Bennett on Consumer Bankruptcy. Frank Bennett

a trustee directory, resources for additional reading, statistics, and other relevant information. The Superintendent’s contact information is set out in Appendix II.

      4. The Official Receiver

      The Superintendent of Bankruptcy monitors the function and role of trustees through various offices throughout Canada, and is represented by Official Receivers throughout Canada. Each province is a bankruptcy district, and within each district, there may be one or more divisions. Within the division, there are a number of Official Receivers that represent the Superintendent.

      Under the Bankruptcy and Insolvency Act, the Superintendent and the Official Receivers are required to perform certain tasks during the administration of the bankrupt’s estate. For example, the trustee’s conduct is monitored by the Official Receiver on behalf of the Superintendent. Any complaint about a trustee is usually given to the Official Receiver in the area where the trustee practises. The Official Receiver chairs the first meeting of creditors in the bankruptcy or under a proposal. However, the Official Receiver can delegate this function to the trustee. Where necessary, the Official Receiver examines the bankrupt or the principal of the bankrupt if it is a corporation concerning the conduct of the bankruptcy, and the disposition of assets that may have been transferred or conveyed before the bankruptcy.

      The offices of the Official Receivers are set out in Appendix II.

      5. The Bankruptcy Judge

      Most consumer debtors who go through the bankruptcy process never appear before the bankruptcy judge. However, if the consumer debtor has been bankrupt before or has been reckless with his or her assets before going into bankruptcy or has incurred significant debt, then it is probable that when the debtor applies to get out, or get discharged, he or she will be required to attend before the registrar or the bankruptcy judge to explain the circumstances surrounding the bankruptcy.

      The bankruptcy judge hears many other matters arising out the bankruptcy. One area is that of discharges where the creditors have an opportunity to oppose the debtor’s application. Once the debtor is placed into bankruptcy, the trustee has a duty to file for the bankrupt’s discharge hearing. There is more about discharges in Chapter 14.

      6. The Registrar in Bankruptcy

      The registrar in bankruptcy is also a court official. The registrar has the authority to rule and judge certain types of cases. Depending on the need, there is usually only one registrar in each province whose office is close to the superior court in the capital. However, there may be deputy registrars in other cities of the province. The deputies have the same authority as the registrar.

      In Ontario, there are two registrars who sit in Toronto; there are also deputy registrars, one in London and the other in Ottawa. In Quebec, there are several registrars located in major centres.

      The powers of the registrar are set out in the Bankruptcy and Insolvency Act. The registrar can —

      • hear cases where both sides have agreed to some solution of a problem;

      • examine any person under oath who has knowledge of the bankrupt’s affairs;

      • grant orders of discharge; that is, once the debtor is in bankruptcy, the debtor will usually want to get out or get “discharged”; that hearing can take place before the registrar;

      • make orders in urgent cases;

      • determine matters relating to proofs of claim; and

      • fix the fees of the trustee and the fees of the lawyer for the trustee.

      With respect to discharge hearings, the court administration determines whether the discharge is heard by the registrar or bankruptcy judge. The registrar also has other powers that are of a more technical nature.

      7. The Inspectors

      Inspectors are persons who represent the creditors and guide the trustee in the deliberations and actions throughout the administration. Once a bankruptcy occurs, there may be a meeting of creditors if requested by the creditors or the trustee. There is seldom a creditors’ meeting in consumer bankruptcies. If a meeting is held, the creditors appoint representatives amongst themselves to discuss the bankrupt’s financial affairs with the trustee. Those representatives are called inspectors. In most cases, those representatives are present at the first meeting of creditors.

      Under the Bankruptcy and Insolvency Act, there can be a maximum of five inspectors appointed. Usually, there is an odd number so that a deadlock vote does not occur, although the trustee may vote in the case of a tie. In consumer bankruptcies, there are usually no inspectors since there are no assets or very few assets to administer. Inspectors are paid a nominal amount for each meeting that they attend. Meetings are held to —

      • discuss the method and the mechanics of the sale of the bankrupt’s assets,

      • investigate the affairs of the bankrupt,

      • authorize any examination of the bankrupt or others,

      • authorize lawsuits to void transactions, and

      • generally assist the trustee in making decisions.

      The trustee relies on the advice of the inspectors since they represent the creditors. They are usually knowledgeable persons who supplied the bankrupt with goods, services, or money, and generally know much about the bankrupt’s business and affairs.

      8. Others

      There are other people who are involved in the bankruptcy process. However, while the debtor may not come into contact with them, the debtor may hear about them throughout the process. For example, there is the bailiff who represents the landlord; the bailiff locks the doors of the tenant debtor if the tenant fails to pay the rent. Then there is the inventory counter, and the liquidator and auctioneer who sells the debtor’s assets at an auction or at a private sale.

      In both the Official Receiver’s office and in the bankruptcy office of the superior court of the province, there are staff members who assist in processing the bankruptcy documents for the public record and assist in conducting searches. They coordinate the times for the court proceedings. In the trustee’s office, there are clerks and estate managers who assist the trustee in interviewing and in completing the reports that are required in each bankruptcy estate. Many unseen people are involved.

      Chapter 3

      Time Sequence in the Bankruptcy Process

      There are several major steps to processing the bankruptcy paperwork when going through bankruptcy from beginning to end. These steps are highlighted in this chapter. After reading this book or parts of it, the consumer debtor may have questions that are not answered and therefore, should make up a list of questions to ask the trustee in bankruptcy before the papers are signed and filed. In addition, and depending on the consumer debtor’s particular problems, the consumer debtor may want to see a lawyer first who has experience in this area, or an accountant who may have a general background in dealing with bankruptcy and insolvency situations. The consumer debtor should definitely consult a lawyer before the papers are signed and filed because once they are filed with the Official Receiver’s office, the lawyer will not likely be able to reverse the process and the lawyer’s advice as to whether the bankruptcy route was proper will be too late.

      As mentioned in previous chapters, there are ways to avoid bankruptcy including negotiating with the creditors on an informal basis or making a formal proposal under the Bankruptcy and Insolvency Act. These and other choices are discussed further in Chapter 9.

      For a visual of the time sequence involved in bankruptcy, see Figure 2.

      Figure