Tag: trustee

TRUSTEE BANKRUPTCIES FEES IN A SCARY CORONAVIRUS WORLD

Post author By Brandon Smith
Post date November 23, 2020

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

Trustee bankruptcies introduction

Are trustee bankruptcies filings high right now?

Every day we read or hear in the media about the life-threatening health challenges faced daily by Canadians. We also hear sad stories about people who have lost their job because of businesses having to close down.

The general public thinks that right now there is a lot of personal bankruptcy and corporate bankruptcy filings. In actual fact, the numbers are low. The 2 main reasons are:

Government support programs have helped support people and businesses. Most of the programs ended effective September 30, 2020.
Creditors are not chasing or harassing borrowers right now. Given that we are about 5 weeks away from Christmas, that will not change until some time in 2021.

I am receiving a lot of inquiries from people and entrepreneurs about their personal and business debt situation. I am doing a lot of initial consultations by telephone or video meeting. That tells me that there should be an increase in insolvency filings in 2021.

It may surprise you to hear that even a licensed insolvency trustee (formerly called a bankruptcy trustee or trustee in bankruptcy) business could be having cash-flow problems. A recent court decision out of Ottawa highlights this issue. The purpose of this Brandon’s Blog is to discuss the court case and what it means for a trustee bankruptcies fee collection.

What are the fees of a licensed insolvency trustee?

This question is quite relevant, but the answer depends on what role the licensed insolvency trustee takes on.

A trustee in bankruptcy performs a wide variety of services, such as:

administrator in a consumer proposal;
the monitor under a Companies’ Creditors Arrangement Act (CCAA) corporate restructuring;
licensed insolvency trustee in either a summary administration or ordinary personal bankruptcy;
receiver over a company’s assets, either by private appointment or court appointment;
the licensed insolvency trustee in a corporate restructuring under the proposal provisions of the Bankruptcy and Insolvency Act (Canada) (BIA);
as the licensed insolvency trustee in a corporate bankruptcy; or
act as a consultant in either a corporate or personal insolvency situation, advising either a creditor or the debtor.

The fee will certainly differ depending on what duty is played. Keep in mind that the costs of trustee bankruptcies are established under the BIA itself for all insolvency administrations under the BIA.

Personal bankruptcy administration where the non-exempt assets are estimated to be worth less than $15,000 is called a summary administration bankruptcy. Rule 128 of the BIA General Rules dictates the cost and disbursements in such trustee bankruptcies. This kind of fee is called a tariff. A tariff also exists in a consumer proposal file.

A bankruptcy is called an “ordinary” bankruptcy when the realizable assets are estimated at $15,000 or greater in personal bankruptcy. Every corporate bankruptcy is an ordinary administration. The BIA also regulates the trustee bankruptcies fee and disbursements.

With this information as background, I will now discuss the recent case out of the court in Ottawa.

**A bankruptcy trustee needs cash flow too**

The case involves a court application by an Ottawa bankruptcy trustee on 3 separate ordinary administration personal bankruptcy files. Normally, when a bankruptcy trustee wishes to get an interim draw towards its fees and disbursements in an ordinary administration, they either get the approval of the creditors at a meeting of creditors or, approval of the inspectors appointed in the bankruptcy administration.

The First Meeting of Creditors has to take place within 21 days of the date of bankruptcy. It is rare to have to call another meeting of creditors. So if the Trustee does not get approval for an interim draw at the outset from the creditors present at the First Meeting, that chance is gone quickly. If no inspectors are appointed, or a long time has passed and the Trustee has trouble finding the inspectors, getting inspector approval may also prove difficult.

But there is one more way for a Trustee to get approval to get an interim draw for its cash flow.

Office of the Superintendent of Bankruptcy (OSB) Directive no. 27R

The OSB publishes Directives from time to time. Trustees are bound by and obliged to follow all regulations provided by the OSB. This is so there will be consistency in the insolvency process across Canada. Directive 27R is titled “Advance of Trustee’s Remuneration for Bankruptcies Under Ordinary Administration.”. It was issued on February 10, 2010. The purpose of this Directive is to set out the correct procedure the Trustee should comply with when making an interim withdrawal or taking out an advance on remuneration for ordinary trustee bankruptcies.

To withdraw an advance on its compensation, the Trustee needs to obtain consent in the form of:

a resolution of a duly comprised meeting of creditors;
the resolution of a majority of the inspectors at a properly convened meeting of inspectors; or
make an application to the Court for an order approving such interim advance.

This is what this Ottawa Trustee did for 3 of its trustee bankruptcies.

The OSB did not like the court application

The OSB did not like the fact that the Trustee made this application. The OSB actually opposed the application, notwithstanding the Trustee was properly following all the requirements of Directive 27R. The Trustee brought to the court’s attention that it would still take some time to prepare its Final Statement of Receipts and Disbursements, submit it to the OSB to receive their comment letter and then apply to the court for taxation. The process would take many months.

The Trustee also highlighted for the court that these are not normal times. Due to the coronavirus pandemic, government and court staff were not working at their normal pace. The Trustee also pointed out that its own business had to lay off staff and its own cash flow was suffering. Therefore, the Trustee was making an application to the court for approval for an interim draw, as allowed. The Trustee highlighted what has gone on to date in each bankruptcy estate. The Trustee also provided proof of proper service on the OSB of this motion.

The decision does not indicate why the Trustee did not just go for inspector approval. Nevertheless, its position was that it was within its rights to make this application to the court and for the court to approve it.

The OSB’s basis for opposing this motion can be summarized as:

Interim draws approved by a court under Directive 27R are just to be made in special circumstances.
While COVID-19 is an exceptional situation, it is insufficient to call for the orders asked for by the Trustee.
The OSB additionally argues that the motion was not on notice to the creditors in the respective trustee bankruptcies estates concerned, who might actually object to the amount being claimed by the Trustee.
The OSB is worried that, if the motion is granted and the court order made, it could cause more need on the court’s time as more Trustees will seek similar orders in other trustee bankruptcies estates.
Finally, the OSB says that this matter is not urgent and therefore ought to not be dealt with right now. The Trustee should just go for final taxation in the normal course.

The OSB also provided two earlier court decisions where interim draws were not approved in support of its opposition.

The court sees COVID-19 creating urgencies, even for trustee bankruptcies

The court considered the OSB’s submissions and the cases it relied upon. The court distinguished those cases from the current motion for these trustee bankruptcies. Due to COVID-19, the Court found that it is not practical for the Trustee to need to wait on the receipt of the OSB Letter of Comment and then proceed to final taxation.

The court stated these are not normal times. The timelines for any of the steps involved in the final taxation process could be much longer, taking into consideration the stay-at-home orders that have been issued, even including the OSB team.

The judge stated that the court must deal with the situation as it presently exists and as it advances each day, and also make appropriate decisions as necessary. He stated that businesses in all industries have been laying workers off. This includes the insolvency industry. A lot of the businesses that are still operating are doing so with minimized staff. Those businesses are attempting to make the most out of their limited cash flow to sustain operations.

The court stated that it understands that the choice it makes on this motion might bring about an influx of cases for interim draws in trustee bankruptcies. If that becomes the case, the court will deal with it. In addition, the court recognized that, because of coronavirus, interim draws are a practical method of managing the liquidity crunch presently being experienced by Trustees. Even if there had been no coronavirus pandemic, Directive 27R still allows for such an application to the court in the trustee bankruptcies.

The Court was also conscious that accounting firms, and consequently licensed insolvency trustee businesses, have been proclaimed essential services in the Province of Ontario.

**The court’s decision on the trustee bankruptices motion**

As a result of all these findings, the court decided that licensed insolvency trustees must have the tools essential to maintain their operations and to permit people and companies to get access to the Canadian insolvency system. Therefore, the court held that Trustees need to be able to access the funds in their trust accounts that they have actually earned as fees, inclusive of HST.

Taking all this into account, the court exercised its discretion and ordered that the Trustee is approved to withdraw 75% of the fee that has been earned in the three trustee bankruptcies, including HST. The Trustee should then move to final taxation. There are already safeguards built into the final taxation process where creditors in each of the trustee bankruptcies estates can object to the taxation and the total fees if they wish to.

If the total final fees are approved, then the Trustee can withdraw the remaining 25%. If final taxation results in any fees less than the 75% interim draw approved in any of the trustee bankruptcies, then the Trustee will have to repay into the bankruptcy estate the specific amount(s).

The court ordered that any costs incurred on the motion was an overhead cost of the Trustee and was not recoverable from the trustee bankruptcies. Costs were neither sought nor awarded. My understanding is that the OSB is not appealing this decision.

Trustee bankruptcies summary

I hope you have enjoyed this trustee bankruptcies Brandon’s Blog. It is the first decision I am aware of that deals with the reality that like any other entrepreneur, a licensed insolvency trustee is running a business too.

Do you or your company have too much debt? Are you or your company in need of financial restructuring? The financial restructuring process is complex. The Ira Smith Team understands how to do a complex restructuring. However, more importantly, we understand the needs of the entrepreneur or the person who has too much personal debt.

You are worried because you are facing significant financial challenges. It is not your fault that you are in this situation. You have been only shown the old ways that do not work anymore. The Ira Smith Team uses new modern ways to get you out of your debt troubles while avoiding bankruptcy. We can get you debt relief freedom.

The stress placed upon you is huge. We understand your pain points. We look at your entire situation and devise a strategy that is as unique as you and your problems; financial and emotional. The way we take the load off of your shoulders and devise a debt settlement plan, we know that we can help you.

We know that people facing financial problems need realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team.

That is why we can develop a restructuring process as unique as the financial problems and pain you are facing. If any of this sounds familiar to you and you are serious in finding a solution, contact the Ira Smith Trustee & Receiver Inc. team today.

Call us now for a free consultation.

We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

Tags bankruptcy administration, Bankruptcy and Insolvency Act, bankruptcy trustee, Consumer Proposal, Corporate Bankruptcy, insolvency, Ira Smith Trustee, licensed insolvency trustee, personal bankruptcy, trustee, trustee bankruptcies, trustee in bankruptcy

Brandon Blog Post

CLOSING A BUSINESS DOES NOT AUTOMATICALLY MEAN AN ALARMING BANKRUPTCY

Post author By Brandon Smith
Post date November 18, 2020

At the end of this blog, we have a special gift for you!

Closing a business introduction

Many times I am consulted by an entrepreneur about closing a business. This may sound odd coming from a licensed insolvency trustee (formerly called a bankruptcy trustee) (Trustee), but not all business closures involve a formal bankruptcy. In fact, there are more business closures that do not involve bankruptcy

Now with so many businesses hurting due to a slowdown or complete destination due to the result of the coronavirus pandemic, I expect more entrepreneurs are going to want to know about closing a business.

In this Brandon’s Blog, I provide the reasons why. I also go through the various steps in closing a business that you can use as a checklist.

Closing a business that does not have many (free) assets

Many times I get a call from someone whose business is not doing well. They probably cannot afford to pay the business rent next month and it does not make sense to stay open. They think bankruptcy is the only way they have for closing a business. The business does not have many assets, or all the assets are secured by a bank that loaned the corporation money. Think of a business where the assets were bought through a bank loan. The funding may or may not have been under a government small business loan program.

The entrepreneur gave a personal guarantee to the bank ranging from 25% to 100% of the total loan amount. The entrepreneur may also have provided a personal guarantee to the landlord. The business may or may not be current in its employee source deduction remittances and harmonized sales tax (HST) payments. The entrepreneur does not believe the assets have any value above the amount of the secured loan and wishes to place the company in bankruptcy as the answer to closing a business.

Here is why bankruptcy will not help:

The assets are fully secured by the bank.
Canada Revenue Agency (CRA) may have a trust claim over the assets because of unremitted source deductions.
A corporate bankruptcy will not solve the entrepreneur’s personal debt issues under the personal guarantee to the bank for any shortfall claim and the landlord for any claim due to the failure of the corporate tenant.

In this type of situation, there is not much I can do. I tell the entrepreneur that if they are going to shut the business down before the first of the next month, they should do so. Then, they should go to the bank, advise them and cooperate with the bank to allow them to realize their security. I tell them to make sure that they follow the steps for closing a business that I outline below.

I tell the entrepreneur that when the bank and the landlord each make a demand for their obligations under the respective personal guarantees to call me. We will then work together on their personal situation. Perhaps a consumer proposal will be possible. I also tell them that it is not worth spending the money they don’t have in order to bankrupt the company.

That is why in this case a corporate bankruptcy will not help an entrepreneur in closing a business. I call this the self-help remedy.

The business is still operating – will anyone buy it?

Before making any decisions about closing a business, you should first think in terms of is your business worth anything? You have spent many years building your business. It may be insolvent because it has suffered losses for several years, cash flow is weak and the corporation cannot pay its debts generally as they come due.

Although the current corporate body may be weak, you need to determine if your business is still viable. Does the marketplace still have a need for the service or product you provide? Are there competitors who seem to be doing well? Your business has a customer base and trained staff. One of your competitors may find your customer base and some or all of your staff something they want to amalgamate into their existing business.

If that is the case, you need to understand what your business might be worth. The selling prices of similar organizations in your geographical area or market will be a good barometer of what you can anticipate getting for your company. Innovative buyers might evaluate your business on the basis of projected cash flow for the next few years. They may very well mark down the worth of that cash flow to mirror the perceived threats and risks inherent in your business.

In the case of an insolvent but viable business, it may be that an insolvency process is necessary to allow the purchaser to buy the assets it wishes to purchase and take on all or some of your employees, maybe even including you.

The range of options available includes:

So with the right insolvency process, the assets of the business can be put back to good use and be very productive. It may very well help get a good M&A deal done.

I have written before many blogs on how these insolvency proceedings could help in getting the healthy parts of a business into a purchaser while leaving the sick parts behind and then be used for closing a business. Those details are beyond the scope of this Brandon’s Blog.

**When does corporate bankruptcy make sense in closing a business?**

Corporate bankruptcy is not a simple process. An entrepreneur needs the advice of their lawyer and also needs to retain a Trustee. This costs money. More often than not, there are no free assets in the company. That means the entrepreneur needs to personally fund the cost of the bankruptcy process for closing a business.

A bankruptcy of the company may make sense in several situations. Some of the most common are:

Certain government claim priorities need to be reversed and that only can be done in bankruptcy. The most common one is unremitted HST. Absent a bankruptcy, the HST obligation is a trust claim and will come before the claim of any other creditor, including a secured creditor. As probably the sole director of the corporation, the entrepreneur may be willing to bankrupt the company to put the HST behind the bank. The director may very well choose as part of closing a business, to take their chances on the claim for unpaid HST as a director liability, rather than increase the bank’s shortfall by the amount of that HST claim.
There may be value in the premises lease. If the rent under the lease is below market and can be sold, a bankruptcy will be necessary. That is because the combination of the Commercial Tenancies Act Ontario and the Bankruptcy and Insolvency Act (Canada) Trustee has certain rights to sell the lease that the corporation tenant does not have. So, bankruptcy may be a good idea in that case.
The security of a lender for which no personal guarantee has been given is invalid against a Trustee. The corporation may be able to restructure with that liability moved from secured to unsecured. Alternatively, a bankruptcy will allow for assets to be better protected for the secured creditors first and then provide some value for the unsecured creditors if there is a bankruptcy.

**My closing a business checklist**

This is what I tell any entrepreneur for a self-help remedy for closing a business that is most appropriate:

Advise the utilities that they should do a final meter reading and shut down the account.
Prepare and issue all records of employment to the former employees.
Remove the books and records (probably computerized) from the business premises so that the information can be secure.
Advise your bank lender that the business is shut down and that you are delivering the keys to the banker so that they can get their security.
If there is no bank lender, and no trust claims over the assets, hold a going out of business sale.
Tell the landlord the business is over and deliver the keys.
Cancel insurance policies. There may be an unearned premium refund coming back to the business.
Redirect the business mail to a different address. Most of the mail will be bills, but there may also be cheques you don’t want to miss so you can deposit them into the bank account.
Cancel any corporate credit cards.
Deal with the termination and return of any business license and permits.
Deal with your business social media accounts, website, and any other digital or intangible assets. You will have to decide when it comes up for renewal if you wish to retain the URL in light of your closing a business decision. The URL may have a value that you can unlock.
Make sure that the final financial statements and tax returns are prepared. File the tax returns with the government. If there is a balance owing, don’t worry about it as the business cannot pay and corporate income tax owed is not a director liability.
Prepare and issue final T4 statements of remuneration paid. Issue them to the former employees. Figure out if there are any employee source deductions owing. If there is and you can pay them as it is a director liability.
Calculate, prepare and file the final HST return. If there is a balance owing and you can pay the amount as it is also a director liability.
Maintain the books and records as CRA may want to perform an audit.
Send a letter to all creditors advising of your closing a business decision was due to financial problems, express your gratitude for the relationships you have built, tell them that there is no money for them and let them know that you have also lost money.
Mail a letter to your customers/clients advising of the closure of the business and thank them for their loyalty and patronage over the years.

Closing a business summary

I hope you have enjoyed this closing a business Brandon’s Blog. A sick insolvent company’s business might be saved by a debt restructuring.

We know that people facing financial problems need a realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team.

Call us now for a free consultation.

We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

CLOSING A BUSINESS INFOGRAPHIC. CLICK ON THE INFOGRAPHIC TO DOWNLOAD YOUR OWN COPY

Tags Bankruptcy, bankruptcy trustee, Canada Revenue Agency, closing a business, Corporate Bankruptcy, CRA, hst, Ira Smith Trustee, licensed insolvency trustee, liquidating proposal, proposal, receivership, restructuring, restructuring proposal, small business, trustee

Brandon Blog Post

CEWS APPLICATION: OUR COMPLETE CEWS EXTENSION PRIMER TO GREATLY HELP YOUR BUSINESS

Post author By Brandon Smith
Post date November 11, 2020

CEWS Application introduction

The expansion of the Canada Emergency Wage Subsidy (CEWS) until June 2021, is one of the last few remaining Canadian government subsidies for business as a result of the COVID-19 pandemic. The subsidy that a CEWS application can be made remains at the current subsidy level of a maximum of 65% of qualifying payroll until December 19, 2020. This measure is the government’s dedication to producing over 1 million jobs and hopefully bring back employment to the degree it was before the COVID-19 pandemic.

The purpose of this Brandon’s Blog is to provide you with our CEWS extension primer to answer what we believe are the most common questions regarding the CEWS application program extension.

CEWS application: What is the CEWS?

The federal government is providing organizations with wage help towards worker wages if they are able to reveal a decrease in earnings as a result of COVID-19. Businesses will be eligible to receive the subsidy for the wages they have actually paid their staff members from March 15th, 2020 to June 2021.

Most of CEWS guidelines stay the very same– except for:

The computation for the top-up, which had actually been based upon a 3-month standard, will now be calculated upon the existing month’s revenue loss to supply more help to those employers needing to close down again.
The subsidy rate will be capped at 0.8 times the income reduction (max of 65%), until December 19, 2020.

As indicated above, the program runs until June 2021.

CEWS application: Who is an eligible employer?

A lot more types of employers have been added as eligible employers, including seasonal operations and also amalgamated companies. For a complete list of who qualifies, check out the Canadian government CEWS application website.

The program does not look at the number of staff on the payroll. Rather, the main requirement is that the business had a CRA payroll account as of March 15, 2020. If your business did not have a CRA payroll number since your third-party payroll provider made remittances for you under their number, you can create one now and still be considered eligible.

**How do I calculate my gross revenue drop for the CEWS application?**

A revenue decline is the percent of gross revenue shed in a month in comparison to a pre-COVID-19 time frame. To determine your gross revenue, you can pick between two accounting techniques. You can choose to record revenue when received and expenditures when paid (the cash approach) or you can pick to recognize revenue and expenses in the period they are incurred (the accrual method).

Once you have picked your accounting approach, you will need to use that same bookkeeping approach for all periods. If you decide to change from one accountancy method to the other, you will then need to refile for all previous periods. That way, you will still only be using one method in your CEWS application.

To calculate the level of the revenue decline you will need to choose between:

contrasting current month revenue to the same month in 2019 (the general method); or
comparing current month revenue to your average revenue in January and February 2020 (the alternative method).

Whatever strategy you use, you will need to continue to make use of that exact same method for Periods 1 to 4. The only time you will be able to change your approach from one to the other will be Period 5, after which you will need to use that very same approach for the remainder of the CEWS application periods.

**What is the safe harbour CEWS application regulation?**

The safe harbour regulation allows organizations who would have been eligible for the 75% wage subsidy under the old CEWS application rules, to still obtain a minimum of 75% under the brand-new regulations for Periods 5 and 6 only.

So, an eligible employer with an earnings reduction of 30% or more in Periods 5 and 6 will be able to receive at the very least a 75% subsidy, or possibly much more under the new rules if their revenue reduction is very high.

**How do I determine which employees’ wages are eligible for the CEWS application?**

Eligible employees must be those employed only in Canada to qualify for the wage aid under a CEWS application. On top of that, for Periods 1 to 4 only, they can’t lack pay for 14 or more consecutive days within a CEWS application period. This guideline does not apply from Period 5 and beyond.

You will then have to figure out whether the staff member is arm’s length or non-arm’s length (usually household members/owners) and if they are on a paid leave or not.

**How do I calculate the pre-COVID payroll amount for the CEWS application?**

For Period 7 onwards, the baseline (pre-crisis) pay is just required for workers that are on leave with pay, and also staff members who are non-arm’s length. That baseline pay is the average wage paid from a specific payroll period before COVID-19.

To optimize your staff member’s baseline pay, you will need to establish which prior period offers your worker the biggest average wage. After that, add up all the amounts paid to the employee during the chosen base CEWS application time period.

**What is the deeming rule for the CEWS application?**

Phase 1 qualification for 75% CEWS application wage support required a decline of 15% from compared period revenues for Period 1 (March 15– April 10). It also needed a 30% decline in revenue throughout each of the three subsequent Periods (2, 3 & 4) through to July 4.

The only exemption to this was a deeming rule that said that if you receive the subsidy from your CEWS application in any one Period, you do not have to prove revenue decrease in the immediate succeeding Period. Essentially, this meant that any business that qualified would automatically get CEWS application wage assistance for eight weeks. It would after that need to requalify through a new CEWS application for any kind of later Period.

This guideline is being adjusted to be a more flexible offering because of the developing assistance levels under the guidelines for Phase 2.

Any Phase 1 CEWS application subsidy period, which ended on July 4, provided a single degree of wage assistance, i.e., 75%. Those calculations and CEWS application decisions made are unaffected by the new guidelines.

**The CEWS application calculations are complex**

You are right. The CEWS application process in Phase 1 was somewhat confusing and complex. For CEWS 2.0, the government has developed a better online CEWS calculator to make the calculations easier.

The CEWS calculator has actually been updated to do more of the complicated CEWS application computations for you.

Before using it, please understand that the calculator does not accumulate or keep the info you input. Also, making use of the calculator itself does not cause an audit or for alarm bells to ring at the tax authorities.

It is recommended that you utilize the calculator in one sitting so as not to lose your calculations. It is likewise suggested that you print/save your computations in case the Canada Revenue Agency does ask sometime in the future to see just how you did the numbers in your CEWS application.

**Business is slow. What should I do to keep my business going besides a CEWS application?**

Regrettably, this is happening to lots of businesses. The government has revealed a number of programs to aid businesses through this difficult COVID-19 pandemic time. There are additional actions you can take to plan for your business’s future.

Look at your income and expenses. Are you able to pay your fundamental business expenses? If not, can you get any relief from your vendors? Speak to your accountant/bookkeeper about your alternatives and whether it makes good sense to stay open, temporarily stop your business, or shut it down waiting for better times.

Redo your business plan, budgets and cash-flow statement for this new reality. Things are tough. Make certain you have a plan as to how your business is going to survive. Does and can your business model change to help you weather this storm?

You may need to sit down with both your accountant and a licensed insolvency trustee (Trustee). The Trustee can run through the various options available to restructure your business. Hopefully, a restructuring can be done to allow for either refinancing or the opportunity to bring in an investor. Maybe a sale of the business is possible and the purchaser will want to keep senior staff on for continuity under a multi-year employment contract.

There are many possibilities for the viable but insolvent company to avoid bankruptcy. You can call me today if your company is experiencing difficulties and you don’t know which way to turn.

CEWS application summary

I hope you have enjoyed this CEWS application Brandon’s Blog. Hopefully, you have better insight now into the CEWS program extension.

We know that people facing financial problems need realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team.

Call us now for a free consultation.

We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

Tags Bankruptcy, canada emergency wage subsidy cews, cews, cews application, cews calculator, covid-19, eligible employer, how do I calculate my gross revenue drop for the CEWS, Ira Smith Trustee, licensed insolvency trustee, pre-COVID payroll amount, restructuring, safe harbour CEWS rule, trustee, what is the cews, which employees' wages are eligible for the CEWS, who is an eligible employer

Brandon Blog Post

CANADA CONSUMER PROPOSAL: SHOULD I IMMEDIATELY OPEN A HAPPY NEW BANK ACCOUNT

Post author By Brandon Smith
Post date November 9, 2020

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

Canada consumer proposal: Introduction

Subscribers to Brandon’s Blog know that I have written many blogs on the Canada consumer proposal process. When considering a consumer proposal, the insolvent person will many times ask me can I keep my bank account? That is a good question. But the better question is should I keep my current bank account?

In this Canada consumer proposal Brandon’s Blog, I will explain why.

Canada consumer proposal: A refresher

Before explaining why the bank account question should be the question, let me give a brief refresher of what a Canada consumer proposal is.

A Canada consumer proposal is a proceeding under the Bankruptcy and Insolvency Act (Canada). However, it is different from bankruptcy. Canada consumer proposals are available to people whose overall monetary commitments do not exceed $250,000, not including debts secured against their principal home.

Collaborating with a licensed insolvency trustee (Trustee) acting as the Administrator of the Canada consumer proposal, you make it to:

Pay your creditors a portion of what you owe them over a particular duration not surpassing 60 months.
Increase the time you need to work out those financial obligations.
Or a mix of both.

Payments are made to the Trustee, and the Trustee utilizes that money to pay each of your creditors their pro-rata share. The Canada consumer proposal shall be finished within 5 years from the day of filing. Also, the Canada consumer proposal must give the insolvent person’s creditors a better return than they would get under the person’s bankruptcy.

**When is a Canada consumer proposal appropriate?**

To figure out if a Canada consumer proposal, or a different option, is the ideal selection for you, set up a meeting with a Trustee to discuss your individual circumstances. The Trustee will evaluate your financial scenario and clarify the advantages and disadvantages of the various choices that are appropriate for your circumstances. If you choose to submit a consumer proposal, the Trustee will deal with you to establish a plan that helps you fully discharge your debts.

**What happens when you file a Canada consumer proposal?**

The Trustee will file the Canada consumer proposal with the Office of the Superintendent of Bankruptcy (OSB). Once your proposal is filed, you quit paying directly to your unsecured creditors. On top of that, if your creditors are garnisheeing your wages or bank account, or have begun legal action against you, these actions are stopped on the filing of the proposal.

The Trustee submits the Canada consumer proposal to your creditors. The proposal will include a report on your personal scenario as well as the root causes of your economic difficulties.

Creditors then have 45 days to either approve or deny the proposal. They can likewise do this either before or at a meeting of creditors if one needs to be held. A meeting of creditors is held if one is requested by enough unsecured creditors who in total are owed at the very least 25% of the overall value of the proven claims.

A meeting request needs to be made by the creditors within 45 days of the declaration of the proposal. The OSB can request the Trustee to call a meeting of creditors any time within that very same period.

The meeting of creditors needs to be held within 21 days after being called. At the meeting, the creditors vote to either approve or refuse the proposal. If no meeting of creditors is asked for within the 45 days of the filing of the Canada consumer proposal, the proposal will be considered to have been accepted by the creditors regardless of any objections received by the Trustee.

Keeping your bank account and other assets in a Canada consumer proposal

A Canada consumer proposal is an approach that is frequently utilized as an option to bankruptcy. It provides several benefits. A consumer proposal permits you to:

Pay an amount of cash every month you can afford to fully extinguish your debts based on your budget.
Pay back just a portion of your debts but get rid of them all.
Pay off your financial debts on an interest-free basis over 60 months (or less if you wish).
Keep all your assets that you can afford to keep.

The ability to keep your assets is the main feature that distinguishes a Canada consumer proposal from bankruptcy.

Canada Consumer Proposal: Who can freeze your bank account in Canada?

Having a frozen bank account is definitely discouraging as well as stressful. Freezing up an account is a tool that is frequently used to get your attention by those you owe money to. This is specifically true if various other methods of getting you to react and get a payment plan into place have actually not worked yet.

When your bank accounts are frozen, you are incapable to utilize the cash you have or move money from one of your accounts to another. As well, when your account is frozen, your bank will not honour any cheques written on the account when they hit your bank for clearing. This is regardless of whether the cheques were written before or after the account freeze. Frozen means frozen!

As a result of the stress and anxiety that a frozen bank account can place on your finances and life, it is necessary to understand who can freeze your account, why somebody might freeze your account, and also how you can get your account unfrozen.

Normally, only parties that you owe money to have the opportunity to freeze your bank account. Canada Revenue Agency (CRA) and the bank where your account is maintained, have more power over you when it concerns recovering debts via freezing accounts as opposed to unsecured creditors.

There are three generally three groups of financial institutions that could potentially freeze your account if you owe them money:

CRA – If you owe money to CRA and do not either pay off their demand or enter into a payment plan, they can freeze your bank account. They can issue a third party demand to your bank to freeze all accounts that you maintain with that bank. The bank will collect all available funds and send it to CRA while maintaining the freeze until CRA tells them they are fully repaid and the freeze can be lifted. CRA has significant powers that they can use without too much delay.
The bank where your accounts are – If you owe money to the bank where your accounts are, then your bank can freeze your accounts. It is a standard term of all credit card and loan documents that if you owe the bank money and are in breach of your credit card or loan agreements, the bank has the right to offset any positive cash balances on deposit with the bank against your debts to the same bank. So it is easy for your bank to turn your account to frozen and take your money.
Execution creditors – An unsecured creditor to who you owe money, can go to court and sue you for the amount owing. If you do not defend, or you defend but lose in court, the creditor then holds a judgment against you. They are now an execution creditor. They can then examine you to understand what assets you own and where they are located, including your bank accounts. The execution creditor can then file a request with the Sheriff to create your frozen bank account and garnishee your bank accounts.

These are the creditors that can freeze your bank accounts.

**Why you should move your bank accounts before filing a Canada consumer proposal or a Canada bankruptcy**

Why should you move your banker account before filing a Canada consumer proposal or a Canada bankruptcy? The reason is simple. You do not want an accident to happen where a creditor is able to withdraw funds from your accounts after you have filed. There is a stay of proceedings once you file your proposal or for bankruptcy. However, mistakes happen and sometimes funds can leak out of your accounts.

How can this happen? I will explain it. Many of us provide one or more vendors that provide goods or services to us with a pre-authorized debit (PAD) arrangement so that they can remove from our account automatically the monthly payment we owe them.

When you file a Canada consumer proposal, any vendor who is fully paid is not a creditor of yours. You may not wish to continue with the service and you may very well be in a long-term contract. So, you would want to cancel the service just before filing. But if you don’t cancel the PAD, the supplier may make a mistake, or not, and continue to pull funds from your account until you cancel the PAD. To avoid this error, it is best to move your bank account before filing so that there are no further funds to withdraw.

The same is true if you owe money to the bank where your accounts are. As soon as your bank gets notice of your Canada consumer proposal filing, they may try to offset the funds in your accounts against what you owe them. This will wreck your budget immediately because you were relying on those funds to pay your necessary monthly expenses and your first proposal payment. So to avoid that calamity, you need to set up new accounts at a bank you don’t owe any money to before filing.

I always advise people to move the accounts when they are contemplating filing. Do it in advance. That planning is important because they may have funds being deposited automatically into their account. Think of your wages, salary or any government amounts deposited into your account. You need time to advise them of your new account that you want your money deposited into. You need the time to make sure that it is being done correctly.

Finally, there are now many online banking choices that offer no-fee accounts and free cheque printing. You can manage everything online, including setting up the account in the first place. These are great choices for people who need to be watching every dollar.

Canada consumer proposal summary

I hope you have enjoyed this Canada consumer proposal Brandon’s Blog. Hopefully, you have better insight now into why anyone thinking about an insolvency filing should set up new bank accounts.

We know that people facing financial problems need realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team.

Call us now for a free consultation.

We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

Tags assignment in bankruptcy, bank account, bankrkuptcy, Bankruptcy, Bankruptcy and Insolvency Act, BIA, canada consumer proposal, Canada Revenue Agency, Consumer Proposal, CRA, Ira Smith Trustee, licensed insolvency trustee, meeting of creditors, Office of the Superintendent of Bankruptcy, OSB, trustee, who can freeze your bank account in Canada

Brandon Blog Post

COMMERCIAL TENANCIES ACT ONTARIO AND THE BANKRUPT TENANT: THE COMPLETE GUIDE TO HAPPILY LOCking IN A LANDLORD’S CLAIM

Post author By Brandon Smith
Post date November 4, 2020

***Commercial Tenancies Act Ontario*: Introduction**

On October 28, 2020, the Court of Appeal For Ontario clarified the interplay between the Commercial Tenancies Act Ontario and the Bankruptcy and Insolvency Act (Canada) (BIA) when a commercial tenant in Ontario goes bankrupt.

In this Brandon’s Blog, I describe what the appellate court decided in the 7636156 Canada Inc. (Re), 2020 ONCA 681 (CanLII) case. I also discuss what it means for commercial landlords when one of its tenants goes bankrupt and what the relationship is between the Commercial Tenancies Act Ontario and the BIA.

***Commercial Tenancies Act Ontario*: The facts**

The facts were not in dispute. On May 1, 2018, the corporate tenant filed for bankruptcy and the Trustee was appointed. On July 23, 2018, the Trustee disclaimed the lease on the commercial premises.

One of the schedules for the commercial lease required the tenant to lodge a letter of credit (LOC) in the amount of $2.5 million in favour of the landlord. The LOC was to have an initial term of one year, renewed each year on an automated basis until 60 days after the expiry of the lease’s term. It was stipulated that the LOC is to continue to stand as protection for the landlord in case the tenant ended up being bankrupt.

According to the lease, the tenant provided the LOC. It was an irrevocable standby LOC issued by The Bank Of Nova Scotia (BNS) for the $2.5 million amount in favour of the landlord. The LOC had been renewed annually before the date of bankruptcy.

To get the LOC, the tenant put up money collateral in the amount of $2.5 million to BNS which was invested in a BNS GIC. BNS took security against the company and registered a financing statement under the Personal Property Security Act, R.S.O. 1990, c. P.10. The security was good and valid as against the Trustee. The Trustee was in agreement that the security was valid.

***Commercial Tenancies Act Ontario*: The landlord draws against the LOC**

As of the bankruptcy date, there were no arrears of rent owing under the lease. Since the commercial tenant was bankrupt, the landlord made 3 claims on the LOC. These three claims totalled the full $2.5 million LOC value.

The initial draw, in the amount of $207,732.28, was made on May 16, 2018, before the Trustee disclaimed its interest in the commercial lease. Under the Commercial Tenancies Act Ontario, the Trustee has the right to occupy the premises for 3 months from the date of bankruptcy, if it wishes. By the end of the 3 months, whether the Trustee occupied or not, it must either disclaim its interest in the lease or adopt it and assign it to a purchaser.

The opportunity to sell the lease would happen if the rented commercial premises are in a sought after location and the lease has value in it. A lease can have value if it is at a rental rate below the market rent at the date of bankruptcy.

The 2nd draw, in the amount of $1,709,768.40, occurred on December 4, 2018. The 3rd claim against the LOC, in the amount of $582,499.32, was made on April 2, 2019.

The LOC draws covered the losses asserted by the landlord as follows:

$207,732.28 being the rent for May 2018;
$1,621,160.72 for rent for the months of August 2018 to April 2019, inclusive;
$368,479 for the unamortized cost for the landlord allowance as included in the lease, inclusive of interest; and
$302,628 for restoring the premises, as allowed for in the lease.

In support of each demand against the LOC, the landlord gave BNS the required certificate verifying the debt of the tenant under the lease. The landlord was the beneficiary under the LOC for the debt of the tenant, for which repayment was demanded from the tenant and not paid.

BNS accepted the landlord’s draw claims under the LOC and paid the complete amount of the LOC to the landlord. BNS never asked the landlord to return the funds paid.

The landlord believed that it was entitled to the funds under the lease drawn up in accordance with the Commercial Tenancies Act Ontario. BNS also believed that the landlord fulfilled its requirements to receive payment under the LOC from BNS.

***Commercial Tenancies Act Ontario*: The landlord’s proof of claim**

The landlord knew how to complete form 31 proof of claim and filed it with the Trustee. The landlord filed for a preferred claim in the amount of $623,196.84. The preferred claim was for 3 months’ accelerated rent: May, June, and July 2018. The landlord’s proof of claim also attached a schedule showing the calculations.

In Ontario, a landlord’s preferred claim for rent in case of a commercial tenant’s bankruptcy is limited: a maximum of 3 months’ pre-bankruptcy arrears as well as for accelerated rent, a 3-month post-bankruptcy claim.

The right to accelerated rent must be stipulated in the lease. Further, the landlord’s entire preferred claim is limited to the value of the bankrupt company’s property on the premises, after the claims of trust claimants or secured creditors.

All these rights are laid out in the Commercial Tenancies Act Ontario.

***Commercial Tenancies Act Ontario*: The Trustee’s disallowance of the landlord’s proof of claim**

The Trustee disallowed the landlord’s proof of claim, stating that the landlord’s preferred claim for three months’ accelerated rent had been paid by the landlord’s draws against the LOC.

The disallowance also stated that:

the funds used to pay the landlord from the LOC originated from funds that came from the bankrupt tenant;
the LOC was to be reduced prior to the date of bankruptcy; and
the landlord did not include proper support for its case for further damages in regard to the tenant’s obligations under the commercial lease.

The Trustee’s position that the LOC should have been reduced in amount is not important for the purpose of this Brandon’s Blog. I won’t spend any time on it other than to tell you that the court did not agree with the Trustee’s position.

***Commercial Tenancies Act Ontario*: The landlord appeals**

The landlord appealed the disallowance to the Registrar in Bankruptcy. The Registrar permitted the landlord’s appeal partly. She held that considering that the landlord had drawn on the LOC for the May 2018 rent, the Trustee appropriately disallowed the preferred claim for the month of May.

However, she further determined that the landlord was correct in its accelerated rent claim for the other two months. The landlord could look for payment from the bankruptcy estate or from the LOC. According to the Registrar, the Trustee therefore incorrectly refused the preferred claim for those other two months.

***Commercial Tenancies Act Ontario*: The Trustee’s motion to a judge**

The Trustee wasn’t finished debating about the landlord’s rights to claim against the entire LOC given the Trustee’s disclaimer of the lease, the Commercial Tenancies Act Ontario and the BIA. The Trustee made a motion to the court to determine what amount from the LOC the landlord was entitled to. The Trustee’s position was that the landlord was not entitled to the full amount of the LOC. Since the security for the LOC was funding from the company, any excess not required by BNS should be paid to the Trustee.

The parties’ positions that they laid out in their respective materials were largely what was already before the Master. The motion judge concluded that the landlord was only entitled to make use of the LOC for the 3 months’ accelerated rent.

The judge’s reasoning was:

a disclaimer of the lease by a trustee in bankruptcy is the same as a voluntary abandonment of the lease by the occupant under the Commercial Tenancies Act Ontario with the consent of the landlord. This snuffs out all obligations of the tenant under the commercial lease;

he turned down the landlord’s submissions that the independent obligation of BNS to it under the LOC meant that the funds coming from the LOC were not the property of the bankrupt and therefore not payable to the Trustee;

that upon the disclaimer of a lease by a Trustee, a bankrupt commercial tenant does not owe any amounts to the landlord. Therefore, the landlord cannot make use of the LOC for any claim other than the 3 months of rent arrears and the 3 months of accelerated rent; and

that the obligation of BNS, under the LOC, to make payment to the landlord beneficiary is limited to the amount owing by the commercial tenant under the lease. As he ruled that from the disclaimer the tenant’s only obligation was for the rent arrears and the accelerated rent, therefore, the landlord could not claim any other amounts against the LOC.

***Commercial Tenancies Act Ontario*: The landlord appeals to the Court of Appeal For Ontario**

The question before the appellate court that I want to discuss is, did the judge err in holding that, upon the disclaimer of the lease by the Trustee, the landlord was not qualified to make use of the LOC other than for the amount of its preferred claim?

The decision of the Court of Appeal for Ontario in considering this case and the interplay between the BIA and the Commercial Tenancies Act Ontario clarified exactly what it means when a Trustee issues a disclaimer of lease and what the contractual relationship around the LOC means.

The Trustee argued that when it disclaimed the lease, the landlord was thereupon stopped from making use of the LOC for any amount other than the amount of its preferred claim. The Trustee contended that such a concept of insolvency legislation overrides the autonomy principle for a LOC and therefore limits the lawful amount the landlord could draw.

The Court of Appeal For Ontario made certain findings relating to a disclaimer of lease by a Trustee as follows:

The disclaimer under the Commercial Tenancies Act Ontario is for the sole benefit of the bankrupt commercial tenant.
While a disclaimer operates to finish the bankrupt tenant’s responsibilities under the lease, the disclaimer cannot be interpreted to be a consensual surrender for all purposes (emphasis added).
A Trustee’s disclaimer of a bankrupt tenant’s lease ends the legal rights of the landlord against the bankrupt tenant’s estate relative to the unexpired term of the lease, aside from the three months’ accelerated rent claim under the Commercial Tenancies Act Ontario and the BIA.

***Commercial Tenancies Act Ontario*: The landlord has a LOC on things**

The appellate court recognized that the ability of the landlord to rely upon the LOC for more than just its preferred claim depends on the wording of the lease. In this case, the lease stated that the LOC functions as safety and security for indemnification of the landlord for losses:

“resulting from any termination, surrender, disclaimer or repudiation of this lease … in connection with any insolvency and bankruptcy or otherwise” and that the Landlord’s rights in respect of the LOC were not affected by the disclaimer of the Lease in any bankruptcy proceeding but would “continue with respect to the periods prior thereto and thereafter as if the Lease had not been surrendered, disclaimed, repudiated or terminated.”

Further, one of the terms of the LOC was that it will not be released, discharged or affected by the bankruptcy of the commercial tenant or the disclaimer of the lease.

The appellate court also went on to state that the motion judge’s decision runs counter to a standard principle relevant to LOCs. That is that providing financial institutions, such as BNS, have an independent responsibility to make a settlement to the beneficiary. The LOC is a contract between BNS and the landlord. It is regulated by the principle of the freedom or autonomy of LOCs, not by the BIA or the Commercial Tenancies Act Ontario.

Under the freedom principle, the issuer needs to pay the beneficiary upon appropriate qualification, subject to the minimal exemption for fraud which was not found in this case.

So with a properly worded lease and a properly worded LOC as security, the landlord can call on the LOC for all claims against the bankrupt commercial tenant after a Trustee disclaims its interest in the lease. With these facts, the landlord was successful in being able to claim everything it was owed, up to the limit of the LOC.

Commercial Tenancies Act Ontario summary

I hope you have enjoyed this Commercial Tenancies Act Ontario Brandon’s Blog. A sick insolvent company’s business can be saved by a debt restructuring.

We know that people facing financial problems need a realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team.

Call us now for a free consultation.

We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

Tags 7636156 Canada Inc., Bank of Nova Scotia, bankrkuptcy and insolvency act, bankrupt commercial tenant, bankrupt tenant, BIA, bns, commercial tenancies act, commercial tenancies act ontario, Court of Appeal for Ontario, disclaimer of lease, form 31 proof of claim, how to complete form 31 proof of claim, Ira Smith Trustee, letter of credit, personal property security act, registrar in bankruptcy, trustee

Brandon Blog Post

CERB UPDATE: CERB YOUR ENTHUSIASM AS INTENSE CERB CRA AUDITS BEGIN

Post author By Brandon Smith
Post date October 28, 2020

CERB update

CERB update introduction

The Canada Emergency Response Benefit (CERB). CERB update: The Canada Revenue Agency (CRA) has started audits to assess payments made under certain of Canada’s COVID-19 Economic Response Plan. After being slowed down by the coronavirus, auditors are now getting back to their complete workload.

This Brandon’s Blog will concentrate on the Government of Canada CERB update.

CERB update: Who can qualify for CERB?

As a refresher, there were eligibility criteria to be eligible for the $2,000 CERB payment by applying to the CRA, you must have met certain conditions during the period you are applying for. The Government of Canada stipulated the eligibility criteria to be:

You did not look for, or get, CERB or Employment Insurance benefits from Service Canada for the exact same qualification period.
You did not stop your work willingly on your own.
You live in Canada and also are at least 15 years old.
You earned a minimum of $5,000 (before taxes) in the preceding 12 months, or in 2019, from 1 or more of:
- employment earnings
- self-employment income
- provincial benefit payments connected to pregnancy or parental leave

1of:
- Your work hrs have actually been minimized because of COVID-19.
- You have actually quit or will certainly quit working as a result of COVID 19.
- You are incapable to work as a result of COVID-19, for example, because you are looking after a person.
- You have actually been paid EI benefits for at the very least one week of benefits since December 29, 2019, and finished your entitlement to such benefits.

One of:.
- If you are applying for the first time: You have actually stopped or will stop working, or you are working minimized hours due to the coronavirus. Also, you don’t expect to earn over $1,000 in gross employment or self-employment revenue for at least 14 days straight during the 4-week duration.
- If you are looking for a subsequent period: You are still not employed or self-employed, or you are doing reduced hours due to COVID-19. You don’t expect to make over $1,000 in gross employment or self-employment revenue, and you anticipate this to continue during the whole 4-week duration.

One CERB update is that the CERB program has now ended. The CRA is continuing to accept and pay retroactive applications until December 2, 2020.

CERB update: What are the CERB pay periods?

You will see in the above CERB update description, it talks about qualifying for different periods. What were the CERB pay periods? The CERB was available from March 15 to September 27, 2020, inclusive.

The Government of Canada paid out $2,000 per four-week duration for approximately 28 weeks, backdated to March 15. CERB payments were paid out in the gross amount. No deductions for income tax, Canada Pension Plan or Employment Insurance were taken off. CERB is taxable income that must be reported on your 2020 income tax return.

As long as you did not make more than $1,000 for any 4-week period applied for, there was not any CERB claw-back.

So for this CERB update, keep 3 things in mind because it will be important from a CRA audit perspective:

You could apply for CERB through either CRA or Service Canada, but not both.
There were certain eligibility requirements regarding anyone who applied having reduced work hours or no work due to the coronavirus.
You were only allowed to earn $1,000 for any CERB pay period. If you earned more, you were not entitled to apply for the CERB for that pay period or receive payment of CERB.

CERB update: What is replacing CERB?

Now that the CERB has ended, the Government of Canada has created some new benefit programs. These new CERB update programs are retroactive from September 27, 2020, to September 25, 2021, inclusive.

Canada Recovery Benefit (CRB)

The CRB will provide qualified workers with $500 weekly (taxable, and this time tax is deducted) for as much as 26 weeks for those who are not working for an employer or independently as a result of COVID-19.

To qualify, you also must not be eligible for Employment Insurance or had employment/self-employment revenue minimized by a minimum of 50% as a result of the coronavirus.

Canada Recovery Caregiving Benefit (CRCB)

The CRCB will supply $500 each week (taxed, tax deducted from the gross weekly amount) for up to 26 weeks per house. It is for workers incapable of working at least 50% of the week since they must look after a youngster under the age of 12 or a member of the family. The allowed for reasons are since schools, day-cares or treatment centres are closed due to COVID-19, or due to the fact that the youngster or member of the family is sick and/or required to quarantine or is at a high threat of serious health ramifications as a result of COVID-19.

Canada Recovery Sickness Benefit (CRSB)

The CRSB will provide $500 weekly (taxable, and this time tax is deducted) for a maximum of 2 weeks, for workers that are not able to work at the very least 50% of the week because:

they acquired COVID-19;
self-isolated for factors associated with COVID-19; or
have hidden problems, are undertaking therapies or have actually gotten various other sicknesses that, in the opinion of a doctor, nurse practitioner, government or public health authority, would make them much more prone to the coronavirus.

Employment Insurance

If you received the CERB by applying to Service Canada after you got your last CERB amount, continue completing records for Service Canada. For the most part, you do not require to make a special application for EI benefits.

Service Canada will automatically examine your data and your Record of Employment. They will review your case and let you know if you qualify for EI.

If you got the CERB by applying to CRA, you are required to first get all your CERB payments before applying for EI benefits. You can apply after the end of your last CERB eligibility period for the CERB update benefits.

CERB update: Can CRA audit CERB?

Definitely. They will be looking for two things. People who made an honest mistake in their application and those who committed out and out fraud.

The CRA isn’t going to fool around with these CERB payments. If you made a mistake on your application and therefore got more money than you should have, the CRA will want those funds back.

The Canadian federal government has spent billions on the CERB program. That’s a lot of money calling for accountability. If you do not think the CRA will audit applications, you may want to rethink just how easy auditing is with the CRA computers.

Taxpayers who inaccurately claimed CERB benefits by mistake may just be required to pay back the incorrectly claimed amount. But here is the CERB update – there will be, if there aren’t already, additional procedures to successfully penalize taxpayers who purposefully claimed COVID-19 subsidies they did not qualify for.

These actions will include penalties and interest and possibly prosecution for the, especially more grievous tax fraudsters. COVID-19 benefits or subsidies have come at a significant cost to the government. They will be keeping an eye out for those attempting to abuse the system.

The very best security against flunking an audit where the CRA chooses you is to have taken simple preventative steps. The simplest way to come out clean from a CERB update audit was to make sure that you qualify before applying for the money!

CERB update: What if you can’t (re) pay?

There are going to be three kinds of people that may very well have trouble paying money to the government. People went on the CERB because of very low, or no, employment earnings. Nobody got rich from the CERB. So people are now flush with cash after having received CERB payments.

The first type is those that made an honest error in their applications. If caught through an audit, they may very well not have the funds to repay.

The second type is those that committed fraud in getting the CERB. Perhaps they never qualified but falsely applied. Or, perhaps on the surface they did qualify, and then while receiving the CERB were able to pick up work and got paid in cash.

The third type will be those people who did everything right and needed all the CERB to put food on the table and make their rent or mortgage payment. Remember that CERB is taxable and was paid at the gross amount. No income tax was deducted at the source. So, next winter or spring, when filling out their 2020 income tax return, they may have a nasty surprise. That nasty CERB update surprise will be income tax payable for which they do not have the cash to make the tax payment they are required to.

So now they will have income tax debt to add to credit card debt or other types of debt. These people will need income tax debt relief. CRA will definitely contact you if you do not pay.

If you find that you will be in need of a debt settlement plan to deal with your debts, including any income tax debt, contact a licensed insolvency trustee (Trustee).

A Trustee will review your situation and make specific recommendations on how you can settle your debts. Our aim is always to help people avoid bankruptcy. We have helped many people who have received bad news from a CRA audit. We can also help anyone with a CERB update problem.

CERB update: Summary

I hope you have enjoyed this CERB update Brandon’s Blog. Hopefully, you have better insight now into the fact that a sick insolvent company’s business can be saved by doing a sale of its assets to a healthy organization.

We know that people facing financial problems need a realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team.

Call us now for a free consultation.

We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

Tags buying real estate from a receiver, can cra audit cerb, Canada Emergency Response Benefit, Canada Revenue Agency, cerb, cerb update, coronavirus, COVID-19 Economic Response Plan, CRA, debt settlement plan, ei, employment insurance, Ira Smith Trustee, Service Canada, trustee, what are the cerb pay periods, what is replacing cerb, who can qualify for cerb

Brandon Blog Post

BANKRUPTCY MEANING: OUR POWER LIST OF DUTIES OF THE BANKRUPT AND OTHERS

Post author By Brandon Smith
Post date October 19, 2020

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

Bankruptcy meaning introduction

I recently read a decision of the Supreme Court of Nova Scotia in Bankruptcy and Insolvency. It was an interesting decision about a bankrupt who essentially absented himself and became AWOL after filing for bankruptcy. I will describe the case below. However, it did get me thinking that perhaps Brandon’s Blog about the duties of the various stakeholders in the bankruptcy process would be of interest. Put another way, if everyone does not do their part, what is the bankruptcy meaning?

The Merriam-Webster dictionary provides a bankruptcy meaning definition as:

“1a: a debtor (such as an individual or an organization) whose property is subject to voluntary or involuntary administration under the bankruptcy laws for the benefit of the debtor’s creditors

b: a person who becomes insolvent

2: a person who is completely lacking in a particular desirable quality or attribute

a moral bankrupt”

In this bankruptcy meaning Brandon’s Blog, I will focus on the first definition, as that is the one I am qualified to answer.

Bankruptcy meaning: The stakeholders

There are various players in the bankruptcy process. The primary ones are:

The person or company, the debtor, who is now bankrupt.
The licensed insolvency trustee (formerly called a trustee in bankruptcy) (Trustee) who administers the bankruptcy process.
The creditors who are owed money.
The Office of the Superintendent of Bankruptcy (Canada) (OSB) who regulates and supervises all administrations under the Bankruptcy and Insolvency Act (Canada) (BIA) in Canada.

I will leave the duties of the bankrupt until the end. That description in the bankruptcy meaning list will flow nicely into my description of the Nova Scotia bankruptcy court case.

Bankruptcy meaning: Duties of the Trustee

There are of course various statutory steps that a Trustee must take in any bankruptcy administration. It is also obvious that the Trustee must perform those steps properly.

In addition, the OSB has established a Code of Ethics for Trustees. The Code of Ethics for Trustees is an integral part of the BIA General Rules.

The Code establishes a standard for services to be provided by Trustees. It addresses:

the information that Trustees must provide to creditors;
the treatment of funds entrusted to Trustees;
conflicts of interest; and
the sale and purchase of the property of a business or individual who has filed for bankruptcy.

It also contains standards for advertising by Trustees and for maintaining the good reputation of the Trustee community.

Rules 34 through 53 inclusive of the BIA General Rules contain what the bankruptcy meaning of the Code of Ethics for Trustees is. You can read them by clicking on this Code of Ethics for Trustees link.

There are also various Directives issued by the OSB that guide the statutory steps that a Trustee must take. Examples of these Directives are:

Directive No. 1R2 Counselling in Insolvency Matters – This Directive deals with how the Trustee should conduct the required financial counselling sessions.
Directive No. 4R Delegation of Tasks – A Directive about when certain Trustee or administrator tasks can be delegated to others.
Directive No. 5R4 – Estate Funds and Banking – How a Trustee must handle estate trust funds.
Directive No. 6R3 – Assessment of an Individual Debtor – The steps to be taken in assessing the financial situation of the debtor, explaining the various options available and what bankruptcy duties are.
Directive No. 11R – Surplus Income – When assessing the financial situation of the debtor who becomes bankrupt, how to calculate the surplus income payments obligation of the bankrupt person.
Directive No. 17 – Retention of Documents by the Trustee – This one is self-explanatory.

These are but a handful of the Directives issued by the OSB that Trustees must follow.

Bankruptcy meaning: Duties of creditors

In the bankruptcy meaning context, creditors have certain duties which can better be described as rights. Creditors are always invited and welcome to participate in the bankruptcy process. It begins with filing a Form 31 Proof of Claim as evidence of the debt owed to them by the bankrupt.

Once they file their claim in the bankruptcy estate, the creditor now has the status to fully participate in the administration of the bankruptcy estate. The filing of the proof of claim allows the creditor to vote, either in person or by proxy. They now have the authority to participate and vote at the First Meeting of Creditors. They can vote for the appointment of Inspectors.

A creditor may notify the Trustee of any kind of inappropriate activities or transactions on the part of the bankrupt that hurt the interests of the creditors. For instance, a creditor may have knowledge of assets or deals that the bankrupt failed to declare. In many cases, creditors who have dealt with the debtor over many years will have better information than the Trustee initially can gain. A Trustee always welcomes this kind of assistance from creditors. If a creditor thinks there is misconduct or illegal activities on the part of the insolvent the creditor should advise the Trustee and the OSB.

A creditor can oppose a personal bankrupt’s discharge from bankruptcy. The grounds for opposing are set out in section 173 of the BIA. The creditor must inform the Trustee and the bankrupt of the opposition and the reasons in the proper form.

By filing the opposition, the bankrupt’s discharge hearing must now go to court to be adjudicated. The Trustee cannot provide the bankrupt with an automatic discharge, even if they have fulfilled all of their duties. The creditor will provide its evidence to the court to support the opposition. The Trustee must file a report on the conduct of the bankrupt both before and during the bankruptcy administration.

Based on all the evidence, the court will then decide what kind of discharge the personal bankrupt is entitled to; absolute discharge, conditional, and/or a suspended discharge. In certain cases, the court may issue a refusal to the bankrupt. That is what happened in the Nova Scotia case I will shortly describe.

This is what the bankruptcy meaning for the rights and duties of creditors are.

bankruptcy meaning

Bankruptcy meaning: Advising the bankrupt or the officer of the bankrupt corporation of duties

The Trustee must explain to the bankrupt or the officer of a bankrupt company, his/her responsibilities. The responsibilities are found in sections 158 and 159 of the BIA. The Trustee must also explain the bankruptcy offences. Those are outlined in sections 198, 199, 200, and 204 of the BIA.

The minimum level of information a Trustee can give to the bankrupt or the officer of a bankrupt corporation is (as applicable):

information on bankruptcy for consumer debtors;

the above essential passages from the Act;

responsibilities of a bankrupt or the officer of the bankrupt company; and

debtor financial information (type and guide).

In all cases, the bankrupt or the officer of the bankrupt company has to be served with a copy of the relevant sections of the BIA. The Trustee must also get an acknowledgment from the bankrupt, or officer of the bankrupt corporation, that she or he has actually been provided with, and understands his/her obligations. The signoff by the bankrupt/the company’s officer needs to be kept on file by the Trustee.

If a bankrupt or officer of the bankrupt company declines to sign, regardless of being offered, Trustees have to keep in their file details of the refusal (i.e. evidence of service as well as details as to the refusal).

Bankruptcy meaning: The duties of the bankrupt or the officer of the bankrupt corporation

The focus of the BIA is for personal bankrupt, to return the honest but unfortunate debtor back to society free of his or her debts. The premise is that the bankrupt, or the officer of the bankrupt corporation, will fulfill their duties with integrity and honesty. The duties are outlined in the OSB’s Directive No. 26. If you are interested, you can read them HERE.

But what if they don’t? What if the individual bankrupt does not fulfill all of their duties and essentially absents themself from the process once they have filed their assignment in bankruptcy. In that case, the Trustee has an obligation to oppose the bankrupt’s application for discharge and bring the matter to court. What is the bankruptcy meaning in such a case?

That is what happened in the Nova Scotia case that I will tell you about now. I believe it is very instructive.

Bankruptcy meaning: Why a bankrupt’s discharge hearing may come to court

The substantial majority of bankrupts execute their obligations under the BIA. As a result, only a minority of bankruptcies end up in court. Mr. Jewkes’ case is one of them.

The usual factors for a bankruptcy case needing to involve the court include:

outstanding financial disclosure; and/or
surplus income payment obligations.

Discharges for third or more bankruptcy filings also need to come to court for a discharge hearing. Occasionally, a creditor objects to the bankrupt’s discharge. All matters are listened to on their merits and a decision is rendered as appropriate for the particular bankruptcy meaning.

Sometimes, there has actually been a lack of action in a bankruptcy file due to a bankrupt’s own difficulties. She or he may have a mental or physical illness. They may have not have been able to communicate with the Trustee for completely valid reasons. They might have genuinely misunderstood the obligations incumbent upon them. It is the responsibility of the Trustee and, that falling short, the court, to set things straight.

And then there is Mr. Jewkes. None of the factors where the Trustee or the court could excuse him for a simple oversight or mistake which can easily be corrected were present.

Bankruptcy meaning: The Nova Scotia case

Mr. Jewkes filed an assignment in bankruptcy in 2019. He cited “relationship breakdown” as the reason for his bankruptcy. This was his first bankruptcy. He showed income on filing to put him just below the OSB’s guidelines for paying surplus income. His assets were minimal, although he did identify the sale of his old vehicle and a mobile home with little or no equity just prior to his bankruptcy.

His creditors were the normal run of the mill kind of creditors in consumer files:

credit cards;
an unsecured line of credit;
a collection agency was after him, possibly for another credit card debt;
two mobile phone accounts; and
a utility company.

And that is where it ended. He has actually not provided the required income and expense information. He has not offered the Trustee with details required to prepare and file his pre-bankruptcy or post-bankruptcy income tax returns. He has not gone to his two mandatory credit counselling sessions. He has not complied with his payment arrangement for the Trustee’s fee. He has not given corroboration or accounting for his pre-bankruptcy vehicle and mobile home sales. His discharge hearing was held in August 2020. He did not show up for his own discharge hearing either by video or telephone.

The Trustee requested that the hearing be adjourned. The Registrar in bankruptcy court was not prepared to use more court resources and he denied the Trustee’s request.

Rather, he had enough and let his feelings be known. The bankrupt got his stay of proceedings. Notice of the bankruptcy was mailed out to the creditors. The collection calls from creditors or collection agencies stopped.

Garnishments, if such existed, ended. After that, this bankrupt went on with life and took the attitude that everyone else can take a hike.

Bankruptcy meaning: The Registrar’s decision

The Registrar wanted to send a bankruptcy meaning message that this kind of behaviour will not be tolerated. The Registrar decided that this bankruptcy meaning message will be sent by the:

bankrupt’s application for discharge being refused;
bankrupt having leave to apply on his own for discharge once he has fulfilled all of his duties;
Trustee finishing the administration and applying for its discharge forthwith;
Trustee being directed, upon its discharge, to write to all known creditors advising of the Trustee’s discharge and that the effect under the BIA is that the stay of proceedings protecting the bankrupt has ended and all creditors are free to begin or resume collection action against him.

This fourth point is not normal. It is obvious that the Registrar was fed up with this bankrupt and others who feel they can avoid performing their duties. The Registrar wanted to send a strong bankruptcy meaning message.

bankruptcy meaning

Bankruptcy meaning summary

I hope you have enjoyed this bankruptcy meaning Brandon’s Blog. Hopefully, you have better insight now into the fact that a sick insolvent company’s business can be saved by doing a sale of its assets to a healthy organization.

We know that people facing financial problems need a realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team.

Call us now for a free consultation.

We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

Tags assignment in bankruptcy, bankrptcy, bankrptcy and insolvency act, bankruptcy meaning, bankruptcy process, BIA, code of ethics for trustees, duties of the bankrupt, financial counselling, Ira Smith Trustee, licensed insolvency trustee, Office of the Superintendent of Bankruptcy, officer of the bankrupt corporation, OSB, trustee, trustee in bankruptcy

Brandon Blog Post

INSOLVENCY AND BANKRUPTCY ACT: ANTI-DEPRIVATION RULE COMPLETELY VALID IN INSOLVENCY

Post author By Brandon Smith
Post date October 12, 2020

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

Insolvency and bankruptcy act introduction

On October 2, 2020, the Supreme Court of Canada (SCC) rendered its decision in Chandos Construction Ltd. v. Deloitte Restructuring Inc., 2020 SCC 25 (Chandos decision). This decision upheld the idea that the anti-deprivation rule is completely valid when it pertains to both personal and business insolvency and bankruptcy act cases.

In this Brandon’s Blog, I describe the Chandos case and what it stands for.

**The definition of the word deprive and the insolvency and bankruptcy act context**

The Merriam-Webster dictionary states the definition of the word deprive is:

1: to take something away from; and
: to withhold something from.

In the Chandos Construction Ltd. (Chandos) insolvency and bankruptcy act case, the SCC was asked to rule on contract clauses that if upheld, would deprive the bankruptcy estate and therefore the unsecured creditors of money that would otherwise be available. This deprivation of funds, which may make total sense as between contracting parties, is not enforceable in bankruptcy.

**The anti-deprivation rule in the Canadian insolvency and bankruptcy act matters**

Neither the Bankruptcy and Insolvency Act (Canada) (BIA) nor the Companies’ Creditors Arrangement Act (CCAA) stops non-defaulting parties to a contract, from relying upon agreement provisions that create an inevitable result when a debtor declares bankruptcy. The common law becomes pertinent in these situations.

Canadian courts still refer to these anti-deprivation provisions as “ipso facto” provisions and also this idea as the fraud upon the bankruptcy law concept. In more current times, this has been described as the anti-deprivation rule.

The SCC has recognized the anti-deprivation rule since the 1890s. However, the contemporary application of this principle in Canadian law greatly originates from an Ontario court decision in 1995 – Canadian Imperial Bank of Commerce v. Bramalea Inc., 1995 CanLII 7262 (ON SC) (Bramalea decision).

This is a decision from the Ontario Court of Justice (General Division). Canadian courts have thought about and decided upon the anti-deprivation rule in many insolvency and bankruptcy act cases since then.

**The Bramalea case and its relevance of insolvency and bankruptcy act matters**

Luckily for me, Ira Smith was the receiver responsible for the file that involved the Bramalea decision. So, I have a bird’s-eye view of that case which started it all leading to the SCC Chandos decision.

In the Bramalea insolvency and bankruptcy act case, a group of companies, including Bramalea Inc. (Bramalea) was in a partnership agreement to develop and operate a shopping mall in Markham, Ontario called Shoppes on Steeles. In 1995, Bramalea was placed into receivership and bankruptcy. Bramalea’s partners included Sears Canada and a private real estate development company.

Amongst the different provisions of the partnership agreement was a specific provision in the contract which considers insolvency. It said that, in case of the insolvency of any of the partners, the non-insolvent partner(s) (given it does not waive the event of insolvency) can buy the interest of the financially troubled partner at the lesser of book value or fair market value.

The paradox of this case was that the large company partners at the time of the drafting of the partnership contract were concerned about what happens if the private property developer one day became insolvent? None of the partners ever believed that it would be that private company that would be the only one that was not insolvent. We all know what happened to Sears Canada!

The moving parties sought to exercise that right by serving a notification to buy the Bramalea passion at book value, approximated to be around $200,000. This was opposed by the receiver and also other stakeholders.

The receiver gave evidence that the fair market price surpassed book value by as much as $2 million to $3 million. The moving parties acknowledged that the fair market value of Bramalea’s stake in the partnership was more than book value. They did not agree with the receiver’s evidence regarding the amount of that difference. They additionally did not submit their own fair market valuation.

**The Bramalea insolvency and bankruptcy act decision**

Based on the evidence, the court took the view that the specific spread between book value and fair market value was not trivial. The court was satisfied that the distinction is greater than marginal, and enough to properly draw the interest of the receiver and the creditors.

The receiver’s position was that there is a higher principle in play and that the concern is not one of hindering the freedom of contract. Rather it was just one of whether or not that part of the partnership contract is void as being contrary to the public interest.

The receiver submitted that while the arrangement might quite possibly stand as between the contracting parties, it is void as against the receiver and also the bankruptcy trustee in the Bramalea insolvency and bankruptcy act proceedings.

The court agreed with the receiver’s position in this insolvency and bankruptcy act case. The court decided that it was clear from the provisions of the partnership agreement itself that the parties contemplated a transfer to one of the partners of the other partner’s partnership interest, only in case of insolvency, at a price less than what could be acquired for that interest on the open market.

The court specified that this stipulation made perfect sense, as between the contracting parties. It made total sense in regards to maintaining their partnership and their respective interests. Nevertheless, the court likewise specified that the clause cannot survive through the scrutiny of the “fraud on the bankruptcy law” principle.

The receiver ended up selling Bramalea’s partnership interest to the other partners for fair market value.

insolvency and bankruptcy act

**The Chandos Alberta court case and the anti-deprivation rule for insolvency and bankruptcy act matters**

Chandos was the general contractor for a condo project contracted with Capital Steel to give $1.3 million worth of steelwork. In the subcontract, Capital Steel agreed that if it became insolvent, Chandos was entitled to all costs arising from the suspension of the contract and it would forfeit 10% of the total subcontract price as an inconvenience fee. Capital Steel performed the majority of its commitments, nevertheless, it filed an assignment in bankruptcy before completing full performance.

As a result, Chandos was forced to finish the contract at an estimated expense of $22,800. Up until that point, Chandos owed Capital Steel $149,618 in outstanding invoices for the job it had performed.

Chandos relied upon the agreement and said that it was qualified to deduct its cost of finishing the job plus 10% of the total contract cost from the amount owing. Given the price of the subcontract, the 10% deduction eliminated Chandos’ balance owing plus an extra amount of $10,511. Chandos declared that gave them a provable claim in the Capital Steel insolvency and bankruptcy act case.

The Trustee’s application to the Alberta Court of Queen’s Bench

On March 6, 2017, the Trustee applied to the Alberta Court of Queen’s Bench seeking advice and directions on whether Chandos was entitled to rely on the provision in the contract or was it void pursuant to the anti-deprivation rule in common-law.

The chambers judge acknowledged that the common law anti-deprivation rule stops parties from contracting out of insolvency and bankruptcy act regulations. The judge stated that if that provision was a liquidating damages provision as opposed to a penalty, it would not violate the rule.

The chambers judge ruled that the condition was an authentic pre-estimate of costs, which imposed liquidated damages and not a penalty. He additionally held that the provision represented a bona fide commercial arrangement that did not have as its predominant objective the deprivation of Capital Steel’s property. Consequently, the chambers judge decided that Chandos can implement the clause against the Trustee.

**Trustee appeals the Chandos insolvency and bankruptcy act decision to the Court of Appeal for Alberta**

The Trustee appealed the Chandos decision to the Court of Appeal for Alberta. The appellate court reviewed the lower court decision in this insolvency and bankruptcy act case and decided that:

The chambers court properly determined the presence and application of the fraud on the bankruptcy law principle in Canada.
In describing the scope of the anti-deprivation rule, however, the chambers judge erred.
The lower court embraced the purpose-based technique set out by the Supreme Court of the United Kingdom
The appropriate technique is to check out the impact of the provision. Its purpose is a different analysis.
Chandos certainly had a genuine commercial interest it was looking to protect.
However, the clause conflicts with the BIA‘s scheme of distribution. The common law anti-deprivation rule revokes the clause and Chandos cannot count on it to defend its claim against the Trustee.

**Chandos appeals to the SCC in this insolvency and bankruptcy act anti-deprivation rule case**

One of the key goals of the insolvency and bankruptcy act law is to make certain there is a fair distribution among creditors. In order to fulfill the objective, the legislation restricts specific contractual stipulations that trigger when one of the parties goes into insolvency proceedings (ipso facto clauses).

As seen in the Bramalea situation, one of these limitations is the anti-deprivation rule. It holds that ipso facto conditions that rob the debtor’s creditors of assets they are qualified to receive in insolvency and bankruptcy act matters are void. This is likewise what the Court of Appeal for Alberta decided. Chandos appealed that decision to the SCC.

The Chandos appeal was heard on January 20, 2020. The SCC split decision was released on October 2, 2020. On the facts of Chandos, the SCC dismissed the Chandos appeal. The SCC refused to promote a contractual stipulation that the subcontractor Capital Steel waive 10 percent of the agreed price if Capital Steel became insolvent or bankrupt.

The SCC majority maintained that the test for application of the contractual provision is effects-based and not purpose-based. The SCC majority confirmed that the anti-deprivation rule stands under Canadian common law and it has not been eliminated in dismissing the appeal in this corporate insolvency and bankruptcy act case.

insolvency and bankruptcy act

Insolvency and bankruptcy act summary

I hope you have enjoyed this insolvency and bankruptcy act Brandon’s Blog. Hopefully, you have better insight now into the fact that a sick insolvent company’s business can be saved by doing a sale of its assets to a healthy organization.

We know that people facing financial problems need realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team.

Call us now for a free consultation.

We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

Tags anti-deprivation rule, Bankruptcy, bankruptcy estate, bankruptcy trustee, bramalea, Canadian Imperial Bank of Commerce v. Bramalea Inc., capital steel, chandos construction, Chandos Construction Ltd. v. Deloitte Restructuring Inc., fraud on the bankruptcy law, insolvency, insolvency and bankruptcy act, ipso-facto, ira smith team, Ira Smith Trustee, licensed insolvency trustee, receiver, trustee, unsecured creditors

Brandon Blog Post

BANKRUPTCY SURPLUS INCOME: OUR ESSENTIAL GUIDE 4 YOU

Post author By Brandon Smith
Post date October 7, 2020

Bankruptcy surplus income introduction

I have written many blogs about personal bankruptcy and consumer proposal insolvency matters over the recent past. I notice though that it has been many years since I have written about bankruptcy surplus income. I refer to it in many of my Brandon’s Blogs but have not described it in detail in quite a while.

In order to correct that situation, here I discuss the concept and application of bankruptcy surplus income in personal bankruptcy filings.

**What is bankruptcy surplus income?**

Surplus income is perhaps an inadequately worded expression. Very few individuals would certainly really feel that they have surplus income, especially when dealing with financial debt. Nonetheless, in the bankruptcy context, surplus income describes a calculation that figures out just how much cash monthly an individual must be paying into their bankruptcy estate for the benefit of their creditors.

When you file for personal bankruptcy in Canada you are able to retain most of the income that you make monthly. In order to have a practical level of living during the bankruptcy period, the Office of the Superintendent of Bankruptcy Canada (OSB) establishes a net month-to-month earnings standard.

These earnings criteria take into consideration annual inflation and are derived from information collected by Statistics Canada annually. What you pay to your licensed insolvency trustee (Trustee) into your bankruptcy estate every month is determined by these standards. They are used to decide if a bankrupt has any bankruptcy surplus income.

I have to warn you though. The practical standard of living that the OSB permits is actually the Canadian poverty line. It matters not if you reside in one of Canada’s most pricey cities or in a rural area. There are no regional modifications made. The OSB lays out the meaning and calculation in its Directive No. 11R2. Every year the OSB updates the exemption limitations.

Click on this link for the up to date bankruptcy surplus income 2020 Directive No. 11R2-2020.

What happens to a person’s wages during bankruptcy?

You are still allowed to earn money and collect your wage or salary when you apply for bankruptcy under the Bankruptcy & Insolvency Act (Canada) (BIA). As a matter of fact, lots of people apply for bankruptcy because their wages, salary, or bank account are being garnisheed or frozen either by Canada Revenue Agency (CRA) or a judgment creditor. As I have written in several Brandon’s Blogs, the filing of an assignment in bankruptcy knocks out the garnishee against your wages or salary and/or the freeze on your bank account.

Now that there is no longer a garnishee, your earnings on an after-tax basis are readily available to you. The Canadian bankruptcy process, which strives for fairness, states that your after-tax income is now available for contribution to bankruptcy surplus income. To provide you a feel for the personal exemptions permitted, on an after-tax basis, as established by the OSB, here is the 2020 table the Trustee needs to work off of:

Superintendent’s Standards – 2020

bankruptcy surplus income

How it works is that you look at the table and pick first how many persons are in your household. The next column marked “S” and “N”, is the exemption that the OSB standard that it gives your family. You can then do one of two things: (1) go across the top of the table that resembles the closest your household after-tax income (the household’s, not just yours); or (2) if you know the calculation, do the exact calculation.

bankruptcy surplus income

Bankruptcy surplus income limits for 2020 Canada

To have bankruptcy surplus income payable, your after-tax regular monthly earnings need to be $200 or greater than the limit established by the OSB. The exact computation is to add the bankrupt’s after-tax monthly earnings to the bankrupt spouse’s after-tax month-to-month revenue, and the same for anyone else in the family that is contributing their income for household expenditures.

Take that sum and deduct your allowed exemption. Then subtract the reasonably few unique extra exemptions, if appropriate:

medical expenses;
support payments
child care expenses
court-imposed fines or penalties
expenses as a condition of employment.

After that take the bankrupt’s percent of the complete household income bankruptcy surplus income which you just computed. Split that number in half which is the month-to-month surplus income that the bankrupt must pay.

So for example, take a look at the calculation below for an imaginary family of two where both spouses work and there are no extra special deductions:

Family Situation (Family unit of two)

Bankrupt’s available monthly income	$2,800
Add: Other family unit member’s available monthly income	1,000
Family unit’s available monthly income	$3,800
Minus: Superintendent’s standard for a family unit of two	2,793
Total monthly surplus income	$1,007
Family Situation Adjustment (2800 ÷ 3,800 = 73.68% $1007 × 73.68% = $741.96)	$741.96
Payment required from bankrupt ($741.95 × 50% = $370.98)	$370.98

Bankruptcy surplus income calculator

To help you better understand everything that goes into the calculation, I want to share with you a tool I use to calculate bankruptcy surplus income. I am providing you with the link to the same spreadsheet that I use to do the calculation.

Here is the link:

Bankruptcy surplus income calculator

Your income is checked by the Trustee on a month-to-month basis and is balanced out over the entire period of your bankruptcy. If you have a short-term boost in earnings, such as from a bonus or commissions, or a short-term reduction, such as a temporary layoff, this will be factored in.

**When do bankruptcy surplus income payments end?**

For a 1st time bankrupt, without surplus income, you are entitled to get an automatic discharge after 9 months. This requires that neither the Trustee nor a creditor has opposed your bankruptcy discharge. If you are a 1st time bankrupt yet you do have surplus income, then you need to make monthly bankruptcy surplus income payments for 21 months. You are then entitled to an automatic discharge if all your surplus income payments are made and there is no opposition to your discharge.

If you have actually been bankrupt before and this is your 2nd (or more) bankruptcy, you will not have the ability to obtain a discharge in 9 months. Your bankruptcy will certainly be lengthened. A 2nd + bankruptcy lasts for a minimum of 24 months. If you have surplus income, a second-time bankrupt will certainly not have the capacity to obtain a bankruptcy discharge for 36 months. The monthly bankruptcy surplus income payments must be made for the very same 36 months.

Can I file bankruptcy if I make too much money?

The test to file for bankruptcy is not how much money do you make. The test is:

are you insolvent; and
have you committed one or more acts of bankruptcy within the six months preceding the filing of an assignment in bankruptcy or the launching of an application for a bankruptcy order.

But if you do make a lot of money, and go into bankruptcy, then no doubt you will have a large bankruptcy surplus income obligation to pay to the Trustee every month. That large amount may not fit into your monthly budget. You may not be able to afford that monthly bankruptcy surplus income payment.

So what can you do? You should speak to a Trustee about filing either a consumer proposal or a Division I Part III proposal. Both are filed under the BIA. Why? Depending on your assets, a proposal may work better for you. Although your proposal would have to be a better alternative for your creditors than your bankruptcy, it gives you the advantage of terming out the monthly payments.

It may work out that for a little more, you can get up to 60 months to pay. So rather than having only 24 or 36 months to make your total payment, as the case may be, you could get 60 months to pay only a bit more. Obviously, the proposal is more gentle on your budget than a bankruptcy. It is also easier on your credit score and credit report.

Bankruptcy surplus income summary – Are you in financial trouble?

To declare personal bankruptcy is a major life event. However, it is a necessary thing to rid yourself of crippling debt. Most people who declare bankruptcy have been faced with a major life event. The main examples are illness, pay cuts, job loss, or divorce. It is not your fault. I hope this bankruptcy surplus income Brandon’s Blog has given you helpful information.

Do you have too much debt? Are you in need of financial restructuring? The financial restructuring process is complex. The Ira Smith Team understands how to do a complex restructuring. However, more importantly, we understand the needs of the entrepreneur or the person who has too much personal debt.

You are worried because you are facing significant financial challenges.
It is not your fault that you are in this situation. You have been only shown the old ways that do not work anymore. The Ira Smith Team uses new modern ways to get you out of your debt troubles while avoiding bankruptcy. We can get you debt relief freedom.

We know that people facing financial problems need realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team. That is why we can develop a restructuring process as unique as the financial problems and pain you are facing. If any of this sounds familiar to you and you are serious about finding a solution, contact the Ira Smith Trustee & Receiver Inc. team today.
Call us now for a free consultation.

We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting. We hope that you and your family are safe and healthy.

Tags assignment in bankruptcy, automatic discharge, Bankruptcy & Insolvency Act (Canada) (BIA), bankruptcy order, bankruptcy surplus income, bankruptcy surplus income calculator, can i file bankruptcy if i make too much money, Consumer Proposal, Directive No. 11R2, Division I Part III proposal, Ira Smith Trustee, licensed insolvency trustee, Office of the Superintendent of Bankruptcy Canada (OSB), personal bankruptcy, Superintendent's Standards – 2020, surplus income, trustee, when do bankruptcy surplus income payments end

Brandon Blog Post

BANKRUPTCY DISCHARGE CERTIFICATE CANADA: THE COMPLETE HAPPY STORY OF YOUR BANKRUPTCY DISCHARGE

Post author By Brandon Smith
Post date October 5, 2020

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

Bankruptcy discharge certificate Canada introduction

What is a bankruptcy discharge? When a bankrupt is discharged from bankruptcy, he/she gets a bankruptcy discharge certificate Canada. The individual is launched from the legal responsibility to repay financial debts that existed on the day that the bankruptcy was filed. This is true other than for certain financial debts that are not discharged when the insolvent receives his/her discharge which I will go over listed below.

Usually, only personal bankrupts are discharged from bankruptcy. Companies that are bankrupt remain that way. The only method a company can exit from bankruptcy is if the claims of creditors are paid off with interest. This never occurs. If it could, the company would have submitted a restructuring strategy under either the Bankruptcy and Insolvency Act (Canada) (BIA) or the Companies’ Creditors Arrangement Act (Canada) (CCAA).

Therefore, the balance of this Brandon’s blog will talk about an individual person who receives a bankruptcy discharge certificate Canada.

**Who can issue a bankruptcy discharge certificate Canada?**

Only a Canadian licensed insolvency trustee (Trustee) can carry out the bankruptcy administration and then provide the bankruptcy discharge certificate Canada. If neither the Trustee nor a creditor opposed the discharge and the Trustee issued the certificate, that means the bankrupt individual satisfied all of their obligations without the need for a court hearing.

If either the Trustee or a creditor opposes the discharge of the bankrupt individual, by issuing a notice of opposition to discharge, that indicates:

In the case of a Trustee opposition, that means the bankrupt did not fulfill all of their duties as an undischarged bankrupt when the time came for the Trustee to make that determination if the bankrupt is entitled to a discharge.
One or more creditors believe there is information that needs to be evaluated by the court to determine what kind of discharge from bankruptcy the person should get if any.

The court would then determine what type of bankruptcy discharge the bankrupt should receive:

absolute – entitled to an immediate discharge;
conditional – can obtain a discharge after fulfilling one or more conditions;
suspended – the bankrupt’s discharge will occur at a later date and is combined with either an absolute bankruptcy discharge or conditional bankruptcy discharge;
refused – the bankrupt’s discharge is such that the court refuses to hear the application; or
“no order” – the Trustee advises the court that notwithstanding the time period has elapsed, the bankrupt has not properly fulfilled all of his or her duties and the bankrupt has failed to respond to the Trustee’s requests. In this case, once the “no order” order is issued, the Trustee is at liberty to seek its discharge (more on this below).

Once the bankrupt person has fulfilled the conditions set by the court and/or the suspension period has ended, the Trustee can then issue the bankruptcy discharge certificate Canada.

Bankruptcy discharge certificate Canada: How long will I be bankrupt?

For a 1st time bankrupt person, many will certainly qualify for an automatic discharge after 9 months.

If you have been bankrupt before a second bankruptcy discharge will not be able to get a discharge in 9 months. Your bankruptcy will be prolonged. A 2nd bankruptcy lasts for a minimum of 24 months. If you have surplus income, a second-time bankrupt will not have the ability to get a bankruptcy discharge certificate Canada for 36 months.

For a 3rd time bankrupt, the timeline is the same as the 2nd time bankrupt. Nonetheless, it is more probable that there will be resistance to that bankrupt’s discharge by the Trustee or one or more creditors. The court can prolong the time in whichever means it believes is most suitable.

Bankruptcy discharge certificate Canada: Who tells my creditors that I am discharged from bankruptcy

The Trustee will notify the Office of the Superintendent of Bankruptcy (OSB) that the individual has been released from bankruptcy. The Trustee advises the OSB by filing a copy of the bankruptcy discharge certificate Canada. The Trustee advised the creditors that the insolvent is qualified to a discharge unless an opposition is filed in the bankruptcy notification sent out to all creditors.

The Canadian credit bureaus, Equifax Canada and TransUnion Canada are notified because they pay the OSB to get Canadian bankruptcy information. The credit bureaus then update all credit files with the corresponding bankruptcy info, including discharges.

Bankruptcy discharge certificate Canada: What debts are not forgiven and will survive my bankruptcy?

What debts cannot be discharged? A bankruptcy discharge certificate Canada provides the discharge of all unsecured debts, except for:

matrimonial or children support payments;
fines or penalties mandated by the court;
claims arising from fraud or fraudulent breach of trust;
student loan debt if less than 7 years have actually passed since the bankrupt stopped being a part-time or full-time student.

These kinds of debts survive bankruptcy and are not released. The person will need to continue paying those financial obligations according to their terms. All other debts are discharged and do not have to be paid.

Also, any debts that are properly secured by one of your assets, such as a house mortgage or car financing, are not released as a result of your bankruptcy or your bankruptcy discharge certificate Canada.

Bankruptcy discharge certificate Canada: What if my creditors still contact me and try to get me to pay them?

If the creditors are consistently calling you and demanding settlement, supply them with a duplicate of your bankruptcy discharge certificate Canada. If the creditor states they were not aware of your bankruptcy, also offer them a duplicate of your sworn statement of affairs revealing them listed as a creditor.

If they are listed, then the Trustee sent them a notice of bankruptcy including a form 31 proof of claim to complete and return to the Trustee.

Bankruptcy discharge certificate Canada: What does trustee discharge mean?

After the Trustee has fully completed the administration of the bankruptcy estate, the Trustee is entitled to its discharge. The Trustee must prove to the OSB that it has completed the administration. This includes providing the OSB with a copy of the Final Statement of Receipts and Disbursements to get the Superintendent’s comment letter.

Then the Trustee must provide the final statement, the comment letter, and other documents to the court to prove that the administration is complete, get the final statement approved, and taxed. When that happens, the court issues the Trustee’s discharge order. The Trustee then files that order with the OSB and closes its file.

It is possible for the Trustee to receive its discharge while the bankrupt remains undischarged. This happens either when the result of the bankrupt’s discharge hearing results in a “no order” (see definition above) or sufficient time has elapsed showing the bankrupt is not going to fulfill the conditions to get a discharge. In this case, the Trustee is at liberty to get its discharge.

Once the Trustee gets its discharge, an undischarged bankrupt loses the protection of the automatic stay of proceedings that were invoked upon the bankruptcy occurring. Once this protection is lost, the creditors are at liberty to once again pursue the bankrupt person for collection on the debts owing.

Bankruptcy discharge certificate Canada: what if I fail to include one of my creditors in my bankruptcy?

If I failed to remember to include one of my creditors in my bankruptcy do I need to pay them? If your Trustee hasn’t been discharged yet, simply tell the creditor to call your Trustee to participate in your bankruptcy.

If your Trustee has actually been discharged then the creditor is qualified to be paid the same returns (% of the debt) your other creditors obtained from your bankruptcy. You will need to pay this amount.

If you intentionally omitted the lender from your bankruptcy (the obligation is on the lender to verify this) after that the lender can ask the court to enable their financial obligation to survive, and if successful, you will need to pay the full amount.

Bankruptcy discharge certificate Canada: What are the benefits of keeping my bankruptcy discharge papers?

As reviewed above, after you have actually successfully finished every one of your bankruptcy responsibilities and any kind of conditions of discharge, you will receive your discharge from bankruptcy. When you get your bankruptcy discharge your Trustee will give you a bankruptcy discharge certificate Canada.

That paper is proof that you have actually formally been launched from your financial debts that were included in your bankruptcy. As already stated, particular financial obligations can’t be discharged in bankruptcy. Also, any type of debts that you sustain after the day of your bankruptcy are your responsibility as well as are not eliminated by your bankruptcy discharge.

Bankruptcy discharge certificate Canada: How long does my credit score take to recover from bankruptcy?

Your bankruptcy will stay on your credit report for 6 years from the date your bankruptcy discharge certificate Canada is issued. If you have actually been bankrupt more than once, then it might be reported for approximately 14 years from the date of your discharge.

Having actually removed your financial obligation problems by getting your bankruptcy discharge certificate Canada, most individuals see they now have the ability to construct a more powerful financial future. Unless you urgently need to purchase a house for the very first time or buy an auto, you need not also bother with getting approved credit to take on debt right away. Many find they have the ability to live without credit considering that they have a more powerful cash flow than prior to bankruptcy. They are now able to start saving.

While you remain in bankruptcy, you are learning to live your life without credit. You are living essentially on a cash basis. You are not spending more than you make. Your Trustee is advising you to do so on an after-tax basis so that you will not have a nasty surprise when tax time comes.

Bankruptcy discharge certificate Canada: 2 simple steps to improve your credit score after your discharge from bankruptcy

This remains for the first 2 or three years after you have actually completed the bankruptcy process. Throughout this time access to credit will be restricted.

We encourage all our bankrupts, once discharged, to immediately start rebuilding their credit. You can slowly start rebuilding your credit through 2 simple steps:

Apply for a secured credit card. This kind of credit card works on the basis that you deposit money against the card with the secured credit card issuer. You then use the credit card like any other. If you pay it off each month, this gets reported to the credit bureaus. This proper use of this credit helps to improve your credit score. If you do not pay the card off when due, the issuer takes the money from your deposit to pay it off.
Take out a small RRSP or TFSA loan. The funds are deposited into your RRSP or TFSA. Make monthly payments against the loan so that the principal and interest are all fully repaid within 1 year. Start small. The important thing is that you do what your cash flow allows. The fact that you are current on your loan is reported monthly to the credit bureaus. This helps to improve your credit score.

Keep in mind that if you do not stay current in paying off your secured credit card balance or your loan, this will further hurt your credit score. The idea is that you have saved this money each month so that you are able to make the monthly payment.

Bankruptcy discharge certificate Canada summary

To declare personal bankruptcy is a major life event. However, it is a necessary thing to rid yourself of crippling debt. Most people who declare bankruptcy have been faced with a major life event. The main examples are illness, pay cuts, job loss, or divorce. It is not your fault. I hope this bankruptcy discharge certificate Canada Brandon’s Blog has given you helpful information.

You are worried because you are facing significant financial challenges.
It is not your fault that you are in this situation. You have been only shown the old ways that do not work anymore. The Ira Smith Team uses new modern ways to get you out of your debt troubles while avoiding bankruptcy. We can get you debt relief freedom.

We know that people facing financial problems need realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team. That is why we can develop a restructuring process as unique as the financial problems and pain you are facing. If any of this sounds familiar to you and you are serious in finding a solution, contact the Ira Smith Trustee & Receiver Inc. team today.
Call us now for a free consultation.

We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

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

Trustee bankruptcies introduction

What are the fees of a licensed insolvency trustee?

A bankruptcy trustee needs cash flow too

Office of the Superintendent of Bankruptcy (OSB) Directive no. 27R

The OSB did not like the court application

The court sees COVID-19 creating urgencies, even for trustee bankruptcies

The court’s decision on the trustee bankruptices motion

Trustee bankruptcies summary

At the end of this blog, we have a special gift for you!

Closing a business introduction

Closing a business that does not have many (free) assets

The business is still operating – will anyone buy it?

When does corporate bankruptcy make sense in closing a business?

My closing a business checklist

Closing a business summary

CLOSING A BUSINESS INFOGRAPHIC. CLICK ON THE INFOGRAPHIC TO DOWNLOAD YOUR OWN COPY

CEWS Application introduction

CEWS application: What is the CEWS?

CEWS application: Who is an eligible employer?

How do I calculate my gross revenue drop for the CEWS application?

What is the safe harbour CEWS application regulation?

How do I determine which employees’ wages are eligible for the CEWS application?

How do I calculate the pre-COVID payroll amount for the CEWS application?

What is the deeming rule for the CEWS application?

The CEWS application calculations are complex

Business is slow. What should I do to keep my business going besides a CEWS application?

CEWS application summary

Canada consumer proposal: Introduction

Canada consumer proposal: A refresher

When is a Canada consumer proposal appropriate?

What happens when you file a Canada consumer proposal?

Keeping your bank account and other assets in a Canada consumer proposal

Canada Consumer Proposal: Who can freeze your bank account in Canada?

Why you should move your bank accounts before filing a Canada consumer proposal or a Canada bankruptcy

Canada consumer proposal summary

Commercial Tenancies Act Ontario: Introduction

Commercial Tenancies Act Ontario: The facts

Commercial Tenancies Act Ontario: The landlord draws against the LOC

Commercial Tenancies Act Ontario: The landlord’s proof of claim

Commercial Tenancies Act Ontario: The Trustee’s disallowance of the landlord’s proof of claim

Commercial Tenancies Act Ontario: The landlord appeals

Commercial Tenancies Act Ontario: The Trustee’s motion to a judge

Commercial Tenancies Act Ontario: The landlord appeals to the Court of Appeal For Ontario

Commercial Tenancies Act Ontario: The landlord has a LOC on things

Commercial Tenancies Act Ontario summary

CERB update introduction

CERB update: Who can qualify for CERB?

CERB update: What are the CERB pay periods?

CERB update: What is replacing CERB?

CERB update: Can CRA audit CERB?

CERB update: What if you can’t (re) pay?

CERB update: Summary

Bankruptcy meaning introduction

Bankruptcy meaning: The stakeholders

Bankruptcy meaning: Duties of the Trustee

Bankruptcy meaning: Duties of creditors

Bankruptcy meaning: Advising the bankrupt or the officer of the bankrupt corporation of duties

Bankruptcy meaning: The duties of the bankrupt or the officer of the bankrupt corporation

Bankruptcy meaning: Why a bankrupt’s discharge hearing may come to court

Bankruptcy meaning: The Nova Scotia case

Bankruptcy meaning: The Registrar’s decision

Bankruptcy meaning summary

Insolvency and bankruptcy act introduction

The definition of the word deprive and the insolvency and bankruptcy act context

The anti-deprivation rule in the Canadian insolvency and bankruptcy act matters

The Bramalea case and its relevance of insolvency and bankruptcy act matters

The Bramalea insolvency and bankruptcy act decision

The Chandos Alberta court case and the anti-deprivation rule for insolvency and bankruptcy act matters

The Trustee’s application to the Alberta Court of Queen’s Bench

Trustee appeals the Chandos insolvency and bankruptcy act decision to the Court of Appeal for Alberta

Chandos appeals to the SCC in this insolvency and bankruptcy act anti-deprivation rule case

Insolvency and bankruptcy act summary

Bankruptcy surplus income introduction

What is bankruptcy surplus income?

What happens to a person’s wages during bankruptcy?

Superintendent’s Standards – 2020

Bankruptcy surplus income limits for 2020 Canada

Bankruptcy surplus income calculator

When do bankruptcy surplus income payments end?

**A bankruptcy trustee needs cash flow too**

**The court’s decision on the trustee bankruptices motion**

**When does corporate bankruptcy make sense in closing a business?**

**My closing a business checklist**

**How do I calculate my gross revenue drop for the CEWS application?**

**What is the safe harbour CEWS application regulation?**

**How do I determine which employees’ wages are eligible for the CEWS application?**

**How do I calculate the pre-COVID payroll amount for the CEWS application?**

**What is the deeming rule for the CEWS application?**

**The CEWS application calculations are complex**

**Business is slow. What should I do to keep my business going besides a CEWS application?**

**When is a Canada consumer proposal appropriate?**

**What happens when you file a Canada consumer proposal?**

**Why you should move your bank accounts before filing a Canada consumer proposal or a Canada bankruptcy**

***Commercial Tenancies Act Ontario*: Introduction**

***Commercial Tenancies Act Ontario*: The facts**

***Commercial Tenancies Act Ontario*: The landlord draws against the LOC**

***Commercial Tenancies Act Ontario*: The landlord’s proof of claim**

***Commercial Tenancies Act Ontario*: The Trustee’s disallowance of the landlord’s proof of claim**

***Commercial Tenancies Act Ontario*: The landlord appeals**

***Commercial Tenancies Act Ontario*: The Trustee’s motion to a judge**

***Commercial Tenancies Act Ontario*: The landlord appeals to the Court of Appeal For Ontario**

***Commercial Tenancies Act Ontario*: The landlord has a LOC on things**

**The definition of the word deprive and the insolvency and bankruptcy act context**

**The anti-deprivation rule in the Canadian insolvency and bankruptcy act matters**

**The Bramalea case and its relevance of insolvency and bankruptcy act matters**

**The Bramalea insolvency and bankruptcy act decision**

**The Chandos Alberta court case and the anti-deprivation rule for insolvency and bankruptcy act matters**

**Trustee appeals the Chandos insolvency and bankruptcy act decision to the Court of Appeal for Alberta**

**Chandos appeals to the SCC in this insolvency and bankruptcy act anti-deprivation rule case**

**What is bankruptcy surplus income?**

**When do bankruptcy surplus income payments end?**

**Who can issue a bankruptcy discharge certificate Canada?**