Directive No. 13R4

Trustee Licensing

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Issued: December 19, 2012

The Office of the Superintendent of Bankruptcy (OSB) has amended Directive No. 13R3, Trustee Licensing.

These amendments reflect the completion of Phase I of the Review of the Licensing Regulatory Framework, which comprise technical and straightforward amendments.

Highlights of Amendments

Harmonization of the Directive with the Memorandum of Understanding between the Superintendent of Bankruptcy and the Canadian Association of Insolvency and Restructuring Professionals. The Directive now specifies new limits on the time frame and number of attempts to pass the oral exam before the Board of Examination. Appendix A, Licensing Process, provides flexibility on the makeup of the Board of Examination by allowing a reduced number of members to sit on the board, while still maintaining an adequate number of professionals.

Probationary Conditions for Newly Licensed Trustees. Appendix A clarifies the conditions under which the two-year probationary period may be lifted, shortened or extended.

Reactivation of the Licence in the Event of the Trustee's Bankruptcy. Appendix C, Policy on Reinstating a Licence that has Ceased to be Valid by Reason of the Trustee Becoming Bankrupt, specifies the factors the Superintendent may consider when deciding, on a case-by-case basis, whether to reinstate a licence that has ceased to be valid by reason of the trustee becoming bankrupt.

Consequential Amendments to Forms

Consequential amendments have been made to Form 2, Application for Trustee Licence (Individual), and Form 3, Application for Trustee Licence (Corporation), to reflect the amendments to the Directive.

Coming into Force

Directive No. 13R4, Trustee Licensing, comes into force on the day it is signed.

Enquiries

If you require further information, please do not hesitate to contact Sheila Westerink Robin, National Manager, Policy and Regulatory Affairs, at the OSB.

(Supersedes Directive No. 13R3 issued on December 8, 2011, on the same topic.)

Interpretation

  1. In this Directive,
    • "Act" means the Bankruptcy and Insolvency Act;
    • "applicant" means a person who applies for a trustee licence under the Act;
    • "CAIRP" means the Canadian Association of Insolvency and Restructuring Professionals;
    • "licence" means a licence issued by the Superintendent of Bankruptcy pursuant to the Act;
    • "MOU" means the Memorandum of Understanding between CAIRP and the OSB signed on October 8, 2009, or any further MOU as may be entered into between the parties thereafter. The MOU sets out the roles, responsibilities and interests of the parties with respect to the delivery of a professional qualification program for insolvency and restructuring professionals seeking a licence to act as a trustee in bankruptcy;
    • "OSB" means the Office of the Superintendent of Bankruptcy;
    • "professional engagement" means any bankruptcy or insolvency matter in respect of which a trustee is appointed or designated to act in that capacity pursuant to the Act;
    • "resident office" means the principal place of business from which the trustee normally practises;
    • "Rules" means the Bankruptcy and Insolvency General Rules;
    • "state of insolvency" means being bankrupt, having filed a notice of intention or a proposal under the Act or being subject to any similar proceedings under federal, provincial or foreign legislation.

Authority and Purpose

  1. This Directive is issued pursuant to paragraph 5(4)(d) of the Act for the purpose of specifying the criteria and qualifications required to obtain and maintain a trustee licence.

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Part I

Criteria to Obtain a Trustee Licence

A. Trustee Licence — Individual
Application
  1. Application by an individual for a trustee licence shall be made using Form 2, Application for Trustee Licence (Individual).
Prerequisite Qualifications
  1. An individual is eligible to obtain a licence if the individual meets the following prerequisites:
    1. the individual is not an insolvent person and has not been in a state of insolvency within five (5) years preceding the date of the application;
    2. the individual has successfully completed:
      1. the Chartered Insolvency and Restructuring Professional (CIRP) Qualification Program (CQP), unless otherwise exempted;
      2. the CIRP National Insolvency Examination (CNIE); and
      3. the Insolvency Counsellor's Qualification Course (ICQC),

        all of which are administered and governed by CAIRP in accordance with the MOU; and

    3. the individual is in good standing with and is not subject to any current disciplinary action by any professional organization of which the applicant is or was a member.
Personal Suitability
  1. An applicant who meets the prerequisite qualifications must also satisfy the reputation and suitability requirements described below.

(i) Reputation

  1. The applicant shall
    1. be of good character and reputation; and
    2. satisfy the Superintendent that the issuance of a licence will not impair public confidence in the bankruptcy and insolvency system.
  2. An applicant who has been found guilty of an indictable offence for which a pardon has not been granted must satisfy the Superintendent that such finding is not of a nature that would impair the trustee's capacity to perform his or her fiduciary duties nor impair public confidence in the bankruptcy and insolvency system.
  3. An applicant who has been found guilty of professional misconduct by any professional organization of which the applicant is or was a member shall satisfy the Superintendent that such finding is not of a nature that would impair the trustee's capacity to perform his or her fiduciary duties nor impair public confidence in the bankruptcy and insolvency system.

(ii) Suitability

  1. The suitability of an applicant to become a trustee is evaluated during an oral examination before a Board of Examination that will assess the skills of the applicant.
  2. After three unsuccessful attempts before the Board of Examination or after five (5) years following successful completion of the CNIE, whichever comes first, the onus is on the applicant to submit a request to the Superintendent for additional time or attempts to pass the oral examination and shall provide justification for such a request. This applies to all applicants who wrote the CNIE on or after October 8, 2009, the date the MOU was entered into.
Conditions
  1. An individual licence is issued subject to the following conditions:
    1. the trustee continues to meet the requirements of this Directive at all times;
    2. the trustee complies with the Act, Rules and Directives; and
    3. the trustee complies with any other condition or limitation that the Superintendent considers appropriate.
Limitations
  1. A licence may be limited to
    1. corporate bankruptcies and corporate proposals; or
    2. consumer bankruptcies and consumer proposals;

      or be subject to any other limitation that the Superintendent considers appropriate taking into account the Board of Examination's evaluation and the professional environment in which the applicant will operate.

  2. For the purposes of this Directive only, where a trustee licence is limited to consumer bankruptcies and consumer proposals pursuant to paragraph 12(b) of this Directive, a "consumer bankruptcy" means a bankruptcy in which an individual has, directly or indirectly, no business liabilities.
  3. Where a bankruptcy does not constitute a "consumer bankruptcy" as defined in paragraph 13 of this Directive and is not a corporate bankruptcy, such an estate may only be administered by a trustee holding a licence without limitations.
B. Trustee Licence — Corporate
Application
  1. Application for a corporate trustee licence shall be made using Form 3, Application for Trustee Licence (Corporation).
Pre-approval of Name
  1. A person who wishes to apply for a corporate trustee licence must
    1. first obtain pre-approval from the Superintendent for the proposed corporate trustee name; and
    2. then obtain the approval of the appropriate federal or provincial regulatory body regarding the proposed corporate name.
Corporate Requirements
    1. Subject to paragraphs 17(2), 18 and 19 of this Directive, the name of a corporate trustee shall only be composed of the names of one or more trustees or accountants that are practising or have actively practised either as trustees or accountants.
    2. The name of a corporate trustee may consist of the name of a monitor appointed in Companies' Creditors Arrangement Act (CCAA) proceedings commenced after September 30, 1997, and before the day on which subsection 1(1) of Chapter 36 of the Statutes of Canada, 2007, came into force.
    3. The corporate trustee must be a corporation incorporated under an Act of Parliament or of the legislature of a province.
  2. A corporate trustee may continue to use a name approved by the Superintendent prior to the date of coming into force of this Directive.
  3. The requirements of paragraph 17(1) of this Directive may be waived or varied in circumstances where the Superintendent is satisfied it is appropriate.
  4. The corporate trustee shall restrict its business to the duties and responsibilities of a trustee licensed pursuant to the Act and to other related functions, such as those of liquidator, receiver, interim receiver, receiver/manager, agent for a secured creditor or consultant in insolvency matters.
  5. A majority of the directors and a majority of the officers of a corporate trustee shall be licensed trustees.
  6. A corporate trustee shall be a private or closed company as defined in the applicable legislation.
  7. A trustee may, with pre-approval from the Superintendent, be a shareholder or a financial backer of more than one corporate trustee provided that
    1. the corporate trustees do not operate in the same district;
    2. the trustee satisfies the Superintendent that there is no conflict of interest; and
    3. the trustee respects any other conditions and limitations that the Superintendent considers appropriate.
  8. Notwithstanding paragraph 23 of this Directive, a trustee may, with pre-approval from the Superintendent, be a shareholder or a financial backer of more than one corporate trustee in the same district, for a limited period of time, in order to wind up the trustee's practice.
Issuance of Licence
  1. A corporate licence is issued subject to the following conditions:
    1. the corporate trustee continues to meet the requirements of this Directive at all times;
    2. the corporate trustee complies with the Act, Rules and Directives; and
    3. the corporate trustee complies with any other condition or limitation that the Superintendent considers appropriate.
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Part II

Conditions to Practise

General Requirements
  1. In order to perform professional engagements, the trustee must
    1. be solvent at all times;
    2. have financial resources sufficient to warrant confidence in the ability to properly administer professional engagements;
    3. have adequate facilities to perform his or her professional engagements; and
    4. have adequate professional liability insurance and adequate employee dishonesty (also known as fidelity) insurance, a bond or other suitable financial arrangements.
Corporate Representation
  1. Subject to paragraph 28 of this Directive, a corporate trustee must, at all times and in each district for which it holds a licence, operate through an individual trustee.
  2. In extraordinary circumstances, where the corporate trustee is left with no individual trustee in a given district due to an unforeseen event, such as death, sickness or resignation of an individual trustee, the corporate trustee shall submit a written request to the Superintendent for authorization to maintain the corporate trustee's operation in the given district for a specified period of time.
Designated Trustee
  1. A corporate trustee shall, for each professional engagement, designate an individual trustee with a licence to practise in the applicable district who shall accept responsibility for the administration of that engagement.
  2. The designation of an individual trustee shall not relieve the corporate trustee of its ethical responsibility under any professional engagement it has accepted.
  3. An individual trustee designated pursuant to paragraph 29 of this Directive shall not accept professional engagements under the individual trustee's personal name.
  4. Where the individual trustee designated by the corporate trustee is to be replaced, the corporate trustee shall forthwith notify the Designated Senior Bankruptcy Analyst of the reason for such replacement and of the name of the newly designated trustee.
Incompatible Occupation
  1. An individual trustee shall not act as a trustee if that trustee practises an incompatible occupation.
  2. "Incompatible occupation" includes a collection agent, a bailiff, a trade association representative, an employee of the OSB, a lawyer, or a notary in the Province of Quebec, as well as any other occupation, business or profession that may be in conflict with the duties and responsibilities of a trustee.
  3. Notwithstanding paragraph 34 of this Directive, an employee of the OSB acting pursuant to sections 14.03 or 29 of the Act may act as a trustee.
  4. The trustee who is a member of a professional body regulating an incompatible occupation must satisfy the Superintendent that he or she does not practise that occupation or profession.
Geographical Jurisdiction
  1. A licence is issued for the bankruptcy district or part thereof in which the trustee maintains a resident office.
  2. The Superintendent may, upon written request, transfer the licence of an individual trustee to another district, or part thereof, provided the trustee satisfies the Superintendent that he or she has sufficient knowledge of the relevant legislation that applies in that district.
  3. The Superintendent may, upon written request, extend the licence of an individual trustee to another district, or part thereof, provided the trustee satisfies the Superintendent that
    1. he or she has sufficient knowledge of the relevant legislation that applies in that district; and
    2. this extension will not adversely affect the performance of professional engagements.
  4. Where an individual trustee has made a request to the Superintendent to transfer or extend his or her licence to one or more districts, the Superintendent may require that the trustee appear before a Board of Examination.
  5. Notwithstanding paragraph 40 of this Directive, an individual trustee who requests that his or her licence be transferred or extended from a common law province to a civil law province, or vice versa, will be required to appear before a Board of Examination.
  6. Appendix B, Policy on Multi-Jurisdictional Licences, sets out the various elements considered by the Superintendent in reviewing a trustee's request to extend and/or transfer his or her licence to a province in which he or she does not maintain a resident office, as well as the procedures to follow in dealing with such a request.
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Part III

Maintenance of a Trustee Licence

Notification of Changes
  1. The trustee shall submit a written request to the Superintendent and receive prior approval before any of the following changes to the trustee's licence can be effected:
    1. a change of district or of the resident office of the trustee;
    2. a change of firm for which the individual trustee practises;
    3. a change in the corporate structure or trustee name;
    4. reactivation or reinstatement of a trustee licence; and
    5. a merger or purchase agreement between two or more corporate trustees.
  2. Any other change in the information supplied by the trustee under this Directive shall be communicated to the Superintendent, in writing, within five (5) days of such a change.
Corporate Name
  1. A corporate trustee shall operate and do business only under the name under which it is licensed.
  2. Any change to the corporate name shall be pre-approved by the Superintendent before the approval of the appropriate federal or provincial regulatory body is requested.

Part IV

Trustee Status

  1. An individual trustee may be active or inactive.
Applicable Factors
  1. The following factors are taken into consideration in determining whether a trustee is active or inactive:
    1. activity in the day-to-day administration of professional engagements;
    2. a supervisory role or control in an insolvency practice;
    3. the length of time of inactivity, if any;
    4. the inventory of open estates in the trustee's personal name or in the trustee's name on behalf of a corporate trustee; and
    5. the intent to file new bankruptcy and insolvency proceedings.
Active Trustee
  1. An active trustee is a trustee who may accept professional engagements either in the trustee's personal name or for a corporate trustee. The trustee is responsible for the administration of these professional engagements.
  2. The trustee must obtain pre-approval from the Superintendent before that trustee can begin accepting professional engagements.
Inactive Trustee
  1. An inactive trustee is a trustee who does not carry out the functions of a trustee and who does not perform any duties in relation to supervision, receivership or liquidation work, look-see, consultation or research in insolvency matters; for example, a trustee who has gone back to school for a period of time or left the profession.
  2. Upon being formally notified by the Superintendent that he or she is inactive, the trustee shall not accept any professional engagements, nor shall that trustee carry out any functions that are exclusively reserved for a trustee appointed under a professional engagement.
  3. An inactive trustee must pay the prescribed annual fees.
  4. In order to reactivate a licence, an inactive trustee must satisfy the Superintendent that the technical knowledge and skills required to act as a trustee have been maintained.
  5. Where the trustee has been inactive for more than five (5) years and wishes to reactivate his or her licence, he or she will be required to appear before a Board of Examination.
Honorary Trustee
  1. The Superintendent may issue an honorary trustee licence to an individual trustee, acknowledging past service, where the trustee meets the following criteria:
    1. the trustee has been active for a minimum of thirty (30) years;
    2. the trustee has retired from active insolvency practise;
    3. the trustee is not responsible for any professional engagements;

      and, at the discretion of the Superintendent,

    4. the trustee is generally recognized by peers as having made a significant contribution to the insolvency community.
  2. An honorary trustee shall not accept any professional engagements and will not be subject to any fees.

Part V

Reinstating a Trustee Licence

  1. In order to reinstate a licence that has ceased to be valid, in accordance with subsection 13.2(3) of the Act, the trustee must satisfy the Superintendent that reinstatement of the licence will not impair public confidence in the bankruptcy and insolvency system.
  2. Appendix C, Policy on Reinstating a Licence that has Ceased to be Valid by Reason of the Trustee Becoming Bankrupt, 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 Act.

Part VI

General Provisions

Temporary Absence
  1. In the event of a temporary absence (i.e., illness, maternity leave, vacation) during which the trustee is unable to perform normal trustee duties, arrangements may be made with the Designated Senior Bankruptcy Analyst to allow another trustee to carry out the required duties.
Compliance and Enforcement
  1. Failure to comply with any provision of this Directive may constitute an offence under the Act and, in accordance with subsection 13.2(5) of the Act, may, among other things, result in cancellation or suspension of a licence as well as application of a disciplinary process and conservatory measures, including a direction to the official receiver not to appoint the trustee to any new estates.
Coming into Force
  1. This Directive comes into force on the date it is signed.
Enquiries
  1. For any questions pertaining to this Directive, please contact Sheila Westerink Robin, National Manager, Policy and Regulatory Affairs, at the OSB.

Bill James
Superintendent of Bankruptcy

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Appendix A

Licensing Process

This appendix provides detailed information on the licensing process and is an integral part of Directive No. 13R4, Trustee Licensing (the Directive).

A. Process Regarding Issuance of an Individual Trustee Licence

Application
  1. After having successfully passed the CNIE and ICQC, an individual may apply for a trustee licence using Form 2, Application for Trustee Licence (Individual).
  2. Subject to paragraph 10 of the Directive, individuals who have passed the CNIE will receive an invitation from the Superintendent to appear before a Board of Examination for the oral examination. The invitation letter will include a copy of Form 2, Application for Trustee Licence (Individual), which must be completed by the applicant and filed with the Superintendent.
Investigation
  1. Once Form 2, Application for Trustee Licence (Individual) is filed, the Superintendent verifies that the applicant meets the prerequisite qualifications and other requirements set out in the Directive.
  2. The Superintendent may require an applicant to provide any additional information and sign any authorization for information as the Superintendent deems appropriate, including, but not limited to, an authorization to communicate with a professional organization in order to verify the applicant's status.
  3. The applicant will provide any consent and authorization that may be necessary where the Superintendent requests an investigation by the Royal Canadian Mounted Police to determine whether the applicant has a criminal record. The Superintendent may also take any other investigative measures that are deemed necessary, including but not limited to:
    1. a bankruptcy search and credit verification;
    2. a financial evaluation; and
    3. verification of the applicant's employment history and references.
Board of Examination
  1. The Superintendent shall strike a Board of Examination that may consist of a trustee, a lawyer, a person designated by the Regional Director to act as Assistant Superintendent and a representative of the Superintendent.
  2. The members of the Board may vary from district to district. The Superintendent selects both the lawyer examiner and the trustee examiner. The trustee examiner is selected after seeking input from CAIRP. The members of the Board are selected upon consideration of the following factors:
    1. that these examiners have a minimum of five (5) years' relevant practical experience in the insolvency field;
    2. the opinion of the Regional Director regarding the competence of these examiners; and
    3. that there is no relationship between the examiner and the applicants that would call into question the impartiality or the fairness of the oral examination process.
  3. The members of each Board shall make a recommendation to the Superintendent.
Superintendent's Decision Regarding Application for a Trustee Licence
  1. The Superintendent's decision shall be sent to all applicants.
  2. An applicant may ask for feedback on their performance, as indicated in the comments of the Board members.
Review of the Superintendent's Decision Regarding Application for a Trustee Licence
  1. An applicant may ask for a review of the Superintendent's decision provided that a written request stating the grounds therefor is made to the Superintendent within thirty (30) days of receiving the decision.
Licence
A. Licence Subject to Probationary Conditions
  1. The following conditions apply to a new licence:
    1. the newly licensed trustee agrees, for a period of twenty-four (24) months, to practise with, and in the same physical location as, an active established trustee who is acceptable to the Superintendent;
    2. where, at any time during those twenty-four (24) months, the newly licensed trustee does not satisfy the requirement set forth in paragraph 12(a) above, the newly licensed trustee is authorized to act only in the following cases, subject to any other limitations imposed upon the licence:
      1. consumer proposals;
      2. summary administration estates;
      3. estates, known as ordinary administration estates, for which unsecured liabilities, as per the Statement of Affairs, do not exceed $500,000 and for which the realizable assets, as per the Statement of Affairs, after deducting the value of all security interests, do not exceed $15,000; and
      4. all other cases (notice of intention, Division I Proposal, receivership, CCAA filing and estates not covered by (iii) above), subject to the approval of the Designated Assistant Superintendent and on any terms that the Designated Assistant Superintendent shall determine, considering the performance of the newly licensed trustee.
  2. In granting the newly licensed trustee approval to act in the cases described in sub-paragraph 12(b)(iv) of this Appendix, the Designated Assistant Superintendent may require that the newly licensed trustee appoint a sponsor who will provide supervision in the administration of such estates.
  3. The Superintendent may also require that the trustee practise under the direct supervision of an established trustee.
  4. After the period of time for which the conditions attached to a new licence are imposed, the trustee must, in order to have them removed, request in writing that the Superintendent lift these conditions.
  5. Trustees requesting the lifting of the conditions attached to a new licence shall:
    1. have worked in the field of insolvency during the 24-month probationary period;
    2. provide details substantiating that significant work experience has been obtained during the 24-month period; and
    3. undergo a review of their practice conducted by the OSB, as required.
  6. The Superintendent may lift, modify or maintain the conditions depending on the recommendation of the Designated Assistant Superintendent as to the performance of the trustee.
B. Licence Subject to Limitations
  1. Where the Superintendent offers a licence with limitations pursuant to paragraph 12 of the Directive, the applicant has thirty (30) days to accept the offer.

B. Process Regarding Issuance of a Corporate Trustee Licence

Application
  1. Form 3, Application for Trustee Licence (Corporation), is filed after the Superintendent has approved the proposed name of the corporate trustee.
  2. The requirements as set out in paragraphs 17 and 22 of the Directive shall be contained in the constituting documents of the corporation.

C. Process Regarding Conditions of Practise

Inquiry
  1. The Superintendent may, from time to time, conduct an inquiry in order to verify that a trustee continues to meet all requirements set out in the Directive.
  2. Within such an inquiry, the Superintendent may require that the trustee provide additional information and documentation, such as the trustee's financial statements. The Superintendent may also conduct any other form of investigation deemed necessary.
Geographical Jurisdiction
  1. A trustee may offer services from a location other than the resident office. All locations other than the resident office must be authorized by the Designated Senior Bankruptcy Analyst in accordance with the provisions of Directive No. 28, Non-Resident Office.
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Appendix B

Policy on Multi-Jurisdictional Licences

A. Purpose

This policy sets out the various elements to be considered in reviewing a trustee's application to extend his or her licence to a province in which he or she does not maintain a resident office, as well as the procedures to follow in dealing with such an application. The policy is intended to ensure consistency in the application of the rules for extending licences to other districts.

B. General Principles

In reviewing a trustee's application, the Superintendent will consider the various elements set out below. He may then grant the extension without conditions, require that certain conditions be met before the extension is granted, or refuse the extension.

If the extension is granted, it will remain at all times conditional on the trustee complying with the requirements set out at the time of the extension.

The extension privilege may be revoked if the trustee fails to meet his or her obligations, or if the trustee's performance or the quality of the trustee's administration is no longer satisfactory, either with respect to files opened in the district for which the extension was given or in the district for which the licence was initially issued.

C. Factors to be Considered

The Superintendent will consider factors related to the trustee's knowledge of relevant legislation and performance of professional engagements.

1. Knowledge of relevant legislation (paragraph 39(a) of Directive 13R4, Trustee Licensing)

a) Provincial Legislation

The trustee must have sufficient knowledge of provincial legislation pertaining to insolvency. While not necessarily exhaustive, the list in Part F below identifies various areas in which the trustee must be very familiar.

b) Board of Examination

A trustee who requests that his or her licence be extended from a common law province to a civil law province, or vice versa, will be required to appear before a Board of Examination. The Superintendent may also require that the trustee appear before a Board of Examination where the trustee does not have sufficient knowledge of the applicable legislation in the new province.

2. The requested extension must not adversely affect the performance of the trustee's professional engagements (paragraph 39(b) of Directive 13R4, Trustee Licensing). Review of an extension request will include consideration of the following factors:

a) Trustee compliance and performance, particularly with regard to:

  • the Bankruptcy and Insolvency Act, and the Bankruptcy and Insolvency General Rules;
  • the Superintendent's Directives;
  • the closing of files, the number of open files, and the age of open files;
  • the number and type of complaints against the trustee.

b) Quality of service provided by the trustee, including:

  • the trustee's facilities and office;
  • access to files;
  • access to the trustee, e.g., assessment in person;
  • access to the trustee's personnel, on-site or not, permanently or occasionally.

c) Cost of services

Trustee fees and disbursements claimed against the estate should not be higher by reason of distance from the resident office.

d) Continuity in the administration of files

The trustee must conclude a succession agreement in case of death, incapacity or other factors that could prevent the trustee from performing engagements. He or she must ensure at all times that there is a successor for the files being administered. This criterion is mandatory in view of the risks inherent in leaving estate files without a trustee.

With the exception of the succession agreement, no one criteria set out above will be determinant. Each case will be considered on its merits based on the entire set of circumstances.

D. Conditions for Issuing an Extension

Before being granted an extension, the trustee must commit in writing:

  1. to maintain satisfactory performance and the same level of service as that which was represented to the Superintendent when he or she applied for the licence extension;
  2. to submit to the Superintendent for prior approval
    1. any significant change in the level of service that he or she represented to the Superintendent;
    2. any significant change in the succession agreement.
E. Process
  • The trustee makes an application in writing demonstrating that he or she meets the requirements of this policy.
  • A copy of the succession agreement(s) for the files he or she administers is attached to the application.
  • The entire application is reviewed by the Assistant Superintendent (Licensing) in consultation with the Designated Assistant Superintendent (DAS).
  • The Assistant Superintendent (Licensing) makes a recommendation and forwards it to the Superintendent of Bankruptcy for a decision.
  • This recommendation is not binding on the Superintendent.
F. Relevant Provincial Legislation

The trustee should have general knowledge as to the application of relevant provincial legislation in a bankruptcy situation. Generally, the trustee should be very familiar with the following areas of provincial legislation:

  • Bulk Sales
  • Business corporation
  • Conditional Sales
  • Construction Lien
  • Credit Reporting
  • Employment Standards
  • Execution (or Exemptions)
  • Family Law
  • Fraudulent Conveyances
  • Landlord and Tenant
  • Mortgages
  • Partition
  • Partnership
  • Pension Benefit
  • Personal Property Security
  • Provincial Taxes
  • Repair and Storage Liens
  • Sale of Goods
  • Workers' Compensation
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Appendix C

Policy on Reinstating a Licence that has Ceased to be Valid by Reason of the Trustee Becoming Bankrupt

A. Purpose

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 Act.

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 Act 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 Act, the Superintendent will consider various factors, which may include, but are not limited to, the following:

  1. 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.
  2. 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.
  3. 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.

Important notice: The XHTML version of this Directive is not the official version. In the event of an inconsistency between the XHTML and PDF versions of this Directive, the PDF version prevails. Users are required to exercise due diligence with respect to the XHTML version.