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Below are some common terms used in the Insolvency and Restructuring process.
A debtor can formally assign all of his or her property to a bankruptcy trustee who will sell the property or use it to pay a debt.
The federal law that regulates bankruptcy and insolvency in Canada.
A bankruptcy trustee or person appointed or designated by the Office of the Superintendent of Bankruptcy to administer consumer proposals.
Counselling from a counsellor registered with the Office of Superintendent of Bankruptcy to help a debtor understand how the debt occurred and to help him or her better manage his or her finances in the future.
The person or business who has a preferred, secured or unsecured claim provable under the Bankruptcy and Insolvency Act.
A debtor is released from the legal obligation to pay a debt—with some exceptions—as of the bankruptcy filing date.
Under the Bankruptcy and Insolvency Act, a dividend is the proportional share of a bankrupt’s estate paid by the bankruptcy trustee to creditors with proven claims.
Charge or claim against property that remains in effect until the debt is satisfied or the issue is resolved with the other party. In the case of a mortgage, it is said that the property is encumbered by that mortgage.
The value of an asset or interest above the amounts owed on it, such as charges or encumbrances against that property.
Property which a bankruptcy trustee cannot take ownership of to satisfy debts, such as property held in trust for other persons, GST credit payments and prescribed payments relating to the debtor’s family’s essential needs, and other exempt property as defined the provincial or territorial law where the debtor resides.
A legal process where a creditor gets a third party (e.g., employer or bank) to release the debtor`s property (e.g., wages or bank accounts) in order to satisfy a debt.
An individual or entity who takes responsibility for another’s debt or performance under a contract, if the other fails to pay or follow through.
An individual is insolvent if he or she cannot satisfy creditors or discharge liabilities because of debt exceeding assets or because of an inability to pay debts as they mature.
A person appointed by creditors at the first of subsequent meeting of creditors, as part of a committee, to work with a trustee or administrator and oversee his or her handling of a proposal or bankruptcy administration.
A decision by the court that resolves controversy by determining the rights and obligations of the parties.
A legal obligation for which a person is responsible, such the amount owed by a debtor to a creditor for goods, services, taxes, etc.
A bankruptcy trustee may call a meeting with the creditors to examine the debtor’s financial affairs in order to discuss a consumer proposal or the bankruptcy administration or as per the written request of 25 percent of the creditors holding 25 percent of the value of the proven claims.
A federal government employee of the Office of the Superintendent of Bankruptcy who accepts the documents required for a proposal or bankruptcy, examines bankrupts under oath, and chairs meetings of the creditors.
A procedure available where a debtor can seek out a legal proceeding to help pay off their debts. Also known as a Consolidation Order, the program consolidates all debts and sets an amount that the debtor must pay to the Court on a regular basis until the debt is satisfied.
A formal offer by a debtor to creditors to settle debts under conditions other than their original terms.
An person appointed by the court or behalf of a creditor to take control of the a debtor’s assets and income for review and inventory of what may be distributed to creditors and what is exempt.
An Officer of the Supreme Court empowered to hear and act in matters under the Bankruptcy and Insolvency Act.
A financial statement showing the debtor’s assets and liabilities, including their estimated values and names and addresses of creditors. This statement is usually presented at the beginning of the process.
A financial statement prepared by the bankruptcy trustee indicating receipt of property (including interest), fees and disbursements charged by the trustee, what has been paid to creditors, and the particulars of what property remains unsold. This statement is usually presented at the end of the process.
A stay of proceedings immediately prevents creditors from starting or continuing a legal action against a debtor and occurs upon filing bankruptcy or a proposal.
A federal official licenced by the Office Superintendent of Bankruptcy to administer bankruptcies and proposals.