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TRUSTEE OF DECEASED ESTATE: WHAT A TORONTO BANKRUPTCY TRUSTEE KNOWS

Trustee of deceased estate: Introduction

I have previously written on what happens when a person dies insolvent, i.e. their debts are greater than the value of their assets. My blogs on being a trustee of deceased estate that is insolvent are:

I am now switching a bit. Over the next few weeks, I am going to be writing a series of blogs and vlogs to explain why I believe that a licensed insolvency trustee (formerly called a bankruptcy trustee) is the professional you should be thinking of making the executor of a deceased estate and recording it in your will. I am talking about solvent estates. Those with many assets and beneficiaries. I will be making the case why over the next few weeks. I will not be on insolvent estates of deceased persons.

I repeat that these blogs and vlogs will have nothing to do with debt, insolvency or bankruptcy. However, I will show how, based on the knowledge and expertise possessed by licensed insolvency trustees, it makes them the perfect candidate to serve as an executor of a deceased estate that is rich with assets. I will also be focussing my comments on the Province of Ontario. There may be some variations from province to province.

I caution that I and my firm are not lawyers, and I am by no means providing in this and upcoming Brandon’s Blogs advice on wills or estate planning matters. For that, you must consult your lawyer.

In this blog, I wish to set the stage by going over some basics when it comes to a deceased estate.

Trustee of deceased estate: The executor/executrix or estate trustee

In Ontario, an estate trustee (also known as the executor or executrix) is the only individual with the lawful authority to handle or disperse an estate. When an individual dies they might leave items, property, real estate, cash and investments and other possessions which is called their estate.

Probate is a treatment to ask the court to:

  • provide an individual with the authority to work as the estate trustee of an estate;
  • verify the authority of an individual acting as the estate trustee named in the deceased’s will; and
  • officially accept that the deceased’s will is their legitimate last will.

You can apply for probate in the Ontario Superior Court of Justice. The procedure is governed by the Estates Act and the related Rules of Civil Procedure.dece

If your probate application succeeds, the court will provide a Certificate of Appointment of Estate Trustee, which is evidence that an individual has the lawful authority to manage the estate. If there is a will, it is also evidence that the will is valid.

Trustee of deceased estate: Must I always apply for probate?

A probate Certificate is not needed in every situation for a deceased estate. Prior to beginning an application for probate, you might want to establish whether the deceased estate actually needs a probate Certificate.

An application for a probate Certificate is normally made if:

  • the departed individual passed away without a will
  • the deceased’s will does not show an estate trustee
  • a financial institution desires evidence of an individual’s lawful authority to get the cash or financial investments of the deceased
  • the estate’s properties consist of real estate which does not pass to an individual by right of survivorship
  • there is a disagreement about who ought to be the estate trustee
  • there is a conflict or possible conflict about the legitimacy of the will; or
  • some of the beneficiaries are unable to supply legal consent.

Trustee of deceased estate: Trustee of estate responsibility

What should the estate trustee’s first steps be? Here is where the actions the estate trustee should immediately take are almost the same as when a licensed insolvency trustee is first appointed either as:

The will and financial records

Assuming the family has already made arrangements for and the funeral has taken place, the estate trustee should first find a copy of the will and any books and records of the deceased that will explain the deceased’s financial affairs. If the estate trustee cannot find a copy of the will, he or she should consult with the deceased’s family and lawyer. Hopefully one or both will have a copy.

As the licensed insolvency trustee, we must also find the books and records of the company or person, so that we can start learning about the financial affairs of the insolvent or bankrupt.

Proof of authority

The estate trustee will also require a certified copy of the death certificate, to prove the death to financial institutions and the government. The will, and/or the probate Certificate, will be proof of the estate trustee’s authority to act.

In the same way, the licensed insolvency trustee requires a copy of its Appointment Letter in a private receivership, the Court order in a Court-appointed receivership, or the Certificate of the Superintendent of Bankruptcy in a bankruptcy. These documents evidence the appointment of the licensed insolvency trustee.

Taking possession and control of the assets

The estate trustee must now take control of any assets that do not automatically by operation of law transfer to another person by right of survivorship. The estate trustee must establish physical control, take an inventory of the assets and arrange for appraisals to be performed where required. The estate trustee should establish the market value of the assets as soon as possible.

In the same way, upon being appointed as either receiver or trustee, a licensed insolvency trustee must establish control and/or possession of the assets, properties and undertakings of the insolvent/bankrupt debtor, whether in the debtor’s possession or that of a third party. The licensed insolvency trustee must make an inventory of the assets and where required, arrange for appraisals.

Insurance and bonding

The estate trustee must make sure that, in the case of real property and chattels, that the assets are properly insured. As well, if an application was made to Court for probate and the Court issued the Certificate, the Court may also require the estate trustee to get a bond for a specific value to protect the beneficiaries. The amount of the bond will have a relation to the estimated value of the assets.

In the same way, the receiver/trustee must make sure that the hard assets are properly insured. In a bankruptcy, the Superintendent of Bankruptcy sometimes requires the trustee to get a bond to protect the bankruptcy estate.

The bond will be issued by an insurance company licensed to provide such coverage in Ontario.

Trustee of deceased estate: The responsibilities of the estate trustee

In general terms, an estate trustee has the following responsibilities:

  • be impartial amongst beneficiaries
  • act in a commercially reasonable way
  • to act in the best interests of the beneficiaries
  • not make decisions for individual gain
  • keep accurate records of all decisions made and actions and activities; and
  • acting in accordance with the will if one exists

In every Court appointment, be it a receivership or bankruptcy, the licensed insolvency trustee must live up to these same standards. Rather than beneficiaries, there are stakeholders. The Court officer must be impartial and must act in the best interests of all stakeholders.

Trustee of deceased estate: Trustee vs executor of an estate

So hopefully from this blog, you can see that the knowledge, experience and expertise of a licensed insolvency trustee would stand him or her in a good position to act as executor, executrix or estate trustee of a deceased estate.

If you have any questions about a deceased estate and the need for an estate trustee, whether it is solvent or insolvent, contact the Ira Smith Team. We have decades and generations of experience in helping people and companies overcome their financial problems. You don’t need to suffer; we can end your pain.

In my next blog, I am going to write about a topic that is becoming more and more common in deceased estates; picking the right estate trustee. As you will see, it is much more than just finding the right skill set.

In the meantime, if you have any questions at all, contact the Ira Smith Team.

trustee of deceased estate

 

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FINANCIAL NEW YEAR’S RESOLUTIONS 2019: WILL YOU KEEP YOUR FINANCIAL NEW YEAR’S RESOLUTIONS 2019?

financial new year's resolutions 2019

If you would prefer to listen to the audio of this financial new year’s resolutions 2019 version of this Brandon’s Blog (with an introduction from a celebrity guest), please scroll to the bottom and click on the podcast.

Financial New Year’s resolutions 2019: Introduction

The New Year has arrived. I wish all of my readers a healthy, happy and prosperous New Year. By now, many people have made themselves promises on how they will improve in 2019. Many people make New Year’s resolutions, including financial new year’s resolutions 2019. In this Brandon’s Blog, I explore what are many of the common resolutions people make and what the chances are on people actually carrying them out.

Financial New Year’s resolutions 2019: The 8 most common resolutions

Other than the first one, in no particular order, the 8 most common New Year’s resolutions are:

Lose Weight. The Number 1 New Year’s Resolution is to drop weight. We’ve all seen it, or become aware of it. Many resolve to lose weight, but few truly complete it in the long-term. That is why January every year is when the weight loss programs, gyms and workout products advertise heavily.


Do Better Than Last Year. Often, life is simply hard. In between family members, good friends, your work, and all the various other stress and anxieties that life can toss at you, it simply appears sometimes that absolutely nothing can go right. And also some years are simply a plain draw. So, after a year of grinding via the days, weeks, and months, you’re prepared for a do-over. You’re prepared to do anything to make sure that the following year begins the very best way it can. So, this resolution is to merely attempt to have a better year than the last one.

Exercise. One of the most usual New Year’s resolutions has to do with ones very own health and wellness. Among the many health and wellness promises, is working out. When you consider it, it’s not just wishing to slim down (which is the number 1 resolution), it’s in fact about wishing to be more powerful, quicker and generally in better shape.

When your body is in peak condition, it does do far better. An in shape body functions far better, provides you with much more power, boosts your mind’s abilities and a lot more. DON’T try to push your body in the beginning to do more than it can handle. Any personal trainer will tell you to begin slowly and work yourself up from there. Set realistic goals for yourself.


Save More/Spend Less. Cash is what people need and the most common of all the financial New Year’s resolutions 2019 is to make sure that we have more of it in the New Year. This is especially true for most Canadians, who are living paycheque to paycheque.

The best way to start your financial plan for the New Year is to first look at what happened in the year that just ended. Reflect on your year. I’m certain you’ll realize some things about your immediate past financial behaviour. Some items that you wish you had not purchased or lost money on. Or, if you understood then what you currently know, you would certainly have done things in a different way and saved yourself a couple of bucks in the process.

In other words, look at your income and expenses carefully and budget properly for the New Year. Your proper budget must include saving a certain amount from each paycheque to put away in an emergency savings fund for when there is an unexpected, well, emergency. Your budget will also hopefully allow for other savings to be able to invest for the longer term.

Use the start of the brand-new year to begin preparing just how you could invest your new savings. In your personal financial plan or budget, concentrate on things you NEED versus the many things you WANT. By doing this one simple thing, you will find you will have more in your savings account. This is the best way to stay on track to meet your financial New Year’s resolutions 2019.


Get More Sleep. Depending upon the researcher you listen to, the body requires between 6-8 hours of rest. Our bodies can work on much less, yes, yet it’s not something that a lot of medical professionals advise. This is another one of the resolutions fitting into the health and wellness category.

Get A New Hobby/Skill. Whether we intend to confess or otherwise, most of us wish to be our best selves. We do not simply intend to be the individual that undergoes the movements, we intend to have something we can expect each week, and even take pride in.

So, with a brand-new year, comes a chance to learn new skills or do something different in our lives than just the “same old, same old”. For some, it, in fact, implies attempting to get new skills for getting a better paying job. For others, they see it as a possibility to handle a new pastime or discover something that they’ve always intended to do or learn.

Quit Smoking/Drinking. Humans are animals of routine, yet in some cases, those behaviours are actually, REALLY negative for you. Two of the ones that cover the “negative for you” checklist is alcohol consumption to such an excess that it is an addiction and smoking cigarettes. Like any addiction, this is very tough to do and many times requires the help of trained professionals.

Volunteer. While practically every one of these resolutions is created to aid oneself in one fashion or another, this one helps both the self and others. One of the best ways to help others is to volunteer your time. Volunteer to what? To help any place you can certainly. In some cases, it’s at a homeless shelter, or to assist a close friend in need. There are many opportunities to help the less fortunate. However the crucial point is that you place yourself 2nd, and the needs of others first. Spreading a little happiness can go a long way for a person. Therefore if you wish to assist others, do not hesitate to ask, “What do you need?”. You may be amazed by simply just how much you can help somebody.

Financial New Year’s resolutions 2019: Why do we do it?

We cannot forecast the future. In some cases, it’s tough to anticipate what will take place in the following couple of hours, not to mention the following 12 months. Why do we do it? Well, it’s mainly since we intend to think that we have some power over the future. If we can state to ourselves, “This year will certainly be different, this will certainly be the year I will make changes for me”, it’ll place us in the best attitude to get down to business and do things. The feeling that we have control over our lives is exceptional.

Financial New Year’s resolutions 2019: Will we keep our resolutions?

It begins straightforward. We look in the mirror, see what we don’t like and resolve to make the changes that probably should have been made a long time ago. We will establish worthy ventures to do simply that thing or things. However, most people will drop off the wagon within a short period of time. What? I’m not being mean, I’m being genuine. Making significant changes in your life is hard.


We are hyped for the New Year. We are. so tired of what occurred in the previous year that we are ready to make the changes we promised ourselves we would make. We may also have invested a lot of time informing other people what changes we will make in the New Year. But then life gets in the way and we fall short.

Financial New Year’s resolutions 2019: Falling short is OK

It does not matter that I fell short all my resolutions actually. I need to so that I can ensure that I can improve further! Of course, I should not try to fail them, but it is normal to fall short. No one is perfect. As long as you see that you have made improvements in the right direction, that is what really counts.

So, make sure that your goals are realistic. Even if you fall short, you have improved immensely and that will be your new starting point for the next New Year’s resolutions. I hope all of you improve your life in some area this year, and that will be your new starting point when 2019 comes to an end. This includes your financial New Year’s resolutions.

Do you need professional help to meet your financial goals?

As I stated above, sometimes professional help is required to meet a New Year’s resolution. We may not have all the skills required. Improving your financial situation may be one of those areas where professional help is required. Maybe you only need a coach to keep you focussed on performing your financial new year’s resolutions 2019. Perhaps on a personal level, you might require only some credit counselling or debt consolidation. On a more formal basis, you may need a debt restructuring plan in the form of a consumer proposal in order to eliminate your debts and get back on the right financial path. In some extreme cases, personal bankruptcy may be what is needed.

Perhaps your company is in need of financial restructuring. Perhaps your lender is threatening receivership or bankruptcy so you are in need of a financial advisor skilled in insolvency matters. A licensed insolvency trustee (formerly called a bankruptcy trustee) is the only professional licensed and supervised by the Canadian Federal government skilled in both personal and corporate insolvency matters If you or your company have too much debt, call the Ira Smith Team for your free consultation. We understand your pain, and we have the prescription to end your pain forever. Call the Ira Smith Team today, so that you can begin your improved life for this New Year 2019, Starting Over, Starting Now!

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WEPPA CALCULATION CANADA: EMPLOYEES’ WEPP MONEY INCREASES ON EMPLOYER BANKRUPTCY OR RECEIVERSHIP

weppa calculation canada

WEPPA calculation:  Introduction

As part of the Federal Budget 2018, the Wage Earner Protection Program Act calculation (WEPPA calculation) has increased the maximum payout.  We have written before about the Wage Earner Protection Program Act (WEPPA).  However, to understand the recent change, it would make sense for me to check again what the WEPPA is.

How did it arise?

A change to the Bankruptcy and Insolvency Act (Canada) (BIA) developed a device for employees of an employer that entered either bankruptcy or receivership to be paid for wages or benefit claims owed, built up in the 6 months before the company became bankrupt or was put into receivership.

The WEPPA became legislation because of the federal government’s previous worry that when you experienced “my firm owes me money and declared bankruptcy” there was seldom a possibility for workers to get any of the salaries owed.

WEPPA calculation:  Who can’t file?

.Nevertheless, you are normally not qualified if, throughout the duration for which qualified earnings are overdue, you:

  • were a director or officer of the company;
  • had a management position in the company; or
  • were management whose duties consisted of making financial decisions and/or making binding choices on the settlement or non-payment of amounts owing.

WEPPA calculation Canada: Who is qualified for the WEPP?

You might be if:

  • your previous company has actually entered bankruptcy or receivership; and
  • you have unpaid wages, salaries, vacation pay or reimburse expenses from the company during the 6 months prior to the date of bankruptcy or receivership.

WEPPA calculation:  Budget 2018 maximum payout increase

The WEPPA gives financial backing to Canadian employees, owed money when their company goes into either bankruptcy or receivership. The WEPPA offers a prompt settlement of qualified earnings.  The amount of qualified earnings is an amount equal to 4 weeks maximum insurable earnings under the Employment Insurance Act ($3,977 for 2018).

The Federal government in its Budget 2018 stated that the maximum payout would be increased by raising the maximum settlement from 4 weeks to 7 weeks of insurable revenues, which will amount to $6,960 in 2018.  This is a boost of nearly $3,000 for each former employee. The rise to the maximum payout received Royal Assent on December 13, 2018. This increased calculation is retroactive for bankruptcies or receiverships that happened on or after February 27, 2018, the day Budget 2018 was tabled.

Receivers and licensed insolvency trustees (LIT) (formerly called bankruptcy trustees) are obliged to tell employees of the Wage Earner Protection (WEPP) program and give employees details about amounts owing to them. From the day of bankruptcy or receivership, trustees and receivers have 45 days to send Trustee Information Forms showing the amounts owing to employees.  Employees have 56 days to send their Service Canada WEPP application to the WEPP. The present handling time for a WEPP settlement is within 35 days of receipt of a finished WEPP Canada application and Trustee Information Form.

WEPPA calculation:  Do you have way too much debt?


Have you lost your job because your employer went into bankruptcy or receivership?  Is the pain and stress of too much debt now negatively affecting your health?

If so, contact the Ira Smith Team today.  We have decades and generations of helping people and companies in need of financial restructuring and counselling.  As a licensed insolvency trustee, we are the only professionals licensed and supervised by the Federal government to provide debt settlement and financial restructuring services.

We offer a free consultation to help you solve your problems.  We understand your pain that debt causes. We can also end it right away from your life.  This will allow you to begin a fresh start, Starting Over Starting Now. Call the Ira Smith Team today so that we can begin helping you and get you back into a healthy, stress-free life.

To all my readers, I wish you and your family a very Merry Christmas and Happy Holidays.

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CANADIAN INSOLVENCY LAWS: ALIENATION OF ASSETS

 

Canadian insolvency laws: Introduction

In today’s commercial world, our economy focuses on and requires Canadian insolvency laws. Insolvency is the financial condition where you cannot pay your debts as they come due and if you liquidated all of your assets, there would not be enough cash to pay off all of your debts.

Insolvency laws are required in a mature economy. It reassures investors that there is a way to “recycle” assets. Asset recycling makes them once again valuable and revenue producing, should insolvency set in on a person or company.

Canadian insolvency laws: My goal with this blog

An insolvency process is used as a means of liquidating one’s whole legacy (i.e. the totality of one’s assets) in order to attempt to please all of the creditors that have grown way beyond the ability of the person or company to repay. Emotions always run high in insolvency procedures. We are dealing with the lives of real people that may be losing their jobs, income, homes and other assets.

The purpose of this vlog is not to teach you about insolvency laws. I want to caution anyone considering going into business how important it is to structure things properly. Your aim is to make sure that you are protecting yourself, your business and your family. If your business falters and becomes insolvent you will be glad that you did.

Canadian insolvency laws: Believe it or not, it may be good for you to meet a licensed insolvency trustee

So naturally, as a licensed insolvency trustee (formerly called a bankruptcy trustee) the first focus is on restructuring. Sometimes bad things happen to good people and companies. Bad judgement, bad luck and bad management all contribute to personal and corporate insolvency. Our primary focus is to use various ways to help people and companies recover from insolvency.

The potential ramifications of insolvency procedures can be minimized. A person can no longer afford to keep their assets. A company has too many problems to continue its business. However, those same assets can be used very successfully in a new business or by someone else. So insolvency laws and procedures help to avoid a total loss of asset values.

In many of our cases, this can involve particular minor legal procedures which could eventually conserve a fortune. For financial institutions, this can be especially good news.

Canadian insolvency laws: Why you need to “alienate” your assets


If you are running a company, or are likely to do so in your career, you must minimize your exposure by safeguarding your assets. By doing so, you are protecting yourself and your family for the future, especially if something in business goes wrong. The time to protect yourself is when you are starting out and there are no problems. If you do so when the problems have already arisen, it is too late. Any asset protection steps you take knowing yourself to be insolvent, will not stand up to attack.

By running a company, you will probably become a Director. If your business needs to borrow money from the Bank to operate, you will probably be required to guarantee the bank debt. So, if you anticipate yourself collecting considerable unsecured financial obligations in the coming years, you need to act. Starting out properly protecting yourself, allows you to either avoid or successfully defend, any challenges on the sequestration of your assets.

Canadian insolvency laws: Why you want to be an “alien”

You will make sure that the properties you have “alienated” no longer form part of your estate. The alienation ensures that the possessions from which you will still benefit cannot be gotten by your financial institutions if the business is unsuccessful and they are looking for any assets you may have to honour the financial obligations you accumulate.what does a court appointed receiver do

Canadian insolvency laws: Use your lawyer


When setting up a company, you need a lawyer. Make sure that you choose a lawyer that can also counsel you on how to protect your assets in the event your business venture fails. We are not lawyers, and the general advice I am going to give you is not meant to replace the advice of a lawyer.

Canadian insolvency laws: You may need more than one company to conduct your business

The first thing to think about is incorporating a limited liability company. Depending on the type of business, you may need to incorporate several, within which to house your operations, the leased or owned premises you operate out of and your shareholdings. Conducting your business through a company will require more documentation and therefore cost.

However, it is well worth it. It removes and protects you personally to the greatest extent possible from personal liability. The goal is to minimize or eliminate the destruction of you and your family. If you choose not to go through a corporate body, for whatever reason, protecting your personal assets becomes even more important. There will not be one or more corporate entities to serve as the first line of protection.

Canadian insolvency laws: Examples of multiple corporations in running a business

Examples of how multiple corporations will better insulate you and your business assets are:

Operating company. Your operating company is the one you conduct business through. It is the vehicle which will attract the most liability. There is always a risk in running any business. However, there is no law that requires you to hold all your business assets in your operating company.

Single purpose corporation. You may want to incorporate a second single purpose company to hold valuable assets used to conduct the business of your operating company. Tangible assets such as machinery and equipment are obvious. You are operating out of premises; either leased or owned.

You may wish to have a corporation that holds the tangible assets. Another company that is simply the real estate company. If you also have valuable intangible assets such as copyrights, licenses, trademarks, you may wish a separate company to hold all of the intangible assets.

These single-purpose corporations will then lease the assets to your operating company to conduct its business. Your operating company will pay rental charges, lease payments and licensing fees to the respective sole purpose companies. You need your lawyer to carefully document in writing everything. By now you can probably see the value in separating out the various important and valuable assets from your normal business operations.

Canadian insolvency laws: Alienating your most valuable asset

The most significant and most important property most of us will own is our house. The time to transfer your ownership interest to your partner ideally is before the first day of your going into business. Waiting until there are business problems and you are insolvent, any transfer will be successfully attacked. Obviously, you have to believe that you and your partner have a solid loving relationship before making the transfer as you will no longer have your ownership interest in the house.

Canadian insolvency laws: Does your company have too much debt?

To set up your company and structure your affairs properly, we urge you to use the best lawyer for your needs. This blog cannot replace the advice of your lawyer. However, if your company is experiencing financial difficulties, you need a professional trustee. 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 at our front 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, ending the pain and stress you are feeling forever. Call Ira Smith Trustee & Receiver Inc. today for your free consultation.canadian insolvency laws 1

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WHAT DOES A COURT APPOINTED RECEIVER DO: REQUIRED CONDITIONS FOR RECEIVERSHIP REAL ESTATE SALE

Bankruptcy

What does a court appointed receiver do: Introduction

Earlier this week I wrote my blog COURT APPOINTED RECEIVER REAL ESTATE: ALL PURCHASE TERMS AREN’T EQUAL. In that blog, I described 5 common conditions that a buyer wants in a real estate agreement of purchase and sale. I also showed why a court appointed receiver cannot agree to those requested conditions. The purpose of today’s Brandon’s Blog is to answer the question what does a court appointed receiver do in setting the vendor’s conditions in a real estate sale.

What does a court appointed receiver do: The 5 most common vendor terms

In the earlier blog this week, I listed the 5 most common seller terms that the court appointed receiver cannot agree to. Here are the five most common terms that the court appointed receiver as seller requires.

  1. Capacity – The court appointed receiver requires the buyer to acknowledge that the vendor is selling solely in its court-appointed role.
  2. Title – Buyer agrees to accept title to the property as will be conveyed by the Court order conveying title which is called a Vesting Order. Also, the buyer must acknowledge that it is accepting title subject to any site plan agreements, restrictions, easements for the supply of utilities, services or otherwise. Also, the buyer will accept title subject to any rights of way, encroachments on or by the subject property onto adjoining properties, leases or licences. This is why it is important for the buyer’s lawyer to do a careful search of title and explain any and all issues to the buyer before the purchaser agrees to accept title.
  3. Inspections – A buyer from a court appointed receiver must be very careful in doing its due diligence. The court appointed receiver will allow for reasonable inspections. The buyer must acknowledge that he/she/it relies entirely upon its own inspection and investigation with respect to quantity, quality and value of the property. The buyer must also agree that it is purchasing and accepts the property on an “as is” basis, as of the date of acceptance and as of the closing date.
  4. Fixtures and chattels – Every buyer obviously wants to get the most possible out of the real estate purchase. It is normal for all buyers to want to confirm that they are receiving good title to all chattels and fixtures. The buyer is also looking for a warranty that they will all be in good working order on the date of closing. This is not possible in a court appointed receiver real estate sale. Rather, in a Court-appointed receivership, the receiver will insist on the condition that notwithstanding anything contained to the contrary in the agreement of purchase and sale, the Buyer acknowledges that the seller does not have title to the chattels or fixtures presently located on or used in connection with the property. The buyer and seller can agree that the chattels and fixtures set out in the schedule to the agreement remain at the property. However the buyer must also agree to take it on an “as is” basis. There is no warranty or representation and the seller won’t provide a bill of sale on closing for any chattels or fixtures. The court appointed receiver probably cannot verify that ownership of the fixtures and chattels are the property of the owner of the real estate. The receiver won’t rely on what is affixed to the premises to to prove or infer title.
  5. Court approval – A court appointed receiver must obtain court approval to the method of offering the property for sale (obtained before the sales process begins) and certainly for a specific sale. The court appointed receiver must seek that approval in order to have the sales process and sale sanctioned. The Court will issue an Approval and Vesting Order. This is the Court order allowing the transfer of title to the buyer. A court appointed receiver will put together its motion material and attend in Court for such approvals once it knows that it has a firm deal, all buyer conditions have been waived and the necessary deposit funds have been received. A Court will not approve a transaction that isn’t firm. The Court will question why the court appointed receiver is wasting resources in making the approval request at that time.

What does a court appointed receiver do: Is your mortgagor in trouble?

I hope this information will help you understand better the most common terms and conditions a court appointed receiver selling real estate requires. A court appointed receiver does this in setting the vendor’s conditions in a real estate sale.

Are you a mortgagor over industrial or commercial realty where the debtor remains in default? There may be reasons that you have to take into consideration for putting in a court appointed receiver.


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. 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.what does a court appointed receiver do

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SEARS CANADA CLOSING: POLITICIANS WANT NEW LAWS TO PROTECT PENSIONERS DUE TO SEARS CANADA CLOSING

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Sears Canada Closing: Introduction

Following the Sears Canada failed restructuring, is the Sears Canada closing of all stores. It is leaving 16,000 retirees unclear about the future of their underfunded pension plan. Support is expanding for brand-new laws to better protect Canadian workers during a company’s collapse.

Sears Canada Closing: What CARP has to say

CARP, a nationwide not-for-profit group formerly called the Canadian Association for Retired Persons, was recently on Parliament Hill to meet dozens of MPs as it lobbies for law adjustments.

Wanda Morris, vice-president of CARP, stated that CARP is requesting for the unfunded pension liability be provided priority position so it goes to the front of the line.

Pensioners hold no priority when it pertains to dividing up assets through a bankruptcy, and Ms. Morris wants protection for retirees for underfunded defined benefit pensions when the company goes through a restructuring or into bankruptcy.

Ms. Morris stated that along with the practically 16,000 retirees at Sears, CARP estimates that there are about 1.3 million workers in Canada that possibly could be in danger with defined advantage pension. Sears Canada closing all stores has made the plight of retirees a front and centre issue for CARP.

Sears Canada Closing: Private Member’s Bill C-372 passes First Reading

On Oct. 17, Bloc Québécois MP Marilène Gill suggested a member’s bill, C-372. The intent is to change the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act.

The change attempts to correct the injustice dealt with by retired workers whose pension as well as group insurance policy benefits are not secured when their company declares bankruptcy or undergoes restructuring. The changes are a result of the Sears Canada employees and retirees treatment, as a result of Sears Canada closing locations.

Sears Canada Closing: What the NDP has to say

Hamilton Mountain MP Scott Duvall plans to introduce his very own private member’s bill to try to solve this problem. While he notes he has actually had talks with Gill, he claimed his suggestion will be a bit different.

Mr. Duvall specifies that his bill will amend the regulations from where it’s worded currently. He wishes that when a company goes into bankruptcy protection, the pensioners will be a secured creditor. He is also responding to the process which has led to Sears Canada closing store locations,

Sears Canada Closing: Bloc MP Marilène Gill and her Bill C-372

On October 17, 2017, MP Marilène Gill rose in Parliament and stated:

“Mr. Speaker, I have the honour to introduce my first bill in the House today, a private member’s bill that seeks to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act.

This bill seeks to correct the injustice faced by retired workers whose pension plans and group insurance plans are not protected when their company goes bankrupt or undergoes restructuring.

I will do everything in my power to ensure that this bill receives royal assent, that way, we can help prevent retirees, like those from my riding who are here today to support me, from losing their pensions, and improve the existing legislation by giving pension plans’ unfunded liabilities preferred creditor status, among other things. I hope my colleagues will be supporting this bill.”

Sears Canada Closing: Can it get Royal Assent?

BILL C-372 which passed First Reading on October 17, 2017 is named “An Act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act (pension plans and group insurance plans)”.

Private member’s bills such as this one rarely pass the House. However, I thought it would be useful to describe what Ms. Gill’s views are as a result of Sears Canada closing.

Below is my analysis of how BILL C-372 proposes to amend the Bankruptcy and Insolvency Act (Canada) (BIA) and the Companies’ Creditors Arrangement Act (Canada) (CCAA). The impetus of course is certain high-profile corporate restructurings/failures with underfunded defined benefit pension plans. With Sears Canada closing, Ms. Gill put forward her private member’s bill.

The most recent corporate failure which initiated her private member’s bill of course was a result of Sears Canada closing.

Sears Canada Closing: Bill C-372 proposed BIA and CCAA amendments

Bill C-372 wishes to amend the BIA as follows:

  • In order to be approved by the Court, a corporate restructuring proposal under the BIA, for a company with a prescribed pension plan, the Proposal must include payment in full of any unfunded pension liability or solvency deficiency calculated at the time of the filing of the Notice of Intention To Make A Proposal (NOI) or the Proposal if there is no NOI filed.
  • The unfunded pension liability or solvency deficiency calculation is by section 9 of the Pension Benefits Standards Regulations, 1985.
  • In a receivership, the receiver is personally liable for paying any unfunded pension liability or solvency deficiency but only from the proceeds of the sale of current assets.
  • In either a receivership or corporate bankruptcy, the charge for any unfunded pension liability or solvency deficiency would rank ahead of the charge of any other secured creditor.
  • The Officers and Directors of the company are not entitled to the benefit of this secured charge. Even if they are participants in the pension plan that has the unfunded pension liability or solvency deficiency.
  • In a corporate restructuring proposal or bankruptcy, the amount not paid under the Wage Earner Protection Program Act (Canada) (WEPPA). It is the amount to adequately indemnify the beneficiaries in the event the employer ceases to take part in a group insurance plan. Such a plan is one that provides for the payment of benefits to, or in respect of, employees or former employees for, among other things, life, disability, health or dental insurance is a preferred claim. It will be a preferred, but still an unsecured claim.
  • The amount equal to the difference between any severance pay or compensation in lieu of notice owed by an employer to an employee and any amount previously paid by the trustee for that severance pay or compensation in lieu of notice.

There are also proposed amendments to the CCAA in Bill C-372. It is to bring the same changes in that statute as described above. The intent is that the treatment under both statutes is the same. I won’t repeat those again.

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sears canada closing

Sears Canada Closing: Will Bill C-372 become law?

As I stated above, it is very rare that a private member’s bill becomes real legislation. The other reason is that the Liberals hold a majority in Parliament. If they don’t want it to pass, it won’t.

On October 25, 2017, Innovation Minister Navdeep Bains said the Liberal government has no plans to change laws to protect pensioners in the wake of Sears’ bankruptcy. That is a pretty definitive statement.

So right now it seems there is a lack of political will to make the proposed law amendments. I suspect that on a financial basis, there will also be opposition for the following reasons:

  • In most cases, it will be impossible to have a successful large corporate restructuring if 100% of unfunded pension liability must be paid. Therefore, jobs will not be saved if we have more corporate bankruptcy filings instead of restructurings.
  • Lenders will have to now ignore current assets in the borrowing base of corporations. This will make corporate borrowing much more difficult for solvent corporations with pension plans to carry on business.
  • Lenders may have to reserve the entire amount of any unfunded amounts. They will rank ahead in a receivership or bankruptcy.
  • Severance pay or compensation in lieu of notice will now be a claim ranking ahead of trade suppliers in a corporate restructuring or corporate bankruptcy. This may alter the amount of an unsecured credit line a supplier will be willing to give to a customer.
  • It will cause more chaos to normal lending and trade practices which will be a problem for any government.
  • Claims under the group health indemnity provisions may not result in any real benefit to employees of a company going through either a corporate restructuring or bankruptcy. There is rarely funds left over after the claims of secured creditors.

We will keep monitoring this important issue. We will update you when MP Scott Duvall puts forward his private member’s bill and as other matters arise.

Sears Canada Closing: What To Do If You Or Your Company Need A Financial Restructuring?

It is now Sears Canada closing time. If you’re attempting to discover a means to restructure your firm’s debt, so that you can avoid a Sears Canada closing scenario, call Ira Smith Trustee & Receiver Inc. If we meet with you early on, we can create a restructuring and turnaround strategy. That way your company won’t have to be like Sears Canada closing.

Our strategy for every person is to create a result where Starting Over, Starting Now occurs, starting the minute you walk in the door. You’re simply one telephone call away from taking the crucial steps to go back to leading a healthy, balanced and tension free life.

sears canada closing 8
sears canada closing

 

 

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RECEIVERSHIP BANKRUPTCY DIFFERENCE CANADA: WHAT A TRUSTEE SAYS ABOUT IT

Introduction

The purpose of this blog is to discuss the corporate receivership bankruptcy difference Canada. Every general security agreement defines exactly how the secured lender will certainly deal with obtaining his/her cash when it comes to default. One means to do this is by selecting a receiver.

A receiver or receiver/manager is an individual/company licensed by the Federal Government to act as a licensed insolvency trustee. The receiver can be appointed either by an instrument in writing or by a court order. A receivership administration falls under the Bankruptcy and Insolvency Act (Canada) (BIA), where the receiver takes possession and control over the assets to of the insolvent business.

The receiver or receiver/manager will certainly seize the properties covered under the lender’s security or covered by the court order. The receiver will also develop a plan to market the assets for sale. After paying any type of priority claims as well as the receivership administration costs, the net funds are paid to the first secured creditor.

receivership bankruptcy difference canada

Can you have both at the very same time?

Sometimes there is both a bankruptcy plus a receivership. Receivership is a treatment for secured creditors, such as financial institutions. Bankruptcy is a treatment for unsecured creditors.

Receivership bankruptcy difference Canada: Bankruptcy

A business could be placed right into bankruptcy by any one of the following methods:

  1. a creditor could apply for a bankruptcy order putting the business right into bankruptcy through the courts;
  2. the directors could assign the corporation right into bankruptcy;
  3. a restructuring proposal could be voted down at the meeting of creditors; or
  4. a restructuring proposal could be annulled by the trustee or creditor for non-compliance.

There are many reasons that a corporation could go into bankruptcy. These consist of the following:

  1. The firm has defaulted under its premises lease, the landlord distrains against the firm’s possessions. A bankruptcy or a notice to make a proposal filed before the property owner finishes the sale of assets defeats the lease distraint.
  2. The firm has unsecured assets (i.e., possessions without a lender’s security registered against it) that are available to be realized upon. Also, the firm cannot carry on business any longer.
  3. If a restructuring proposal is submitted, but the company could not get adequate funding to continue its business and complete the proposal.
  4. To reorganize the statutory priorities.
  5. To officially bring the business to an end as well as give a complete report to the creditors so they will not believe the principals engaged in any kind of misbehaviour.

Receivership bankruptcy difference Canada: Corporate Bankruptcy

In a company bankruptcy, the licensed insolvency trustee seizes all the business’s properties plus deals with all the creditors. The directors and management of the company accept the authority of the trustee; if requested by the trustee, they can as well as aid the trustee in his/her tasks. This eliminates them from all the stress of dealing with the creditors as well as running the cash-starved business.

Receivership bankruptcy difference Canada: Making the Application to Put a Debtor Into Bankruptcy

If a creditor is incapable of recovering the amount owed to it with any one of the readily available techniques which can be done, they may look to a bankruptcy application. This is especially so having actually acquired a judgment for the quantum owing which has not been satisfied. The BIA allows for the licensed insolvency trustee, once appointed, to take possession in an organized way, the assets of an insolvent debtor, to realize upon those assets and to then distribute the funds according to the scheme of priority in the BIA.

The BIA allows for the benefit of both bankrupts and their creditors. While the Act is not planned for usage as a device for the collection of private financial obligations, this may be the case in specific situations.

Receivership bankruptcy difference Canada: When is a Creditor Allowed making a Bankruptcy Application?

An unsecured creditor could apply for a bankruptcy order where:

  1. the lender is owed $1,000 or even more on an unsecured basis, and
  2. there has actually been an act of bankruptcy by the borrower within the 6 months that come before the filing of the application. Keep in mind that a secured lender can value its security at less than the overall amount owing to develop a partly unsecured debt.

The BIA states that acts of bankruptcy consist of the following:

  1. if in Canada or elsewhere he makes an assignment of his property to a trustee for the benefit of his creditors generally, whether it is an assignment authorized by this Act or not;
  2. if in Canada or elsewhere the debtor makes a fraudulent gift, delivery or transfer of the debtor’s property or of any part of it;
  3. if in Canada or elsewhere the debtor makes any transfer of the debtor’s property or any part of it, or creates any charge on it, that would under this Act be void or, in the Province of Quebec, null as a fraudulent preference;
  4. if, with intent to defeat or delay his creditors, he departs out of Canada, or, being out of Canada, remains out of Canada, or departs from his dwelling house or otherwise absents himself;
  5. if the debtor permits any execution or other process issued against the debtor under which any of the debtor’s property is seized, levied on or taken in execution to remain unsatisfied until within five days after the time fixed by the executing officer for the sale of the property or for fifteen days after the seizure, levy or taking in execution, or if any of the debtor’s property has been sold by the executing officer, or if the execution or other process has been held by the executing officer for a period of fifteen days after written demand for payment without seizure, levy or taking in execution or satisfaction by payment, or if it is returned endorsed to the effect that the executing officer can find no property on which to levy or to seize or take, but if interpleader or opposition proceedings have been instituted with respect to the property seized, the time elapsing between the date at which the proceedings were instituted and the date at which the proceedings are finally disposed of, settled or abandoned shall not be taken into account in calculating the period of fifteen days;
  6. if he exhibits to any meeting of his creditors any statement of his assets and liabilities that shows that he is insolvent, or presents or causes to be presented to any such meeting a written admission of his inability to pay his debts;
  7. if he assigns, removes, secretes or disposes of or attempts or is about to assign, remove, secrete or dispose of any of his property with the intent to defraud, defeat or delay his creditors or any of them;
  8. if he gives notice to any of his creditors that he has suspended or that he is about to suspend the payment of his debts;
  9. if he defaults in any proposal made under this Act; and if he ceases to meet his liabilities generally as they become due.
  10. if he ceases to meet his liabilities generally as they become due.

Keep in mind that in most of the situations above, the creditor does not need to show that the borrower cannot pay various other creditors. In the last situation, the creditor should show that more than just its own debt is not being paid. Unique situations would differentiate matters though.

Unique scenarios can consist of allegations of fraud, near-fraud or those other transactions which fall under the types that would seem to be attackable by a trustee. At least on a prima facie basis.

It should, nonetheless, be remembered that stringent evidence of both your unsecured debt and an act of bankruptcy is required to have an individual or business judged bankrupt.

 

Receivership bankruptcy difference Canada: Under What Circumstances Should a Creditor Make An Application For A Bankruptcy Order?

Making an application for a bankruptcy order to put a debtor into bankruptcy is no little job. Prior to choosing this option, consider the following:

  1. the presence and amounts of claims that could take priority over your unsecured creditor status;
  2. the dollar measure of unsecured debt ranking on the same level with your financial debt (i.e., each unsecured creditor is paid according to the calculated share based on the measure of his/her debt);
  3. the existence of questionable transactions or transfers undervalue within the three-month to five-year evaluation period before the declaration of bankruptcy;
  4. your very own history of repayments from the debtor/borrower in addition to the normal payment patterns in the 3 months before the date of bankruptcy; as well as
  5. the legitimacy of any kind of security you might hold.

Receivership bankruptcy difference Canada: The Bankruptcy Application Can Be Very Useful

Think about:

  1. has the debtor actually moved the residential property to a related party for inadequate or no consideration;
  2. where the debtor does not want to lose a specific part of its property (e.g. a private yacht, unique cars and truck or shares in a firm) or does not want its transactions and events to be inspected by a trustee and/or creditors;
  3. the debtor (being an individual) expects an inheritance;
  4. where the debtor (being an individual) needs to be an officer, director and/or shareholder of several businesses;
  5. the debtor (being an individual) might have his/her expert certification or licence from which he/she derives income compromised or lost as an outcome of being ruled a bankrupt;
  6. when the bankruptcy of the debtor would cause him/her to lose the ability to generally conduct business, such as required to use a trust account or employment requires the need to be bonded; or
  7. being a bankrupt would cause the company or individual to lose the advantage of a specific useful agreement, lease, or company.

Receivership bankruptcy difference Canada: How Does a Creditor Make The Application For A Bankruptcy Order?

The creditor desiring to file the application will certainly need a lawyer to prepare the needed documents to make the bankruptcy application. The lawyer will serve the motion material and attend for the bankruptcy order. For an uncontested motion, the lawyer appears before the Bankruptcy Registrar who is a Master of the Court. If opposed, the matter can only be heard by a Judge.

The creditor has to additionally make arrangements with a licensed insolvency trustee to act will need to guarantee the trustee’s fee and costs incurred by the trustee where there are not enough proceeds from the sale of assets. A lot of times it is likewise needed to give the trustee a cash retainer.

When the Bankruptcy Order is made, the licensed insolvency trustee starts the bankruptcy administration. All actions against the insolvent are stayed.

Receivership bankruptcy difference Canada: What If You’re Company Has Too Much Debt?

Is your company insolvent? Are you looking for solutions? The Ira Smith Team is here to offer alternatives to restructuring and turnaround services however, if required, we also act as a licensed insolvency trustee in bankruptcy matters. We offer help in Vaughan as well as throughout the GTA.

Are you an individual or company who feels your situation is hopeless? Ira Smith Trustee & Receiver Inc. can prepare and put in place the plan MADE JUST FOR YOU. The plan will free you from the burden of your financial challenges. With our help, you will go on to live a productive, stress-free, financially sound life.

Our motto is Starting Over, Starting Now! Ira Smith Trustee & Receiver Inc. can help you overcome your financial difficulties. Contact us today.

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COMPANY WENT BANKRUPT AND DIDN’T PAY ME WAGES: IT DOESN’T HAVE TO BE HARD

Previous blogs for the company went bankrupt

The issue of the company went bankrupt and didn’t pay me wages is not a new one. We previously wrote two blogs on this topic:

We have noticed a surge of renewed interest in this topic based on recent activity from readers of our Brandon’s Blog, so, we thought it would be a good idea to put together a short video on this topic.

People ask us what if the company didn’t pay me wages?

We answer if wages are owed by your employer because the employer went bankrupt with unpaid employees or is in receivership don’t despair; there is hope for you to recuperate monies owed to you. The Wage Earner Protection Program (“WEPP”) Act – WEPPA – in conjunction with an amendment to the Bankruptcy and Insolvency Act (Canada) – BIA – created a mechanism for employees to be compensated for claims of unpaid wages, commissions and vacation pay accrued in the six months preceding the employer files for bankruptcy or being placed in receivership and wages are owed to you along with claims for unpaid termination and/or severance pay.

Are there any exceptions? What are the rules?

There are a few exceptions to the company went bankrupt and didn’t pay me wages. You are generally not eligible if, during the period for which your wages are owed to you by your employer, you:

  • were an officer or a director of your former employer
  • had a controlling interest in the business of your former employer
  • were a manager whose responsibilities included making binding financial decisions impacting the business of your former employer, and/or making binding decisions on the payment or non-payment of wages by your former employer

Who is eligible for the WEPP? You may apply if wages are owed to you by your employer and:

  • your former employer has filed for bankruptcy or is subject to a receivership
  • wages are owed to you by your employer, vacation pay, termination or severance pay from your former employer
  • amounts earned during the eligibility period or, in the case of termination or severance pay, your employment was terminated during the eligibility period ending on the date of bankruptcy or receivership

One more very important exception – it only applies if wages are owed to you by your employer and your employer is in either receivership or bankruptcy and owes you wages. If your employer is attempting a corporate restructuring under a Notice of Intention to Make a Proposal, a Division I Proposal or the Companies’ Creditors Arrangement Act, then WEPPA and its provisions do not come into play.

Claim limits when the company went bankrupt and didn’t pay me wages

Regardless of the total amount owing to you, the maximum any employee can receive under WEPPA is the greater of $3,200 or four times the maximum weekly insurable earnings under the Employment Insurance Act (which is now around $3,900).

Once employees file claims with both the Trustee/Receiver and Service Canada, Service Canada pays their claims for owed wages by the employer and Service Canada becomes the creditor. The amendment to the BIA has recognized WEPPA and created a priority charge that supersedes all secured charges except CRA’s deemed trust claim (and the reclaiming rights of farmers and suppliers) to a max of $2,000 per employee, secured against current assets.

Documentation needed if the company went bankrupt and didn’t pay me wages

While no one wants – or expects – to be part of a receivership or bankruptcy, you should always keep detailed records of hours worked for any pay period. On any occasion when you discover there will be no paycheque, record the loss that you will suffer, such as not being able to pay bills or buy groceries. Ask for a formal explanation from your employer and keep detailed notes on your efforts. It’s important to prove that when owed wages by an employer; you still expect to be paid, even if it’s late.

If your employer is in receivership or bankruptcy proceedings, and you believe you have a claim for owed wages by the employer, find the trustee and get in touch with Service Canada. Have your records ready and make sure you get your Proof of Claim.

What should I do if I have too much debt and the company went bankrupt and didn’t pay me wages?

This is an important issue. If you are experiencing financial problems, contact Ira Smith Trustee & Receiver Inc. We’re here to find what your bankruptcy options are, put your financial house back in order and set you on a path to debt free-living. You’ll be amazed at the difference one phone call to Ira Smith Trustee & Receiver Inc. can make.

Contact us today. We are a licensed trustee and will listen to your issues and offer compassionate, professional assistance to aid you to avoid bankruptcy, so that you can regain control of your life, Starting Over, Starting Now.

company went bankrupt and didn’t pay me wages

THIS VLOG WAS INSPIRED IN PART BY OUR eBOOK – PERSONAL BANKRUPTCY CANADA: Not because you are a dummy, because you need to get your life back on track

 

 

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#VIDEO – HOUSEHOLD DEBT IN CANADA CRISIS#

Household debt in Canada can lead us into crisis

On January 16, 2016, the Office of the Parliamentary Budget Officer (PBO) released its report titled: “Household Indebtedness and Financial Vulnerability“. A summary of the PBO’s findings are:

In the third quarter of 2015, total household debt in Canada reached 171 per cent of disposable income. In other words, for every $100 of disposable income, households had debt obligations of $171. This is the highest level recorded since 1990 and the highest level. The report also found that:

  • Among G7 countries, Canada has experienced the largest increase in household debt relative to income since 2000. Households in Canada have become more indebted than any other G7 country over recent history.
  • The Bank of Canada conducted its analysis. It suggests that low-interest rates, higher house prices and financial innovation have contributed to the increase in household indebtedness.
  • A financially vulnerable household is required to devote a real part of its income to service its debt. It faces greater exposure to negative income and interest rate shocks, and is more likely to be delinquent in its debt payments.
  • The PBO does not see the trend correcting itself until 2020.

We discussed the issue of rising household debt in Canada in the past

The PBO report produced a graph on household debt ratios

Household Indebtedness and Financial Vulnerability,household debt in canada,canadian household debt,canadian household debt statistics,average canadian household debt,canadian household debt to income ratio,statistics canada,canadian household debt by province,canadian household debt to income ratio graph,canadian household debt ratio calculator,canadian household debt 2015,ira smith trustee,household debt in canada
Graph courtesy of the Report of the PBO “Household
Indebtedness and
Financial
Vulnerability” dated January 19, 2016

The PBO’s point in this graphical analysis is that the projected increase in the total household debt service ratio (DSR) to 15.9 per cent would be 3.1 percentage points above the long-term historical average of 12.8 per cent (from 1990Q1 to 2015Q3). It would also be almost one full percentage point above its highest level over the past 25 years, 14.9 per cent , which was reached in 2007Q4.

There is apparently no end in sight for Canadians’ appetite to take on more debt, and it takes more income to service the higher debt. Unfortunately, the only thing that will seem to break this cycle is some shock to the Canadian economic system, and this will not be good news for many who will find themselves strung out on debt and not able to service it when the shock comes.

What to do if you or your company can no longer service your debt?

Is your household debt in Canada out of control? Have those spending habits creeped into your company’s spending? If so, you need to contact us now to get a solution, before bankruptcy is your only alternative.

We help people and companies throughout the Greater Toronto Area (GTA) facing financial crisis in need of restructuring and turnaround, receivership or bankruptcy that need a plan for Starting Over, Starting Now. The Ira Smith Team brings a cumulative 50+ years of experience dealing with diverse issues and complex files, and we deliver the highest quality of professional service. Don’t worry about debt; instead take immediate action.

Call us today. If you or your company is trapped in high debt, you need a professional trustee to help you manage the situation before it reaches a critical stage where bankruptcy or receivership is your only option. We have been able to help many people and companies carry out a successful debt settlement programs or corporate restructuring and turnarounds.

It all began with a first consultation. The first step is a realistic cash-flow budget. Successful completion of restructuring, will free you or your company from the burden of your financial challenges to go on to live a productive, stress-free, financially sound life.

PERSONAL BANKRUPTCY CANADA: Not Because You Are A Dummy, Because You Need To Get Your Life Back On Track, ira smith trustee, toronto bankruptcy, vaughan bankruptcy, consumer proposal, bankruptcy laws in bc, bankruptcy information online, canadian bankruptcy act, bia, canadian bankruptcy laws, bankruptcy protection canada, canadian bankruptcy laws and regulations, personal bankruptcy protection canada, canadian personal bankruptcy laws, canadian personal bankruptcies laws

 

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HOW SECRET REAL ESTATE FLIPPING BECOMES COSTLY FLOPPING

receiver mortgagee $6.2 million flipped $9 million, property flip, real estate flipping, bankruptcy, professional trustees, receiver, Receiver, receivership, trustee, ira smith trustee, Ahmed Baig, Soundair Corp., restructuring and turnaround, Ahmed Baig, Meridian Credit Union, Meridian Credit Union Limited v. Baig, bankruptcy trustee, starting over starting nowThe television air waves are clogged with real estate reality shows – buying properties, selling properties, real estate flipping properties, renovating properties, income properties… There’s a real estate show that demonstrates every facet of the business and it all looks very simple. But I’m pretty sure that not one real estate reality show told you that real estate flipping when purchasing from a Receiver in Ontario can land you in a heap of legal trouble. Here is the story surrounding the Court of Appeal for Ontario case of Meridian Credit Union Limited v. Baig, 2016 ONCA 150.

Real Estate Flipping

Mr. Ahmed Baig’s corporation bought a downtown Toronto property located 984 Bay Street in a receivership sale. The property was purchased from the court-appointed Receiver with court approval, for $6.2 million in August 2006. Before the deal went through Mr. Baig secretly flipped the property for $9 million, netting a tidy profit of $2.8 million. The Receiver had no clue that when Mr. Baig bought the property he’d already agreed to resell it to Yellowstone Property Consultants (Yellowstone). In fact the Receiver assumed Yellowstone was Baig’s company and neither Mr. Baig nor his lawyer corrected that misunderstanding. On the advice of counsel the deal was structured so that the property would go directly to Yellowstone to avoid duplicate land transfer taxes. What a score for a little paperwork and some creative bookkeeping!

The Flopping

It’s hard to keep a $2.8 million real estate flipping secret and in 2009 Meridian Credit Union Limited (Meridian), the first ranking secured creditor at the time of the sale, and the Applicant in the receivership case, discovered the resale to Yellowstone. Meridian sued Mr. Baig. The Receiver, obliged to maximize the return on assets of any sale, argued it would never have recommended court approval had it known about the real estate flipping.

The Court noted that one of the terms of the Agreement of Purchase and Sale entered into between the Receiver and Mr. Baig’s company stated:

“Article 39 of the agreement of purchase and sale provided that Mr. Baig could assign the agreement to a corporation to be incorporated for the purposes of the sale with the receiver’s consent which could not be unreasonably withheld. However, in respect of any other assignment, the receiver had a consent right and its consent “may be arbitrarily withheld”.”

In the original case in the Ontario Superior Court of Justice, The Honourable Mr. Justice F.L. Myers found that:

“Apart from the normal circumstances where any buyer would be reluctant to tell its vendor that there was another buyer available who would pay substantially more for the property, the fact that the sale occurred in a receivership is important. A receiver requires approval of the court to make a material sale of the debtor’s property. To obtain court approval, a receiver must establish that it engaged in a fair and commercially reasonable process to try to obtain fair market value for the property to maximize realization for the creditors. See: Royal Bank of Canada v. Soundair Corp., 1991 CanLII 2727 (ON CA), 1991 CanLII 2727 (ONCA). If a Receiver learns that it has undersold property it can be in a very difficult position in which it is contractually bound to seek court approval for its sale but it must, at the same time, disclose to the creditors and to the court that it has not maximized realization.”

The Honourable Mr. Justice Myers made the finding that Mr. Baig is liable to Meridian for fraudulent misrepresentation in an amount to be determined by the court.

The Appeal Court Ruled On The Real Estate Flipping

Upholding the lower court decision, the Court of Appeal found Ahmed Baig had deliberately misled the Receiver handling the receivership by failing to alert them to the resale through the real estate flipping. “In certain circumstances, silence and half-truths can amount to a misrepresentation,” the Appeal Court ruled. “Both the appellant and his counsel wanted to prevent the Receiver from discovering the sale to Yellowstone, because the $2.8 million differential in the price would jeopardize court approval,” the Appeal Court said. “Both the appellant and his counsel actively hid the agreement,” the Appeal Court found. Instead of making a fast $2.8 million Mr. Baig was held responsible for the misrepresentations made by his lawyer, who knew documents given to the receiver were false. While Baig had no obligation to disclose the resale agreement, the court decided that his failure to correct the misunderstanding that Yellowstone was his company amounted to fraudulent misrepresentation.

Would this real estate flipping decision be the same in a bankruptcy?

In my view, this ruling would also extend to bankruptcy administrations, as the bankruptcy trustee would be required to obtain either inspector or court approval, and be held to the same high standards as in this case. As professional trustees we are extremely ethical and would never support a fraud or blatant misrepresentation. We help individuals and companies throughout the Greater Toronto Area (GTA) facing financial crisis in need of restructuring and turnaround, receivership or bankruptcy that need a plan for Starting Over, Starting Now. The Ira Smith Team brings a cumulative 50+ years of experience dealing with diverse issues and complex files, and we deliver the highest quality of professional service. Don’t worry about debt; instead take immediate action.

Call us today. If you or your company is trapped in high debt, you need a professional trustee to help you manage the situation before it reaches a critical stage where bankruptcy or receivership is your only option. We have been able to help many individuals and companies carry out a successful debt settlement programs or corporate restructuring and turnarounds. It all began with an initial consultation. The first step is a realistic cash-flow budget. Successful completion of such a program, will free you from the burden of your financial challenges to go on to live a productive, stress-free, financially sound life.

Call a Trustee Now!