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July 2018 Archives

Proposal creditors attacking the claims of other proposal creditors

When a non-consumer debtor files a proposal under the Bankruptcy and Insolvency Act ("BIA"), the creditors of the debtor have an opportunity to vote on the proposal. If the proposal is not accepted, the debtor is assigned into bankruptcy. In order to be accepted, a proposal must receive supporting votes from of a majority of the number of creditors, and those creditors must represent at least two thirds of the value of the claims against the debtor. Accordingly, a creditor with a large claim can in some cases control whether a proposal succeeds or fails. 

Superintendent's levy on secured claims in failed proposal proceedings

The Manitoba Court of Queen's Bench was recently asked to opine on whether the 5% levy payable in bankruptcy matters to the Superintendent of Bankruptcy pursuant to s. 147 of the Bankruptcy and Insolvency Act ("BIA") was applicable to secured creditors. Secured creditors generally operate outside of bankruptcy proceedings.

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