Bankruptcy and Insolvency Act
If a proposal fails, the BIA contains a bridge to bankruptcy whereby the debtor's assets are liquidated and the proceeds paid to creditors in accordance with the statutory scheme of distribution.[65] A notice of intention,[66] a Division I proposal, or a Division II proposal, will automatically create a stay of proceedings and "no creditor has any remedy against the debtor or the debtor's property, or shall commence or continue any action, execution or other proceedings, for the recovery of a claim provable in bankruptcy".[68] S. 70(1) of the BIA provides that bankruptcy orders and assignments take precedence over "all judicial or other attachments, garnishments, certificates having the effect of judgments, judgments, certificates of judgment, legal hypothecs of judgment creditors, executions or other process against the property of a bankrupt,"[69] but that does not extend to: The Ontario Court of Appeal has ruled that, in the case of a "requirement to pay" under the Income Tax Act (Canada) that was issued after a notice of application to appoint a receiver (but before the court heard the application), supported by an ex parte "jeopardy order" issued by the Federal Court of Canada under s. 225.1(1) of that Act,[70] the "requirement to pay" was considered to have been completely executed on the date of its issue, and thus took precedence over other creditors' claims.[98] Some liabilities are not released upon discharge, including:[99] Directors and parties related to the bankrupt may still be held personally liable for certain tax debts,[101] and, if a clearance certificate is not obtained from the tax authorities prior to discharge, directors' liability will subsequently resume.[103] In 2009, the Act was amended to reform the rules relating to setting aside any preferences, or transfers at undervalue, occurring before the initial bankruptcy event: Recovery actions under ss.However, the courts have ruled that a payment may withstand challenge by a trustee where it is made in furtherance of a reasonable business imperative.[115][116] The provincial Superior Courts have "such jurisdiction at law and in equity" as will enable them to exercise bankruptcy process under the Act.[122] The Office of the Superintendent of Bankruptcy ("OSB") is designed to supervise the administration of all estates and matters to which the Act applies.[123] Trustees — either individuals or corporations — are licensed by the superintendent, and are appointed to administer an estate by virtue of the assignment, bankruptcy order or proposal that has been filed.[131] When required, he is obliged to report on the estate's condition, moneys on hand, and property remaining unsold.