Glossary

Assignment (in Bankruptcy) 

The process by which a person voluntarily places themselves in Bankruptcy. Most bankruptcies in Canada are voluntary.

Bankrupt 

The state of being bankrupt or the fact of becoming bankrupt.

Bankruptcy Estate 

All funds received by a Licensed Insolvency Trustee from any source are placed into a trust fund. This would include surplus income payments, funds from the sale of non-exempt assets, tax refunds as appropriate etc. Out of these funds, the trustee is entitled to a set fee as determined by a Government set tariff and then any remaining funds are distributed by the Trustee to the Unsecured Creditors.

Counselling 

Both individual bankrupts and those making a consumer proposal are required to go through counselling sessions with a qualified counsellor. You will be required to attend two sessions, which primarily cover good financial management (including prudent use of consumer credit and budgeting principles); developing successful strategies for achieving financial goals and overcoming financial setbacks; restoring one’s credit rating and at any over time, and where appropriate, making referrals to deal with non-budgetary causes of insolvency (e.g.: gambling, addiction, marital and family problems, etc.)

Creditor 

One to whom a debt is owed; in insolvency matters, a person having a claim provable under the Bankruptcy and Insolvency Act. Secured creditors have collateral (i.e. a charge or lien) against the property of the debtor, whereas unsecured creditors have no collateral.

Discharge 

The release of a debtor from the obligation to repay his or her unsecured debts. A bankrupt's discharge may be automatic, suspended, conditional or absolute. A bankrupt may also be refused discharge.

Dividend 

The amount a creditor receives out of the funds paid into a bankrupt’s estate or through a consumer proposal.

Encumbrance 

A claim or liability that is attached to property or some other right that may lessen its value, e.g. a lien or mortgage.

Equity 

The difference between the market value of an asset and the debt secured against it.

Exempt Assets 

Assets defined as exempt by provincial legislation that are not available to the trustee for the benefit of creditors.

First Meeting (of Creditors) 

Meeting called by the trustee to consider the affairs of the bankrupt or debtor in a Proposal, to affirm the appointment of the trustee, to appoint inspectors, and to give such directions to the trustee as the creditors may see fit.

Garnishment 

A legal process whereby a creditor requires a third party to turn over to the creditor, a debtor's property such as wages or bank accounts.

General Security Agreement 

A contract under which all the personal property of a debtor is pledged as security to a lender; (not used in all provinces).

Guarantor 

A person who takes on financial responsibility for another's debt.

Insolvent 

A person who is unable to pay debts as they become due in the ordinary course of business, or having liabilities that exceed the total value of assets.

Inspector 

Inspectors can be appointed by creditors to represent them before the trustee during the administration of proposals and bankruptcies. They are expected to assist the trustee by virtue of their experience and are required to supervise certain aspects of the trustee's administration.

Judgement 

A formal decision issued by a court on a matter under its consideration.

Liability 

A financial obligation or debt of an individual or a business, including unpaid taxes, salaries, accounts payable etc.

Licensed Insolvency Trustee

A person licensed by the Superintendent of Bankruptcy to administer bankruptcy and proposal estates.

Offences 

The offences and sanctions provisions are contained in Part VIII of the Bankruptcy and Insolvency Act. These are criminal or quasi-criminal violations of law; a person guilty of an offence is liable to a fine or imprisonment.

Official receiver 

The Official Receiver is a federal government employee in the Office of the Superintendent of Bankruptcy. The Official Receiver, among other things, accepts the documents that are filed in proposals and bankruptcies, examines bankrupts under oath and chairs meetings of creditors, if such meetings are held.

Order 

The command of a Court or Judge.

Orderly Payment of Debts 

A procedure prescribed in Part X of the Bankruptcy and Insolvency Act, governed by provincial courts, which allows a person to pay debts. Only available in Alberta, Nova Scotia, Prince Edward Island and Quebec (where it is known as Voluntary Deposit Service / Lacombe’s Law).

Property 

Includes money, goods, land and every description of property, whether real or personal, situated in Canada or elsewhere. Real Property is land and the buildings thereon, Personal Property is anything other than Real Property.

Proposal 

An offer to creditors to settle debts under conditions other than the existing terms. It is a formal agreement under the Bankruptcy and Insolvency Act.

Receiver 

A person who has taken possession pursuant to a security agreement of substantially all of the inventory, accounts receivables or the other property of the debtor. "Receiver" also includes a person who has been appointed privately pursuant to a security agreement or by an order of the court for the protection or collection of property that is the subject of diverse claims, usually to seize and sell the property of the debtor. Registrar An Officer of a provincial court appointed by the Chief Justice with the powers and jurisdiction as specified under the Bankruptcy and Insolvency Act.

Registrar 

An Officer of a provincial court appointed by the Chief Justice with the powers and jurisdiction as specified under the Bankruptcy and Insolvency Act.

Statement of Affairs 

The bankrupt's financial statement or a balance sheet of assets and liabilities showing the estimated value of assets and the names and addresses of creditors and the amounts owed along with other pertinent information.

Statement of Receipts and Disbursements 

A statement detailing the receipt and disbursement of funds, interest received, fees charged by the trustee, all the dividends distributed to the creditors and particulars of property that is not sold.

Stay of Proceedings 

A bar (i.e. stop) against any creditor for the recovery of a claim provable in bankruptcy or a proposal against the insolvent person or the insolvent person's property. No creditor shall start or continue any action, execution or other proceeding for the recovery of such claims.

Superintendent of Bankruptcy 

A federally appointed official who oversees the administration of the Bankruptcy and Insolvency Act in Canada.


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