Draft Policy on Reinstating a Licence that has Ceased to be Valid by Reason of the Trustee Becoming Bankrupt
This document is a draft and should only be used for the purposes of this online consultation.
This policy sets out the factors the Superintendent may consider when deciding whether to reinstate the licence of a trustee pursuant to paragraph 13.2(4)(b) of the Bankruptcy and Insolvency Act (BIA).
B. Sources and General Principles
As a general rule, the Superintendent may reinstate the licence of a trustee whose licence has ceased to be valid by reason of the trustee becoming bankrupt (hereinafter “the applicant”) only after the discharge of the trustee who administered the applicant’s bankruptcy (hereinafter “the administering trustee”).
The Superintendent will handle reinstatement applications under paragraph 13.2(4)(b) of the BIA on a case-by-case basis having regard to the factors set out in Part D.
If the applicant’s bankruptcy was the result of fraudulent activities or other willful misconduct, the Superintendent will generally refuse reinstatement of the licence in the interest of protecting the integrity of the bankruptcy and insolvency system.
C. Application Process
A trustee whose licence has ceased to be valid by reason of the trustee becoming bankrupt may apply for reinstatement of his or her licence by submitting written representations to that effect to the Superintendent.
An applicant must provide an attestation of professional competence showing that he or she has kept up-to-date with developments in the insolvency field, and provide an attestation of good character showing that there have been no breaches, investigations or sanctions against the applicant that may impair public confidence in the bankruptcy and insolvency system.
D. Factors to be Considered
Upon receipt of an application for reinstatement under paragraph 13.2(4)(b) of the BIA, the Superintendent will consider various factors, which may include, but are not limited to, the following:
- Factors relating to the period prior to the bankruptcy:
- Causes of the bankruptcy.
- Whether the applicant breached his/her fiduciary obligations.
- Whether the applicant willfully neglected his/her creditors, was financially irresponsible, or whether his/her personal extravagance contributed to the bankruptcy.
- Number, nature and quantum of the applicant’s creditors.
- Nature of the applicant’s practice (number and type of files).
- History of the applicant’s licence and the firm at which the applicant worked.
- Whether the applicant committed any act that is, by its nature, fraudulent or subject to sanction as criminal by a court of competent jurisdiction.
- Factors relating to the period of bankruptcy:
- Amount of time between the date of bankruptcy and the discharge of the administering trustee.
- Applicant’s discharge and any conditions of discharge.
- Whether the administering trustee has been discharged.
- Relative percentage and amount of dividends recovered by creditors.
- Factors relating to the period following the bankruptcy:
- Whether the applicant will be working with other trustees and will, therefore, be subject to internal control processes and procedures.
- The applicant’s financial situation, including cash reserves to enable the applicant to operate the business, if applicable, over a period of time.
- The applicant’s controls and reporting over trust accounts.
- Whether the Superintendent believes the applicant is:
- competent to carry on the practice of a trustee;
- capable of performing the essential duties associated with his/her employment; and
- capable of carrying out any business or practice in which the applicant is engaged.
- Other factors, such as references to be submitted by the applicant, and the time period between the discharge of the applicant and the application for reinstatement.
While the above factors are intended to clarify the basis upon which the Superintendent may decide to reinstate a licence of a trustee whose licence has ceased to be valid by reason of bankruptcy, the Superintendent maintains the ultimate discretion in the matter.
The Superintendent may reinstate a licence with or without conditions or limitations, or may refuse the reinstatement application. The applicant will be notified accordingly.