Glossary

After-Acquired Property: The Property of a bankrupt that was acquired after the date of filing the bankruptcy but before the date of discharge
Assets: In the context of bankruptcy it means all the property of the debtor available for distribution for the general benefit of creditors (available for paying debts)
Assignment in Bankruptcy: A voluntary assignment by an insolvent person of all of his property to a trustee for the general benefit of creditors
Bankrupt: A natural person or corporation who has, or is deemed to have, made an assignment, or against whom a receiving order has been made under the Bankruptcy and Insolvency Act; the legal status of such a natural person or corporation
Bankrupt Estate: All assets of the bankrupt which vest in the Trustee for the benefit of creditors
Bankruptcy: A legal process governed by the Bankruptcy and Insolvency Act; the state of being bankrupt or the fact of becoming bankrupt, voluntarily or involuntarily
Bankruptcy and Insolvency Act: Also referred to as the BIA; the federal statute with respect to bankruptcy and insolvency in Canada, which is applicable to all provinces and territories
Conflict of Interest: The circumstance of a person who finds that one of his activities, interests, etc. may have a contrary interest on another of his interests or activities
Certificate of Full Performance of Proposal: A document issued by the trustee or administrator once a debtor has fully performed his or her obligations under the proposal
Consumer Proposal: A simplified process to make a proposal for repayment of debt to creditors, available under the Bankruptcy and Insolvency Act to a consumer debtor whose aggregate debts, excluding any debts secured by the person's principal residence, do not exceed the amount prescribed in the Bankruptcy and Insolvency Act
Contingent Claim: A provable claim in bankruptcy that may or may not become a debt depending upon the result of some future event
Counselling: To assist and educate bankrupts and relatives of bankrupts, or consumer debtors, on good financial management, including prudent use of consumer credit and budgeting principles; to developing successful strategies for achieving financial goals and overcoming financial setbacks ; and at any time, where appropriate, making referrals to deal with non-budgetary causes of insolvency; e.g.: gambling, addiction, marital and family problems, etc.
Court Appointed: An appointment sanctioned by the Court. Once a receiver, receiver manager or Trustee is appointed, he becomes an Officer of the Court. Court appointments usually result from an application to the Court requesting such appointment
Creditor: One to whom a debt is owed; in insolvency matters, a person having a claim, secured, preferred or unsecured, provable as a claim under the Bankruptcy and Insolvency Act
Debt: Money, goods, or services owing from one person to another; a liability; a legal obligation
Debtor: A person who owes money, goods or services to another; an insolvent person who is not bankrupt
Directors’ Liability: The liability of the directors of a company to the shareholders and others for negligence, fraud, or
acts committed outside the scope of their authority
Disallowance: To refuse or to set aside; for example the Trustee in Bankruptcy under the Bankruptcy and Insolvency Act can disallow a claim submitted by a creditor
Discharge: To cancel or relieve a person of an obligation or responsibility to repay his or her debts; may be automatic, absolute, suspended, or conditional:

- Automatic Discharge
A debtor whose discharge is not opposed by the Superintendent of Bankruptcy, the Trustee or a creditor and who has not refused or neglected to receive counselling, is automatically discharged after 9, 21, 24 or 36 months, depending on whether it is a first or second bankruptcy. The discharge also depends on whether or not the bankrupt is required to pay a portion of his or her surplus income into the bankruptcy estate per the standard established by the OSB.

- Order of Absolute Discharge
This official document issued by the court relieves the debtor of the debts incurred before the
debtor declared bankruptcy, taking under consideration the exceptions provided in the Act.

- Order of Conditional Discharge
The court may impose certain conditions that must be met before a person's discharge becomes absolute. For example, the Court may require you to pay an amount to your Trustee for distribution to your creditors.

- Order of Suspended Discharge
The court orders a delay so that the discharge will not be effective until a certain date.
Dividend: The proportional share of a bankrupt's estate paid out by the Trustee to creditors who have proven claims against that estate
Encumbrance: A claim on property or chattels usually a registered charge held by a secured creditor
Equity: The difference between the market value of an asset and the secured debt against it
Examination: Questioning of the bankrupt under oath with respect to the bankrupt's conduct, causes of bankruptcy and disposition of the bankrupt's property. The examination may be conducted by an Official Receiver, a Trustee, a creditor or other interested person in accordance with conditions prescribed in the Bankruptcy and Insolvency Act
Exempt Asset: Any asset owned by the bankrupt which is exempt from execution, garnishment, or seizure, under federal or provincial legislation, and does not vest in the Trustee in Bankruptcy for the benefit of the creditors
Exemptions: Those items that cannot be legally seized by any execution creditor to enforce a debt, or by a Trustee in Bankruptcy
First Meeting (of Creditors): Meeting required to be called by the Trustee to consider the affairs of the bankrupt, or the proposal filed by a debtor, to affirm the appointment of the Trustee, to appoint inspectors, and to give such directions to the Trustee as the creditors may see fit
Foreclosure: A legal proceeding commenced after a mortgage is in default, permitting the mortgagee to seize and sell the property to satisfy the debt
Former Trustee: A Trustee who has been substituted by another Trustee under the Bankruptcy and Insolvency Act
Garnishment: To attach property, monies, earnings, or receivables belonging to a debtor while in the hands of a third party; can be accomplished with a Garnishee Order issued by the Court or the Canada Revenue Agency, without a Court Order
Guarantor: One is who answerable and financially responsible on behalf of someone else, who is primarily responsible.
Insolvency: The inability to pay debts as they become due, in the usual course; or, having liabilities in excess of a reasonable market value of assets held. It is not synonymous with bankruptcy
Insolvent Person: A person who is not bankrupt and whose liabilities exceed his/her assets and/ or ability to pay. The Bankruptcy and Insolvency Act defines an insolvent person as – “a person who is not bankrupt and who resides, carries on business, or has property in Canada and whose liabilities to creditors provable as claims under this Act amount to $1,000 and who is for any reason, unable to meet his obligations as they generally become due, who has ceased paying his current obligations in the ordinary course of business as they generally become due, or the aggregate of whose property is not, at a fair valuation, sufficient or, if disposed of at a fairly conducted sale under legal process, would not be sufficient to enable payment of all his obligations, due and accruing due”
Inspector: Inspectors are appointed by creditors at the first or subsequent meeting of creditors to represent them before the Trustee during the administration of proposals and bankruptcies. They are expected to assist the trustee by virtue of their experience and are required to supervise certain aspects of the Trustee's administration
Interim Receiver: A licensed Trustee appointed by the court to safeguard the estate assets and perform such other functions as the court may order for such time period as the court may determine. Protects the debtor’s property and the interests of the creditors during the period the insolvency proceedings are pending and the rights of the creditors are stayed
Liabilities: Financial obligations or debt of an individual or a business, including unpaid taxes, salaries, accounts payable etc.
Lien: A right to enforce a claim upon or retain possession of a debtor’s asset until the claim is satisfied, usually arising by operation of law rather than express contract between parties
Look-See Engagement: An overall review or assessment of the operations and management of a business, including the security position of the lenders, for the purpose of reporting to the management, owners, and creditors. The scope and purpose of the review are set out in the engagement letter
Notice of Intention to Enforce Security: The statutory notice required by the Bankruptcy and Insolvency Act to be sent by a secured creditor to an insolvent debtor ten days before the security agreement can be enforced and any of the debtor’s assets seized
Notice of Intention to File a Proposal (NOI): A legal document filed with the Official Receiver stating that the debtor intends to file a proposal. The document is to include the name and address of the licensed trustee who has consented in writing to act as the trustee under the proposal and the names of the creditors who are owed $250 or more and the amounts of their claims. The filing of this document triggers the protection afforded to insolvent debtors under the Bankruptcy and Insolvency Act
Office of the Superintendent of Bankruptcy: Also referred to as the OSB, an agency of Industry Canada. The Office of the Superintendent of Bankruptcy supervises the administration of the Bankruptcy and Insolvency Act.; the OSB has Division Offices throughout Canada
Official Receiver: A person appointed by the Governor in Council and deemed to be an office of the Court who reports to the Superintendent of Bankruptcy on the estates originating in his division and performs statutory duties as specified by the Bankruptcy and Insolvency Act
Power of Sale: The right to sell land when a mortgage is in default
Preferred Creditor: A creditor who has been given priority under the Bankruptcy and Insolvency Act over other creditors in the distribution of dividends
Preliminary Report to the Creditors: The report required to be presented by the Trustee at the first meeting of creditors on his findings with respect to the debtor’s records, assets, conservatory and protective measures taken, provable claims against the estate, legal proceedings, reviewable transactions, preference payments, conflicts of interest, fee guarantees or deposits, anticipated realization, projected distribution, and any other relevant matters
Proposal: An offer to creditors to settle one’s debts under other than the existing terms. May be an informal contractual agreement, or a former proposal under a federal statute, the Bankruptcy and Insolvency Act, Companies’ Creditors Arrangement Act, Winding-up and Restructuring Act
Proof of Claim: A creditor's written statement that is submitted to prove the creditor's claim; used as the basis for paying dividends, if accepted by the Trustee
Proven Claim: A claim that has been filed in the proper manner with evidence to prove what is owed and accepted by the Trustee in Bankruptcy and used as the basis for the payment of dividends when there are monies available for distribution
Proxy: A document signed by a creditor granting another person the authority to represent them at creditors' meetings; the proxy holder can exercise the creditor's right to vote
Receiver: A person appointed privately under an instrument or by Order of the Court for a specific purpose usually to seize and sell the property of the debtor. Cannot carry on the business of the debtor after his appointment
Secured Creditor: A person holding an instrument such as a mortgage or a lien on or against the whole or part of the property of a debtor as security for a debt due him from the debtor
Statement of Affairs: A statement of financial position similar to a balance sheet; a statement of assets and liabilities drawn up to indicate the amounts which may be expected to be realized if the debtor’s property is sold and the manner in which the proceeds of such sale will be distributed, having regard for the interests if secured, preferred, and unsecured creditors
Statement of Receipts and Disbursements: A statement detailing the receipt and disbursement of funds, interest received, fees charged by the trustee, all the dividends distributed to the creditors and particulars of property that is not sold
Stay of Proceedings: A bar against any creditor for the recovery of a claim provable in bankruptcy against the insolvent person or the insolvent person's property. No creditor shall start or continue any action, execution or other proceeding for the recovery of such claims
Summary Administration: A type of bankrupt estate in which, at the time of filing, unencumbered, realizable assets are valued at $15,000 or less
Superintendent of Bankruptcy: A federally appointed official who oversees the administration of the Bankruptcy and Insolvency
Act in Canada
Surplus Income: The portion of an individual bankrupt's income that is required to be paid into the bankruptcy estate during the bankruptcy as per standards established by the OSB
Tender: An offer in writing to buy or sell
Trustee in Bankruptcy: A person who is licensed or appointed under the Bankruptcy and Insolvency Act to administer a bankrupt estate or a proposal
Unsecured Creditor: A creditor who advances credit without taking any rights against the property of the debtor
Voting Letter: A document in which a creditor with a provable claim registers his vote for or against the acceptance of a proposal

** All definitions have been taken from the Office of the Superintendent of Bankruptcy’s (OSB)website and the Canadian Association of Insolvency and Restructuring Professional’s (CAIRP) website **

Terms and Definitions