Superintendent's Statement on Faxed and Electronic Proofs of Claim
Recently the Office of the Superintendent of Bankruptcy has received a number of enquiries regarding the validity of Proofs of Claim filed with the trustee by fax and by a web-based mode of transmission that uses scanned images of signatures. The position of the OSB on these matters is summarized below.
Proofs of Claim Sent By Fax
Over the past number of years, facsimile transmission of documents has become a widely-accepted and efficient means of transmitting documents between parties, and questions of the validity of these documents have been largely resolved over time. The Federal Court, for example, acknowledges that the concept of the 'original signature' has over time evolved towards that of 'handwritten' signature which is sufficient to permit faxed affidavits and consents. Similarly, the OSB has accepted faxed assignment documents for several years. A safeguard exists in the fact that there is a signed and witnessed original retained by the sender, which can be produced for evidentiary purposes should the need arise.
Subsection 108(2) of the Bankruptcy and Insolvency Act (BIA) specifically allows for electronically transmitted proofs of claim for the purposes of voting. Trustees have the ability to require additional proof from a creditor when necessary to help them decide whether to accept or reject a claim. In their professional capacity, trustees must weigh the risks associated with accepting any claim and demand the appropriate degree of proof. Clearly, the risks are lower when no dividends will be paid.
The OSB is unaware of any current challenges to the acceptability of a document with a faxed signature, and has no particular concern with the judicious use of faxed proofs of claim.
Electronically Transmitted Proofs of Claim with Scanned Signatures
Determining the validity of an electronically transmitted proof of claim with scanned signatures is complicated by the fact that regulations for the Personal Information Protection and Electronic Documents Act (PIPEDA) have not as of this date been finalized, as well as by a lack of case law in this area. Section 46 of this federal statute states that the acceptable electronic equivalent of a document with a witnessed signature would contain 'secure electronic signatures'. Until such time as regulations are in force to define the features of a 'secure electronic signature', it is not possible to categorically declare whether the scanned signatures on proofs of claim are in compliance with PIPEDA or not. However, given the content of the proposed regulations on this subject, it would appear highly unlikely that a scanned signature would satisfy the exigencies of section 46.
The other salient difference is that there is no original signed and witnessed document in this situation. Trustees should be aware that they could be challenged by creditors, especially if dividends are being paid on the strength of proofs of claim with scanned signatures alone. Until such time as clear standards exist, trustees must be aware that there are risks involved in this practice, and that they could be held liable if another party can show it was prejudiced. Meanwhile, the OSB is continuing its efforts to remove any remaining impediments to the electronic transmission of documents between insolvency stakeholders. Earlier amendments to the BIA have done much to facilitate this already. Work is currently underway to identify any remaining hurdles, and wherever appropriate to remove them. In this way we will promote a modernized insolvency system and contribute to the Government's broader agenda of connecting Canadians and encouraging innovation.