Quebec Bankruptcy Dictionary

Assignment into Bankruptcy:
The act of a person who places himself or his company into bankruptcy pursuant to the Bankruptcy and Insolvency Act.

Automatic Discharge:
First-time bankrupts receive an automatic discharge nine months after they became bankrupt unless it is opposed by either a creditor, the trustee or the Superintendent of Bankruptcy.

CAIRP (Canadian Association of Insolvency and Restructuring Professionals):
The Canadian Association of Insolvency and Restructuring Professionals is the national professional organization representing 913 general members acting as trustees in bankruptcy, receivers, agents and consultants in insolvency matters. There are also another 430 members (in the articling, life and corporate categories). The Association is a non-profit corporation, established in 1979 to "advance the practice of insolvency administration and the public interest related to it".
The CAIRP website is: http://www.cairp.ca/

Caveat:
A formal warning. Beware!

Charge:
An encumbrance, lien or financial obligation that is attached to some property.  For example, a person who files a lien against a piece of property might say that he has a charge against that property.

Consumer Debtor:
A natural person who is bankrupt or insolvent and whose aggregate debts, excluding any debts secured by the person's principle residence, do not exceed $75,000 or such other maximum as is prescribed.

Consumer Proposal:
A simplified form of Proposal available to debtors owing less than an amount prescribed under the Bankruptcy and Insolvency Act. In 2002 the amount was $75,000.00, excluding a mortgage on the principal residence.

Contra:
The setting off of mutual debt.  For example, if a company owes $100 to another company that is owed $30 by that company in turn, the company is allowed to set off the $30 against the $100 and make a net payment of $70.

Demand:
To ask for with authority; claim as a right.

Demand Letter:
A letter usually from a lawyer on behalf of a client that makes a demand for payment or some other action which is in default.  Under the Bankruptcy and Insolvency Act, a financial institution before it takes any action must give demand and notice of intention if it intends to enforce its security and must wait 10 days before it can enforce its security by, say, the appointment of a Receiver or Agent.

Discharge of Bankrupt:
For bankrupts who do not qualify for the automatic discharge, the trustee is required within one year from the beginning of the bankruptcy to apply to the court for a hearing of the application for a discharge.

The court official has several options from which to choose. At the hearing, the court decides whether to postpone the hearing to a later date, refuse the discharge, or issue any of the following orders:

• Order of absolute discharge which relieves the bankrupt of the debts incurred before the bankruptcy, except for the exceptions provided in the Act.

• Order of conditional discharge where certain conditions must be met before an absolute order of discharge is issued.

• Order of suspended discharge where the court orders a delay before the discharge becomes effective.

Expunge:
To strike out; to obliterate, erase or mark for deletion.

Fee Simple:
Title to ownership without restriction or limitation.  For example ownership of land in fee simple means the land is owned out right as compared to a person who leased land

Garnishee:
The seizure of property, monies, earnings, receivables belonging to a debtor that are in the hands of a third party.

Hypothecate:
To mortgage or pledge without delivery of title or possession. To place or leave an item of property in the custody of another.

Indemnity:
The act of one party protecting or guaranteeing protection, or freedom from liability, of a third party for actions of that party.

Insolvent Person:
A person who is not bankrupt and whose liabilities exceed his assets and/or ability to pay.

The BIA contains a statutory definition that differs from this general definition as follows: "means a person who is not bankrupt and who resides or carries on business in Canada whose liabilities to creditors provable as claims under the Bankruptcy and Insolvency Act amount to at least $1,000.00 and

• (a) who is, for any reason, unable to meet his obligations as they generally become due, or

• (b) who has ceased paying his current obligations in the ordinary course of business as they generally become due, or

• (c) the aggregate of whose property is not, at a fair valuation, sufficient or, if disposed of at a fairly conducted sale under legal process, would not be sufficient to enable payment of all his obligations, due and accruing due."

Judgement:
A formal decision, sentence or Order of a Court of Justice.

Judgement Proof:
A term to describe assets protected from being seized by a creditor. i.e. assets a creditor cannot seize by going to court and getting a judgement.

Lis Pendens:
A dispute which is the subject of ongoing or pending litigation.  Oftentimes, a lis pendens can be filed at the Land Registry Office against real property to denote to third parties that another party may have an interest in the property.

Nulla Bona:
Unable to locate assets.

Pari Passu:
Equally and without preference.  This term is often used in bankruptcy proceedings where creditors are said to be paid pari passu, or each creditor is paid pro rata in accordance with the amount of his claim.

Proposal:
Under the Bankruptcy and Insolvency Act there are two types of proposals that can be made.  A proposal filed under Division I, which is applicable to companies and any individual who wants to avail himself of it.  There are also "consumer proposals", which are a special type of proposal that a consumer can avail himself of but only if his debts, excluding mortgages on real property, do not exceed $75,000.  One of the main features of a consumer proposal is that if the creditors do not accept the proposal, the person is not automatically bankrupt as in a Division I proposal.

Superintendent of Bankruptcy: A federally appointed official who oversees the administration of the Bankruptcy and Insolvency Act in Canada. The Superintendent is responsible for: supervising the administration of estates in bankruptcy, commercial reorganizations, consumer proposals and receiverships; maintaining a publicly accessible record of bankruptcy and insolvency proceedings; recording and investigating complaints regarding possible wrong doing by someone involved in the insolvency process; licensing of private sector trustees to administer estates and appointing administrators of consumer proposals; setting and enforcing professional standards for the administration of estates.

The Superintendent's Web site address is: http://osb-bsf.ic.gc.ca

Writ:
Form of written notice or command issued by a Court or other official. Can include Writ of Summons, Writ of Subpoena, Writ of Attachment, Writ of Habeas Corpus, etc.