In Part 1 we discussed the factors to be considered in deciding whether to deal with a deceased person's insolvent estate under either the Wills, Estates and Succession Act ("WESA") or the Bankruptcy and Insolvency Act ("BIA"). In this concluding part, we will discuss the court proceedings in general terms under the WESA and the BIA.
Insolvency and Deceased Persons - Part 2
Bankruptcy, Secured Creditors, and the Superintendent's Levy
All distributions made out of a bankrupt estate are subject to a 5% levy payable to Superintendent of Bankruptcy pursuant to section 147 of the Bankruptcy and Insolvency Act. Generally, this does not impact secured creditors, whose rights are largely unaffected in bankruptcy. However, in Superintendent of Bankruptcy v Business Development Bank of Canada, 2019 MBCA 72, the Manitoba Court of Appeal recently confirmed that in certain circumstances, even a secured creditor's recovery can be subject to the levy.
Another one bites the dust: Roxodus Music Festival declares bankruptcy
In a plot twist familiar to festival-goers here in BC, another music festival has declared bankruptcy, this time in Ontario.
The Roxodus Music Festival, put on by MF Live Inc., was set for July 11 to 14 and was to feature a star-studded cast of performers, including Aerosmith, Kid Rock, Nickelback, Lynyrd Skynyrd, Alice Cooper, Cheap Trick, Collective Soul, Matthew Good, Peter Frampton, Billy Idol, Theory of a Deadman, and Blondie, among others. Instead, just two days before the start of the four-day festival, MF filed for bankruptcy, listing creditors owed over $18 million.
Insolvency and Deceased Persons - Part 1
At death, nearly everyone will have a few outstanding creditors, even if it is only for the last month's bills and outstanding taxes. The executor or court appointed administrator (the "Personal Representative") will generally pay the final bills in the course of the administration of the deceased's estate, assuming there are funds in the estate. If the estate is insolvent, because there are not enough assets to pay all the debts and liabilities of the deceased, the Personal Representative of the deceased, or family members who may be deciding whether to become a Personal Representative, will need to consider how they will deal with the insolvent estate.
Ontario Court provides guidance on non-arm's length transactions
A trustee in bankruptcy has special powers to investigate the affairs of a bankrupt estate, and among the greatest of those powers is the ability to review and potentially unwind transactions prior to bankruptcy under section 95 and 96 of the Bankruptcy and Insolvency Act ("BIA").
No personal bankruptcy laws in China
China modernized its bankruptcy laws for corporations back in 2007, enacting a legislative scheme similar to that of western nations, including the power to restructure insolvent corporations and avoid outright bankruptcy in certain situations.
Transfers to family members upheld following bankruptcy
A transfer of a car to a family member, within one year of the transferor's bankruptcy. Such transactions are regularly set aside in bankruptcy. Even where the transfer was on account of a previous debt owed to the family member, such a transfer would normally be an invalid "preference" under s. 95 of the Bankruptcy and Insolvency Act.
Chinese debtors face public shaming - at the movies
No one likes the endless trailers and advertisements that precede the main feature at movie theatres these days. But some in the audience might have preferred more ads to the fare on offer at a recent screening of the latest Avenger movie. ABC News reports that Chinese authorities now shame debtors and defaulters who owe money to the state by projecting their names and faces on the screen at movie theatres.
Bill C97
On April 8, 2019, the federal government introduced Bill C 97, An Act to Implement Certain Provisions of the Budget Tabled in Parliament On March 19, 2019 and Other Measures, which includes proposed amendments to the Bankruptcy and Insolvency Act, as well as the Companies' Creditors Arrangement Act.
Trustee's disallowance of claim a reminder to creditors to take proofs of claims seriously
A recent decision of the Supreme Court of BC took issue with a bankruptcy trustee's investigation of a proof of claim, but also serves as a reminder that creditors need to take the proof of claim process seriously, particularly where there is any complexity to their claim, or else they risk unneeded cost and inconvenience.
