In Canada, these procedures need to be filed with the Office of the Superintendent of Bankruptcy (OSB) by a Licensed Insolvency Trustee.
If a debtor chooses to file for bankruptcy, in accordance with terms of the Bankruptcy and Insolvency Act (BIA), a Receivership may come into place.
In a Receivership, an independent third party – the Receiver – will take possession of your assets and will realize or sell them in order to pay back your creditors as much of the outstanding debt owed to them as possible, according to the priorities established by Canadian law.
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The Receiver’s Role in the Bankruptcy Process
Receivership is used in a bankruptcy process when there are creditors with outstanding secured debts.
The Receivership will come into effect 10 days after the secured creditor’s notice is sent out, unless you agree to it sooner.
The Receiver, once appointed, will notify all of your creditors that they have been appointed as your Receiver.
They will then provide updates on the progress of the Receivership, and submit a final report and statement of Receivership accounts after their appointment ends.
Depending on whether the bankruptcy is filed by an individual or a business, the kind of Receiver may vary:
- Personal or Consumer Bankruptcy: the Receiver is always a Licensed Insolvency Trustee and could be the same Trustee that is managing your bankruptcy. If necessary, the Receiver will be appointed by a court order as part of the bankruptcy process.
- Corporate Bankruptcy: the Receiver can be either a Privately Appointed Receiver or a Court Appointed Receiver. In both cases, the Receiver is always a Licensed Insolvency Trustee.
- A Privately Appointed Receiver is appointed by your secured creditor and usually represents the interests of just one of your creditors, and thus will only handle the assets covered by that creditor’s loan agreement. They generally have broad powers, including the authority to run your company’s operations and to sell its assets by auction, private sale or tender.
- A Court Appointed Receiver acts on behalf of all your creditors. In the case of a Court Appointed Receivership, a court order will lay out the powers and duties of the Receiver, who will act as an officer of the Court.
Summary on Receivership
To summarize, a Receivership is the process by which a Licensed Insolvency Trustee is appointed to take possession of either your personal assets or your company’s assets, and to realize these assets to pay back your secured creditors.
Get in touch with a local Licensed Insolvency Trustee to find out more about how a Receivership works, and how your Trustee can help you pay back your creditors during insolvency.
Information on Consumer Proposals
Consumer Proposals in Canada – An Alternative to Bankruptcy
What is a Consumer Proposal?
How to Amend a Consumer Proposal
What are the Benefits of a Consumer Proposal?
What are the Steps in a Proposal?
Consumer Proposal Eligibility
What Debts Are Erased in a Consumer Proposal?
Is There Life After a Proposal?
How to File for Bankruptcy
What is Bankruptcy?
How Does Bankruptcy Work?
What is the Cost of Bankruptcy in Canada?
How to Rebuild Credit Following Bankruptcy
Personal Bankruptcy in Canada
What Debts are Erased in Bankruptcy?