Samson Bélair Deloitte Touche Inc.
In the matter of:
Pfeiffer & Pfeiffer Inc.
Sydney H. Pfeiffer
Instructions For Conservatory Measures
(section 14.03 of the Bankruptcy and Insolvency Act)
Whereas the Bankruptcy and Insolvency Act provides the Superintendent with the general power to supervise the administration of all estates and matters to which the Act applies;
Whereas Mr. Robert Massé, auditor, for the Office of the Superintendent of Bankruptcy, began a general audit of the trustee firm Pfeiffer & Pfeiffer Inc. on May 1st, 2002;
Whereas during the course of this audit and despite the trustee's lack of collaboration, Mr. Massé identified numerous irregularities in the trustee's practice, specifically that estate funds are not invested in authorized investment products, the interest is not distributed and/or paid to estate accounts in accordance with the Superintendent's Directives, fees have been withdrawn without proper authorization, the accounting system as used by the trustee does not meet the minimal standards imposed by the Superintendent's Directives, thereby not permitting an adequate evaluation of accounting data or of transactions performed within each estate, and consequently, making it impossible to render an opinion as to the proper administration of the estates;
Whereas, when questioned about these various irregularities, the trustee could not provide satisfactory explanations, he provided copies of bank documents which appeared to be incomplete and he refused to produce the originals of these documents, also not producing others documents pertaining to accounting and banking matters as requested by the auditor Robert Massé;
Whereas the delays, the lack of collaboration by the trustee and his refusal to produce documents requested by the auditor Robert Massé prevented Mr. Massé from continuing his audit of the trustee Pfeiffer & Pfeiffer Inc. causing him to leave the trustee's office on June 19, 2002;
Whereas Mr. Raymond Villemure, Assistant Superintendent Audit, required the trustee Pfeiffer & Pfeiffer Inc., by letter dated June 21, 2002 to produce various banking and accounting documents on or before June 26, 2002;
Whereas the trustees did not respond in a satisfactory manner to Mr. Raymond Villemure
Whereas on July 5, 2002, for the above mentioned reasons and with a view to protecting the estates, the undersigned issued conservatory measures which enjoined financial institutions where, according to information given by the trustees, estate funds had been deposited to make no debit, payment or transfer on funds credited to the estates administered by the trustees unless they be co-signed by a representative of the Office of the Superintendent of Bankruptcy;
Whereas these measures also enjoined the Official Receiver to stop appointing the trustees to new files and also enjoined a representative of Industry Canada, to make a copy of the trustees' electronic data and accounting data related to the estates;
Whereas subsequent to the issuance of these conservatory measures, the investigation revealed that the trustees misled representatives of the Office of the Superintendent of Bankruptcy by making false statements and by knowingly providing incomplete, erroneous and false documents;
Whereas on July 15th, 2002, the trustees Pfeiffer & Pfeiffer Inc. and Sydney H. Pfeiffer were required to account for estates trust funds that they were presumably holding in a consolidated trust account;
Whereas the trustees were unable to account for a substantial part of the estates trust funds;
Whereas the Superintendent of Bankruptcy may and must, for the protection of an estate, exercise the powers referred to in subsection 14.03(1) of the Act in the circumstances stipulated in subsection 14.03(2) of the Act;
Whereas the Superintendent of Bankruptcy has delegated to the Deputy Superintendent (Policy, Programs and Standards, now Programs, Standards and Regulatory Affairs) in accordance with subsection 14.01(2) of the Act, in certain situations mentioned in subsection 14.03(2), his powers as specified at subsection 14.03 (1) of the Act, copies of which delegation are attached along with copies of subsections 14.01(2) and 14.03(1) to (4) of the Act ;
In accordance with paragraphs 14.03(1)a) and b) of the Bankruptcy and Insolvency Act;
I, Alain Lafontaine, in my capacity as Deputy Superintendent (Programs, Standards and Regulatory Affairs), give instruction to:
Samson Bélair Deloitte Touche Inc, as agent of the Office of the Superintendent of Bankruptcy, to take all the necessary steps to continue the administration of the estates and estate files that were administered by Pfeiffer & Pfeiffer Inc. and Sydney H. Pfeiffer trustees, a list of which is provided as Appendix A and namely:
- to keep the said property and files, titles, documents and electronic data related to files mentioned in Appendix A, to make an inventory of them, to preserve them in accordance with the Bankruptcy and Insolvency Act;
- to continue the administration of these files in accordance with the duties and responsibilities incumbent on trustees in bankruptcy according to the Act;
These instructions take effect immediately and will stay in place until further notice or until a decision is rendered under section 14.01 of the Act;
In accordance with subsection 14.03(3) of the Act, these instructions bind their addressee, who must comply with them;
In accordance with subsection 14.03(4) of the Act, a person who complies with the present instructions is not liable for any act done by the person only to comply with them.
Signed, in the City of Ottawa, Ontario, July 24th, 2002
Deputy Superintendent (Programs, Standards and Regulatory Affairs)
This document has been reproduced as submitted by the delegate of the Superintendent of Bankruptcy.