Directions for Conservatory Measures to Laurent Lachance, Louis Nolet and Bernadette Blain—May 10, 2001

Conservatory Measures

What is a conservatory measure?

The Superintendent of Bankruptcy puts in place conservatory measures when a bankruptcy or insolvency estate needs protection. It might be in cases of Licensed Insolvency Trustee (LIT) malfeasance or if serious wrongdoing on the part of a LIT puts estate files at risk. Conservatory measures may also be put in place if a LIT becomes ill or dies without a valid succession agreement. Finally, conservatory measures may be put in place if a LIT, for whatever reason, has allowed the administration of his or her practice to become substandard.

Canada

In the matter of:
Samuel S. Lévy
Sam Lévy et Associés inc.


Instructions For Conservatory Measures
(Section 14.03 of the Bankruptcy and Insolvency Act)


Whereas the Bankruptcy and Insolvency Act provides the Superintendent with the general power to supervise the administration of all estates and matters to which the Act applies;

Whereas in October 1998, a preliminary audit report outlining numerous irregularities was provided to the trustee, and despite numerous promises to correct the situation made by the trustee since then, the situation has only deteriorated;

Whereas on July 14, 2000 a mandate to review the conduct of trustees Sam Lévy et Associés inc. and Samuel S. Lévy was conferred on Mr. Michel Leduc, Senior Analyst/Disciplinary Affairs, who is pursuing his investigation;

Whereas on January 15, 2001 auditors Louis Nolet and Richard Hunter began a general audit of the practice of trustee Sam Lévy et Associés inc. and exercised this mandate until March 23, 2001;

Whereas on April 27, 2001 auditors Nolet and Hunter provided me with an interim audit report and Mr. Michel Leduc provided me with an interim report on the trustee's conduct, both of which reveal that the estates under the administration of trustees Sam Lévy et Associés inc. and Samuel S. Lévy require protection;

Whereas the Superintendent of Bankruptcy may, for the protection of an estate, exercise the powers referred to in subsection 14.03(1) of the Act, in the circumstances stipulated in subsection 14.03(2) of the Act;

Whereas the Superintendent of Bankruptcy has delegated to the Deputy Superintendent (Programs, Standards and Regulatory Affairs) in accordance with subsection 14.01(2) of the Act, in certain situations referred to in subsection 14.03(2), his powers as specified at subsection 14.03(1) of the Act, copies of which delegation are attached along with copies of subsections 14.01(2) and 14.03(1) to (4) of the Act;

In accordance with paragraphs 14.03(1) and (2)b) of the Bankruptcy and Insolvency Act;

I, the undersigned, Alain Lafontaine, in my capacity as Deputy Superintendent (Programs, Standards and Regulatory Affairs) give instruction to:

  1. Laurent Lachance or Louis Nolet or Bernadette Blain to ensure the validity and justification of all payments for expenses, fees, remuneration, etc. from the estate accounts administered by Sam Lévy et Associés inc. that are presented for payment subsequent to the issuance of these instructions, and if said payments are justified, to co-sign all cheques, bills of exchange, bank drafts, certificates of deposit, and fund transfers payable out of the accounts of estates administered by Sam Lévy et Associés inc.;
  2. Laurent Lachance and/or Louis Nolet and/or Richard Hunter to take possession, for inventory purposes, of all cheques, postdated or otherwise, bank drafts, money orders, bank notes and bills of exchange pertaining to the estates administered by Sam Lévy et Associés inc. and to return said cheques, bank drafts, money orders, bank notes and bills of exchange to the trustee as quickly as possible;
  3. Laurent Lachance and/or Louis Nolet and/or Richard Hunter to prepare an inventory of all cash pertaining to the estates administered by Sam Lévy et Associés inc.;
  4. Laurent Lachance and/or Louis Nolet and/or Bernadette Blain, to take possession of the two most recent bank reconciliations for the summary administration bankruptcy and consumer proposal consolidated accounts along with the bank statements, any deposits or cleared cheques, and the relevant printouts from the Insolvency Manager file management system, namely:
    • Summary of Estate Balances at a Given Date for each consolidated account
    • Journal Entries Listing for each consolidated account;
  5. Laurent Lachance and/or Louis Nolet and/or Bernadette Blain to take possession of all bank reconciliations for the trust accounts that are made by the trustee subsequent to the issuance of these instructions along with the bank statements, any deposits or cleared cheques, and the relevant printouts from the Insolvency Manager file management system, namely:
    • Summary of Estate Balances at a Given Date for all estate accounts
    • Journal Entries Listing for all estate accounts;
  6. Laurent Lachance and/or Louis Nolet and/or Bernadette Blain to make copies of electronic files pertaining to the estates administered by Sam Lévy et Associés inc., i.e., Insolvency Manager and Quicken, on a weekly basis following issuance of these instructions;

These instructions take effect immediately and will remain in place until further notice or until a decision is rendered under section 14.01 of the Act.

In accordance with subsection 14.03(3) of the Act, these instructions bind their addressee, who must comply with them.

In accordance with subsection 14.03(4) of the Act, a person who complies with the present instructions is not liable for any act done by the person only to comply with them.

Signed, in the City of Ottawa, Ontario,
May 10, 2001

Alain Lafontaine
Deputy Superintendent
Programs, Standards and Regulatory Affairs

This document has been reproduced as submitted by the delegate of the Superintendent of Bankruptcy.
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