Glossary

Assignment (in Bankruptcy)
A voluntary assignment by an insolvent person of all of his property to a trustee for the general benefit of creditors.

Bankrupt
The state of being bankrupt or the fact of becoming bankrupt.

Counselling
A process under which services of a qualified counsellor are made available to assist and educate bankrupts and/or relatives of bankrupts, or consumer debtors, on good financial management, including prudent use of consumer credit and budgeting principles; in developing successful strategies for achieving financial goals and overcoming financial setbacks; and at any time, where appropriate, making referrals to deal with non-budgetary causes of insolvency (e.g.: gambling, addiction, marital and family problems, etc.).

Creditor
One to whom a debt is owed; in insolvency matters, a person having a claim provable under the Bankruptcy and Insolvency Act.

Discharge
The release of a debtor from the obligation to repay his or her debts. A bankrupt's discharge may be automatic, suspended, conditional or absolute. A bankrupt may also be refused discharge.

Dividend
The proportional share of a bankrupt's estate paid out by the trustee to creditors who have proven claims against that estate.

Encumbrance
A claim or liability that is attached to property or some other right that may lessen its value, e.g. a lien or mortgage.

Equity
The difference between the market value of an asset and the secured debt against it.

Exempt Assets
Assets defined as exempt by provincial legislation that are not available to the trustee for the benefit of creditors.

First Meeting (of Creditors)
Meeting called by the trustee to consider the affairs of the bankrupt or debtor in a Proposal, to affirm the appointment of the trustee, to appoint inspectors, and to give such directions to the trustee as the creditors may see fit.

Garnishment
A legal process whereby a creditor requires a third party to turn over to the creditor, a debtor's property such as wages or bank accounts.

General Security Agreement
A contract under which all the personal property of a debtor is pledged as security to a lender; not used in all provinces.

Guarantor
A person who takes on financial responsibility for another's debt.

Insolvent
A person who is unable to pay debts as they become due, or in the ordinary course of business, or having liabilities that exceed the total value of assets.

Inspector
Inspectors are appointed by creditors to represent them before the trustee during the administration of proposals and bankruptcies. They are expected to assist the trustee by virtue of their experience and are required to supervise certain aspects of the trustee's administration.

Judgment
A formal decision issued by a court on a matter under its consideration.

Liability
A financial obligation or debt of an individual or a business, including unpaid taxes, salaries, accounts payable etc.

Offences
The offences and sanctions provisions are contained in Part VIII of the Bankruptcy and Insolvency Act. These are criminal or quasi-criminal violations of law; a person guilty of an offence is liable to a fine or imprisonment.

Official receiver
The Official Receiver is a federal government employee in the Office of the Superintendent of Bankruptcy and appointed by the Governor in Council. The Official Receiver, among other things, accepts the documents that are filed in proposals and bankruptcies, examines bankrupts under oath and chairs meetings of creditors.

Order
A command of a Court or Judge.

Orderly Payment of Debts
A procedure prescribed in Part X of the Bankruptcy and Insolvency Act, governed by provincial courts, which allows a person to pay debts.

Property
Includes money, goods, land and every description of property, whether real or personal, situated in Canada or elsewhere.

Proposal
An offer to creditors to settle debts under conditions other than the existing terms. It is a formal agreement under the Bankruptcy and Insolvency Act.

Receiver
A person who has taken possession pursuant to a security agreement of substantially all of the inventory, accounts receivables or the other property of the debtor. "Receiver" also includes a person who has been appointed privately pursuant to a security agreement or by an order of the court for the protection or collection of property that is the subject of diverse claims, usually to seize and sell the property of the debtor.

Registrar
An Officer of a provincial court appointed by the Chief Justice with the powers and jurisdiction as specified under the Bankruptcy and Insolvency Act.

Statement of Affairs
The bankrupt's financial statement or a balance sheet of assets and liabilities showing the estimated value of assets and the names and addresses of creditors and the amounts owed.

Statement of Receipts and Disbursements
A statement detailing the receipt and disbursement of funds, interest received, fees charged by the trustee, all the dividends distributed to the creditors and particulars of property that is not sold.

Stay of Proceedings
A bar against any creditor for the recovery of a claim provable in bankruptcy against the insolvent person or the insolvent person's property. No creditor shall start or continue any action, execution or other proceeding for the recovery of such claims.

Superintendent of Bankruptcy
A federally appointed official who oversees the administration of the Bankruptcy and Insolvency Act in Canada.

Trustee in Bankruptcy
A person licensed by the Superintendent of Bankruptcy to administer bankruptcy and proposal estates.