The BIA is sometimes simply called the bankruptcy act, and it protects you and your rights, as well as the rights of the creditors, and gives the courts and trustees instructions on their duties, powers and responsibilities when helping a person file bankruptcy.
The BIA governs all Canadian bankruptcies, consumer and commercial proposals and receiverships, and the Bankruptcy and Insolvency Act also is responsible for governing the Office of the Superintendent of Bankruptcy (OSB).
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History of the Bankruptcy and Insolvency Act
Enacted in 1869, the first Canadian bankruptcy act was known as “An Act respecting Insolvency” and only covered traders. It was not until 1919, with the Bankruptcy Act of 1919, until bankruptcy was available for all individuals, corporations, and other entities.
The Bankruptcy and Insolvency Act that we know today was not enacted until 1992.
In 1992, when the Act was renamed the Bankruptcy and Insolvency Act provisions for consumer proposals were made.
The Act was again updated in 1998 to deal with the discharge of student loan debt in insolvency.
The last update to the BIA went into force in 2009, which established the Wage Earner Protection Program, which allows compensation to employees of bankrupt companies or companies that were placed in receivership under the Bankruptcy and Insolvency Act.
What Parts of the Bankruptcy and Insolvency Act are There?
The BIA is broken down into 14 main parts.
Part 1: Administrative Officials
Lays out the responsibilities of the Licensed Insolvency Trustee (bankruptcy trustee), the official receivers and the Superintendent of Bankruptcy.
Part 2: Bankruptcy Orders and Assignments
This part of the Act lays out the Acts of bankruptcy and how to claim bankruptcy.
Part 3: Proposals
Part 3 of the Bankruptcy and Insolvency Act relates to proposals, including informal and formal consumer proposals. This third part of the Act lays out the roles of the trustee (consumer proposal administrator) and the consumer (you).
Part 4: Property of the Bankrupt
This part lays out how property is dealt with when going bankrupt. Non-exempt property and the bankruptcy exemptions.
Part 5: Administration of Estates
The handling of your estate (an estate is your assets and money) by trustees and your creditors.
Part 6: Bankrupts
The rights, duties, and responsibilities of a bankrupt. This part of the Act also lists how the bankruptcy law will help you
Part 7: Courts and Procedures
This part of the BIA lays out the duties and roles of the court.
Part 8: BIA Offences
The penalties for not following the rules of the BIA
Part 9: Miscellaneous Provisions
This part of the BIA is for regulations and rules that do not fit in any other category
Part 10: Orderly Payment of Debts
An orderly payment of debts is a bankruptcy alternative available in some provinces
Part 11: Secured Creditors and Receivers
Secured debts are treated differently in bankruptcy so this part of the Act lists how property of secured creditors is handled
Part 12: Security Firm Bankruptcies
This part of the Act gives instructions on how to deal with security firms in bankruptcies
Part 13: International Insolvencies
This part deals with international insolvency filings