The impacts of Covid-19 have been felt in most aspects of life in Canada and insolvency proceedings are no exception. Generally, where general procedures have required people to gather together or even be in each other’s presence, new laws have been introduced that allow for alternate arrangements. One such example is the requirement to hold a creditors' meeting in insolvency proceedings pursuant to the Bankruptcy and Insolvency Act (“BIA”).
The general rule is that a creditors' meeting has to be held within 21 days of when a proposal is filed or a bankruptcy occurs. On April 30, 2020, representatives from the Superintendent of Bankruptcy and the Canadian Association of Insolvency and Restructuring Professionals obtained an omnibus order from the BC Supreme Court that provides, in part, that for active commercial proposals, consumer proposals and bankruptcies the time for holding meetings of the creditors in those three types of proceedings is to be extended by the suspension period (being April 27, 2020 to June 30, 2020). What this means is that timelines stop running between April 27th and June 30th, so trustees in bankruptcy do not have to schedule meetings of creditors during this time.
The actual application of the omnibus order is a bit confusing so the superintendent of bankruptcy has published explanatory examples. If a proposal was filed 7 days before April 27th, then the meeting of creditors will have to be held by July 14, 2020. For a proposal or bankruptcy that occurred post April 27th, trustees will have until up to 21 days after June 30th, or July 21, 2020, to schedule a meeting of creditors.
Notwithstanding the omnibus order, trustees are urged to schedule meetings of creditors as soon as possible, especially where a party has requested that the meeting be held.
The Federal Department of Justice has also put forward Draft Legislative Proposals Regarding Time Limits and Other Periods In Circumstances Due to Covid-19 (see: https://www.justice.gc.ca/eng/csj-sjc/pl/lp-pl/tlopa-ldap/lp-pl.html). If this proposed legislation becomes law, it could extend the time during which a debtor who has filed a Notice of Intention to Make Proposal under s. 50.4 of the BIA must file a proposal. Accordingly they would not be deemed bankrupt if they fail to file a proposal within the usual time limits provided in the BIA.