remains. Can you afford to keep up the payments as part of the household budget? Do you need that specific vehicle?

Can you file bankruptcy and keep your home and car? Can you file bankruptcy on car loans?

This may seem like an odd question, but in a way of speaking, the answer is yes. The same is true if the car is leased by you.

If you have decided that you can no longer afford the financing or lease payments and you don’t need that specific vehicle, it is possible to return the car to the lessor or lender and have the fallout from that termination count in the debts caught in the bankruptcy proceedings. That is what I call filing bankruptcy on car loans. However, to do so, you must follow certain steps very carefully.

What I always advise people who cannot afford to keep the car payments and are going to lose it anyway, is to return the car BEFORE they file either a consumer proposal or for bankruptcy. Then you must wait to receive notice of default from the lessor or lender and that they are accelerating their claim for the breach of the lease or the shortfall from the sale of the vehicle.

The reason you have to wait is if you file a consumer proposal or for bankruptcy before they make this demand on you, they could take the position that their debt crystallized after you filed. The last thing you want is for their debt to be a post-filing claim. A post-filing claim is payable in full by you. So with some planning and patience, it can be a pre-filing claim, caught in your consumer proposal or bankruptcy.

If your spouse has guaranteed payment of the car lease or car loan, then this strategy may not be the best for you. The lessor or lender, in this case, would have the right to demand full payment from the guarantor. So, you may not have accomplished anything by doing this.

If you choose to do this, but you do require a car, then you, your spouse, a good friend or your employer will have to arrange for a new auto for you that your family budget shows you can afford to pay for. As you can see, the decision is not a simple one. You must very carefully analyze this situation before taking any action.

Will I lose my car if I declare bankruptcy if I want to keep the car I own?

Not automatically. In bankruptcy, like with your home, the Trustee is not entitled to the car. What the Trustee is really entitled to is the equity in the auto. The Trustee would rather receive cash representing the car’s equity, and not taking possession of your car.

Think about it. By taking possession the Trustee has to store and insure the car and then sell the used car. It is much easier for a Trustee to just accept cash; either a one-time payment or in regular monthly installments.

The equity in a car is calculated as follows:

  1. Find the car’s current market or black book value. The price you paid for the car is not the current value of the auto. A Trustee always runs a black book desktop appraisal of a car and can tell you what that number is.
  2. If you have a car loan and the lender registered security against the auto, you have to deduct the current amount outstanding on that loan. If you don’t have any such financing, then you would not deduct anything. After performing this part of the calculation, move on to step 3 below.
  3. In Ontario, under the regulations to the Ontario Execution Act, RSO 1990, c. E.24, a person is entitled to an exemption of $6,600 for one vehicle. So you need to deduct $6,600 from the amount you arrived at in your calculation in number 2 above. If you end up with a negative number, there is no equity. If you get a positive number, that is the equity you have in the car.

As I mentioned before, the Trustee would rather make arrangements with you to get that value in cash during your bankruptcy administration, rather than taking possession of your auto. Don’t get me wrong. If you have a high-end valuable car, or you can’t come up with the cash over time to pay the Trustee your equity, the Trustee will have no hesitation to take possession of your car. It just isn’t the Trustee’s first choice to do so.

So I hope that by now you understand why I say the answer to the question, will I lose my car if I declare bankruptcy, is if you need to or want to and can afford to, then yes!

What Will filing for bankruptcy do?

As I have written many times in earlier Brandon’s Blog articles, bankruptcy should be the last choice. Bankruptcy will allow the honest but unfortunate person to get financial rehabilitation. It will allow that insolvent person to reenter society as a person free from their debts.

Do you have way too much debt? Are you having trouble making your month-to-month expenses? Is your business having a difficult time managing its financial challenges that you simply can not figure the escape of?

Call the Ira Smith Team today so you can end your stress and anxiety that your monetary troubles have caused. With the unique roadmap, we establish special for you, we will immediately return you right into a healthy and balanced trouble-free life.

If so, call the Ira Smith Team today. We have years and generations of experience helping people and companies searching for financial restructuring or a debt settlement strategy. As a licensed insolvency trustee, we are the only specialists acknowledged, certified and supervised by the federal government to offer insolvency advice and options to assist you to avoid bankruptcy.

You can have a no-cost assessment now to assist you so we can fix your debt troubles. Call the Ira Smith Team today. This will most definitely allow you to get back to Starting Over Starting Now.

can you file bankruptcy and keep your home and car

 

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