Glossary

Allan Marshall & Associates Inc. is pleased to provide with the following list of commonly used terms and definitions for your benefit.

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Administrator
The party responsible for the administration of a Consumer Proposal under the Bankruptcy and Insolvency Act; i.e., a trustee or such other person designated by the Superintendent of Bankruptcy.

Assignment (in Bankruptcy)
The transfer of assets and liabilities by an insolvent person to a trustee for the general benefit of creditors.

Auction
A Public sale in which articles are sold to the highest bidder.

Bankrupt
A person or company who has made an assignment or against whom a receiving order has been made

CIRP
(Chartered Insolvency and Restructuring Professional) This designation used by a general or life members of the Canadian Association of Insolvency and Restructuring Professionals.

Chattel
Movable property.

Chattel Mortgage
A lien or charge on personal property normally taken as security by a person lending money or selling an asset.

Claim Provable
Includes any claim or liability provable in proceedings under the Bankruptcy and Insolvency Act by a secured, preferred or unsecured creditor.

Collateral
security pledged for the payment of a loan or property subject to a secured interest.

Commissioner of Oaths
Commissioner for taking affidavits in a province as authorized by provincial statue.

Consumer Proposal
A simplified form of Proposal available to debtors owing less than $75,000.00, excluding a mortgage on the principal residence, under the Bankruptcy and Insolvency Act.

Contingent
Dependent upon other circumstances not yet certain. A contingent claim in a bankruptcy proceeding is one which has not yet occurred and which is dependent on some future event that may or may not happen.

Creditor
A person to whom money is owed for goods or services.

Crystallize
The process of converting a floating charge on assets under a debenture to a charge attaching to specific assets, usually by issuing a formal demand for payment.

Debt
Money, goods or services owing; a liability.

Debtor
One who owes money, goods or services; including an insolvent person.

Defalcation
Misappropriation of money held by an employee, official, trustee or other fiduciary. In bankruptcy, it is grounds for not having the debt released at the time of discharge.

Default
Failure to do something required by duty or law.

Directors
Persons elected by the shareholders of a corporation to manage or supervise the management of the affairs and business of the company.

Disallowance
a refusal to admit the validity of a secured, preferred or unsecured claim.

Discharge
To be released from debts through bankruptcy. Also, the Court discharges the trustee after he completes his administration of the estate. Release from debt and the state of being bankrupt. It may be absolute or conditional.

Dividend
A sum of money paid by the trustee to creditors who have proven claims in a bankrupt estate.

Duties
Moral or legal obligations defined by the Bankruptcy and Insolvency Act.

Encumbrances
A claim on property or chattels, such claim usually being a registered charge held by a secured creditor.

Equity
The excess of the market value of an asset over any secured indebtedness against that asset.

Examination (of a bankrupt)
Questions put to the bankrupt by the Official Receiver, Trustee or other interested person.

Final Dividend
The last distribution to creditors of an estate.

First Meeting (of Creditors)
Meeting called to consider the affairs of the bankrupt, or debtor in a Proposal, to affirm the appointment of the trustee, to appoint inspectors, and to give such directions to the trustee as the creditors may see fit.

Floating Charge
A type of security interest that charges the debtor’s property but does not attach to any specific item until crystallized. This allows the debtor to deal with the property in the normal course of business until the creditor holding the floating charge takes action to enforce his security.

Fraud
An act of deception or misrepresentation. An intentional perversion of the truth’ deceitful practice or deceit resorted to with intent to deprive another of property or right.

Fraudulent Preference
Every conveyance, transfer of property, payment or obligation incurred by an insolvent, (who subsequently becomes a bankrupt), in favor of a creditor with a view or intent to give that creditor a preference over the other creditors.

Garnishee
To attach a lien on property, monies, earnings or receivables belonging to a debtor while it is in the hands of a third person. This can be accomplished with a Garnishee Order from the Court or by the Revenue Canada without a Court order.

Guarantee
An assurance for fulfillment of a contract.

Guarantor
One who is answerable and financially responsible on behalf of someone else who is primarily responsible.

Insolvent
Means a state of a person or company who is not bankrupt and resides or carries on business in Canada whose liabilities to creditors provable as claims under the Bankruptcy and Insolvency Act amount to at least $1,000.00 and; (a) Who is, for any reason, unable to meet his obligations as they generally become due, or; (b) Who has ceased paying his current obligations in the ordinary course of business as they generally become due, or; (c) The aggregate of whose property under legal process, would not be sufficient to enable payment of all his obligations, due and accruing due.

Interim Dividend
Dividend paid to creditors before the administration of the estate of the bankrupt has finalized; any dividend that is not a final dividend.

Interim Receiver
A person appointed to protect the assets of the debtor during an interval before a receiving order is returnable in the case of a petition in bankruptcy and before a proposal receives Court approval.

Judgment
A formal decision given by a Court; sentence or Order of a Court of justice; e.g., after hearing a petition, the Court issues a judgment either granting the receiving order or dismissing the petition.

Levy
To impose or collect by Legal authority; an assessment imposed by the Superintendent of Bankruptcy of 5% on all dividends to assist in the financing of bankruptcy administration.

Liability
Monies owed; debts or pecuniary obligations.

Lien
Security for the holder against a debtor’s assets, usually arising by operation of law rather than express contract between the parties.

Mortgage
Instrument whereby land or a chattel is in any manner conveyed, assigned, pledged, or charged as security for the payment of money or monies which will be re-conveyed, reassigned or released on satisfaction of the debt. Does not include an agreement for sale, a right to purchase land or an interest in land.

Offences
Bankruptcy offences and punishments are set out in Part VIII, sections 198 to 208, of the Act; e.g., a bankrupt who makes any fraudulent disposition of property before or after bankruptcy is guilty of an offence and may be subject to fine or imprisonment.

Officers (of a company)
Officials of a corporation appointed by the Board of Directors to manage the day-to-day affairs of the company; e.g., President, Vice-President, Secretary, Treasurer, etc.

Official Receiver
Person appointed by the Governor in Council who shall be deemed to be an officer of the Court, report to the superintendent of Bankruptcy, and perform duties and responsibilities specified by the Bankruptcy and Insolvency Act.

Perfection
Requirement necessary before security interest attaches; achieved by either taking physical possession of the collateral or by proper registration of the security document as prescribed by the applicable statute.

Postponement
To place after in order of importance; to put off to a later time.

Preference
The payment of money or granting of security by an insolvent debtor to one or more of his creditors to the detriment of his other creditors.

Preferred Claims
As detailed in S.136 of the Bankruptcy and Insolvency Act, paid out in priority to unsecured ordinary claims.

Property (Real or Personal)
Includes money, goods, things in action, land, and every description of property, real or personal, movable or immovable, legal or equitable, and whether situated in Canada or elsewhere, and includes obligations, easements, and every description of estate, interest and profit, present or future, vested or contingent, in, arising out of, or incident to property.

Proposal
An offer to creditors to settle one’s debts under than the existing terms. Division I proposals are for corporations and individuals whose debts exceed a prescribed amount. Division II proposals are called consumer proposals and are for individuals whose debts do not exceed the prescribed amount.

Provable Claims
All debts and liabilities, present or future, to which the bankrupt is subject at the date of the bankruptcy, or to which he may become subject before his discharge by reason of any obligation incurred before the date of the bankruptcy, shall be deemed to be claims provable.

Proven Claim
Claim that has been filed with the trustee in accordance with S.124. Such claim may be “admitted” in the estate by the trustee after scrutiny, or disallowed.

Proxy (General & Limited)
A written statement by which a creditor can appoint a person as his nominee to attend meetings of creditors and act for him on his behalf. A proxy is also a person appointed to act on behalf of another.

Purchase Money Security Interest
A superior type of security interest under most Personal property Security Acts whereby a lender who provides the funds to finance the purchase of an asset obtains the first secured charge on the asset. Colloquially, referred to as a “pimsy” (PMSI).

Receiver
A person or corporation appointed under an instrument, (usually a debenture), for a specific reason usually to take control of assets in order for a secured creditor to recover on its debt. The major difference between a receiver and a receiver-manager is that the receiver cannot carry on the business of a corporation for a limited period after his appointment; may also be Court appointed. A receiver is also a defined in Part XI of the Bankruptcy and Insolvency Act as a person who has been appointed to take, or has taken, possession or control pursuant to a security agreement or Court order, of all or substantially all of a business debtor’s accounts receivable, inventory or other property. Receivers have various duties and responsibilities under this part of the Act.

Registrar
Officer of the Supreme Court appointed by the Chief Justice of the Court for the transaction and disposal of matters as detailed within the Bankruptcy and Insolvency Act; powers include settling and signing orders, hearing discharge applications, taxing of fees, the summoning and examining of a bankrupt, substituting for the Official Receiver in case of absence or illness, and the referral of matters to a Judge.

Reviewable Transactions
A person who has entered into a transaction with another person otherwise than at arm’s length, shall be deemed to have entered into a reviewable transaction.

Secured
The status of a creditor holding a mortgage, hypothec, pledge, charge, lien or privilege on or against the property of the debtor or any part thereof as security for a debt due or accruing due to him from the debtor, or a person whose claim is based upon or secured by a negotiable instrument held as collateral security and upon the debtor is only indirectly or secondarily liable.

Settlement
A contract, covenant, transfer, gift and designation of beneficiary in an insurance contract to the extent that it is gratuitous or made for normal consideration; Certain settlements are void pursuant to S.91 of the Bankruptcy and Insolvency Act.

Sheriff
An officer of a county or district whose principal duties are to aid criminal and civil Courts. He serves, processed, summons, executes judgments, and holds judicial sales; includes bailiff and any officer charged with the execution of a writ or other process under the Bankruptcy and Insolvency Act or any other Act or proceeding with respect to nay property of a 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 of preferred, secured, and unsecured creditors. Under S.158(d) of the Bankruptcy and Insolvency Act, it is the duty of a bankrupt to complete a statement of affairs within 7 days of his bankruptcy.

Statement of Receipts and Disbursements
A statement detailing the receipt and disbursement of funds and interest received by the trustee, the remuneration claimed by the trustee and full particulars of all property of the bankrupt that has not been sold or realized.

Stay of Proceedings
A stopping or arresting of a judicial proceeding.

Trustee in Bankruptcy
A person who is licensed and appointed under the Bankruptcy and Insolvency Act to administer a bankrupt estate or proposal. Duties and qualifications are outlined in the Bankruptcy and Insolvency Act.

Voting letter
Document in which a proven creditor registers his vote for or against the acceptance of a Proposal.