Bankruptcy

Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay their creditors. A declared state of bankruptcy can be requested by creditors in an effort to recoup a portion of what they are owed; however, in the overwhelming majority of cases, the bankruptcy is initiated by the bankrupt individual or organization.

Bankruptcy in Canada

Bankruptcy in Canada is laid out by federal law, set out in the Bankruptcy and Insolvency Act and is applicable to businesses and individuals. The office of the Superintendent of Bankruptcy, a federal agency, is responsible for ensuring that bankruptcies are administered in a fair and orderly manner. Trustees in bankruptcy administer bankruptcy estates.

Related Topics:
Federal law - Bankruptcy and Insolvency Act - Superintendent of Bankruptcy - Federal agency - Trustees in bankruptcy

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Duties of Trustees

Some of the duties of the trustee in bankruptcy are to:

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• Prepare the bankruptcy documents that assign the person into bankruptcy
• Review the file for any fraudulent preferences or reviewable transactions
• Chair meetings of creditors
• Sell any available assets
• Perform counselling for the debtors
• Recommend whether the bankrupt should be discharged.

Creditors' Meetings

Creditors become involved by attending creditors' meetings. The trustee calls the first meeting of creditors for the following purposes:

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• To consider the affairs of the bankrupt
• To affirm the appointment of the trustee or substitute another in place thereof
• To appoint inspectors
• To give such directions to the trustee as the creditors may see fit with reference to the administration of the estate.

Bankruptcy Reform

The Bankruptcy and Insolvency Act was last updated in 1997. On June 3, 2005 the government introduced insolvency reform legislation in parliament. As of August 2005 it is not known if or when this proposed legislation will become law.

Related Topics:
1997 - June 3 - 2005 - Government - Parliament - August

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