The Office of the Superintendent of Bankruptcy issued Draft Directive No. 29R3, this week, on trustee advertising to consumers.
CAIRP also issued comments on the draft directive.
My comments are directed at the Designation section of the draft directive and to the objective of the Draft Directive, which is stated to be:
These requirements aim to provide greater clarity for Canadians regarding who is Licensed by the Superintendent of Bankruptcy to provide services under the Bankruptcy and Insolvency Act and to help individuals to make informed choices about formal mechanisms to address debt problems.
- In all communications or representations falling within the purview of a trustee Licensed under the BIA, trustees shall identify themselves using the professional designation “Licensed Trustee in Insolvency and Restructuring” or the acronym “LTIR.”
- Licensed Trustees in Insolvency and Restructuring shall not use other terms alluding to possession of a trustee licence, such as “Trustee in Bankruptcy.”
I do not think that the substitution of the name, Trustee in Bankruptcy, that has been in use for decades and that the public well knows will “provide greater clarity for Canadians regarding who is Licensed by the Superintendent of Bankruptcy.”
In fact, I believe it will have the opposite effect.
The proposed name “Licensed Trustee in Insolvency and Restructuring” is awkward, confusing and inaccurate when used in the context of advertising to consumers.
The vast majority of advertising by trustees is to consumers. The term ”Restructuring” has little meaning to consumers and may even lead them to believe that trustees are not the ones who can best deal with their financial problems.
The closest thing to “restructuring” for consumers is the Consumer Proposal or Division I Proposal.
No one, and surely not trustees, refers to “Restructuring” when discussing these vehicles.
The term “restructuring” only has common meaning when referring to corporations. The following examples all refer to corporations:
- AIRA, The Association of Insolvency and Restructuring Advisors, describes itself as “a non-profit professional association serving financial advisors, accountants, crisis managers, business turnaround consultants, lenders, investment bankers, attorneys, trustees and other individuals involved in the fields of business turnaround, restructuring, bankruptcy and insolvency.”
- A second example from a Google.com search for “Restructuring Professionals” presents the following in the #4 position: Top 100: Restructuring & Turnaround Professionals Features the World’s Most Accomplished, Innovative, Brilliant, Industry Executives.
- A third example from a Google.com search for “Restructuring Professionals” presents the following in the #8 position:”As bankruptcy and restructuring professionals gear up for another slow year, some drivers for the industry, such as low oil prices and potentially higher interest rates, are strengthening. Still, those drivers aren’t expected to result in a broad shakeout across corporate America, as credit markets still remain friendly to many borrowers, keeping corporate defaults and Chapter 11 filings low.”
I suggest that the name not be changed from “Trustee in Bankruptcy” for advertising to consumers.
For greater clarity I also suggest that when advertising to consumers that other commonly understood names be allowed such as Trustee, Trustees, Bankruptcy Trustees, Licensed Trustee as well as Trustee in Bankruptcy.
I also support CAIRP’s suggestions in this regard.