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Bill C-12: Amendments to Bankruptcy & Insovlencey Act
Bill C-12, a bill to amend the Bankruptcy & Insolvency Act, received Royal Assent on December 14, 2007 but, as of today, has not come into force. The Senate still wants additional time to hear from certain stakeholders who expressed concerns about several of the provisions within the Bill and the Office of Superintendent of Bankruptcy must still draft all of the regulations to go along with these changes to the Act prior to implementation. Accordingly it will still likely be 6 to 12 months for this to take place and an Order from the Governor-in-Counsel will be required before the Bill comes into force. A summary of the most significant changes to the Act is as follows:
A consumer proposal may be filed by a person with up to $250,000 in debts, excluding the mortgages on their principal residence; the old limit was $75,000;
Student loans are now automatically discharged after seven years (instead of the current 10 years), and an application may be made to court in hardship cases to have a student loan discharged after five years;
RRSPs are now exempt from seizure by a trustee in a bankruptcy, except for contributions made to the RRSP in the previous year;
You will lose your tax refund for the entire year of the bankruptcy;
Secured loans and leases cannot be terminated simply due to the filing of a proposal or bankruptcy; this means that certain banks that routinely repossess cars upon bankruptcy will no longer be able to do so;
Automatic discharges are now available for all bankrupts (who have completed their counselling) as follows:
a first time bankrupt with no surplus will be bankrupt for 9 months (unless opposed);
a first time bankrupt with surplus will be bankrupt for 21 months (unless opposed);
a second time bankrupt with no surplus will get an automatic discharge after 24 months (unless opposed); and
a second time bankrupt with surplus will get an automatic discharge after 36 months (unless opposed).
Tax debts are now treated differently than all other debts. If the total personal income tax debts are more than $200,000, and if they represent more than 75% of the bankrupt's total unsecured debts, the bankrupt is not eligible for an automatic discharge. A discharge hearing must be held as follows:
First time bankrupts with no surplus - after 9 months;
First time bankrupts with surplus - after 21 months;
Second time bankrupts with no surplus - after 24 months;
Second time bankrupts with surplus - after 36 months;
Third or more time bankrupts - after 36 months.
Stay tuned for further announcements in this regard.
Read the Bulletin from the Canadian Association of Insolvency and Restructuring Professionals: BILL C-12 PASSED BY SENATE, GIVEN ROYAL ASSENT
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