What Do I Need to Know About The Creditors’ Meeting in a Bankruptcy?
If your assets in a bankruptcy are less than $15,000, your bankruptcy is considered a “summary administration,” and a bankruptcy creditors’ meeting is not automatically required.
Almost all bankruptcies in Canada are a summary administration and therefore most bankrupts won’t be required to attend a meeting of creditors during the course of their bankruptcy.
A meeting of creditors is only called in a summary administration bankruptcy if at least 25% of your creditors (based on the value of the amount you owe them) requests a meeting or the Office of the Superintendent requires a creditor’s meeting, although this is rare.
A meeting of creditors can be called if your bankruptcy is an ordinary administration (ie, your assets are more than $15,000).
What is a Creditors’ Meeting?
The creditor’s meeting is intended to allow your creditors to ask you questions about your financial dealings and to review your situation.
A meeting of creditors is also an opportunity for your creditors to instruct the bankrupt’s Trustee on how to handle issues with distributing your assets that have been paid into the bankruptcy estate, in exchange for an elimination of your unsecured debts.
For most people, a creditors’ meeting is not a concern as they happen in less than 1 in 100 bankruptcies.
What Happens When a Creditors’ Meeting Is Called?
When your creditors request a meeting, or your bankruptcy is complex or has high value a creditors’ meeting will take place, usually at your Trustee’s office.
Your creditors will likely only request a meeting of creditors if they have a specific concern about your bankruptcy filing, such as real estate that has legal issues surrounding it.
The purpose of the meeting is to exchange information between the creditors, the trustee handling the bankruptcy file, and the bankrupt themselves.
At the meeting of creditors, your creditors will have the right to ask you about your finances.
The bankrupt has a right to refuse to answer questions not relating to their finances, as well as even questions about their finances, however this could complicate matters for your bankruptcy case.
For example, your creditors might ask about certain medications you are taking if they are expensive.
While you have the right to refuse to answer such questions, your creditors expect you to co-operate, so if you do not provide reasonable answers, your creditors might take a hardline stance towards your bankruptcy case.
You have the right to request a lawyer (your insolvency trustee is not a lawyer and cannot provide legal advice) to represent you at the meeting of creditors, but this doesn’t usually happen.
If you are required to bring any documentation, paperwork or any more information to the creditors’ meeting, you will be provided with a formal request for such information before the meeting.
You will have time to prepare all the required information.
During the meeting, your creditors might request further information, and your creditors will provide you time to gather this information.
If significant information is requested, the creditors’ meeting might be adjourned and put off to a later date.
This information should give you a fair understanding of creditors’ meetings, but you can discuss further with your Trustee if one is called in your situation.
Remember, a meeting of creditors is only called in less than 1% of bankruptcy cases, so they are quite rare and you shouldn’t be too worried.
Even if a meeting is requested, your Trustee will prepare you for the meeting.