Corporate and Individual Trustees

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:
Frank Sheldon Kisluk
Frank S. Kisluk Limited


Directions for Conservatory Measures
(Section 14.03 of the Bankruptcy and Insolvency Act)


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

Whereas Frank Sheldon Kisluk is the holder of an individual license as trustee in bankruptcy;

Whereas Frank S. Kisluk Limited is the holder of a corporate trustee license;

Whereas an investigation made by the Superintendent pursuant to section 5(3)(e) of the Act revealed that Frank Sheldon Kisluk (the trustee) had a number of deficiencies in banking and in the general administration of his estate administrations;

Whereas a Monitoring Review was conducted in December 2004 and a Monitoring Report was issued on January 11, 2005, followed up with supplementary compliance reviews conducted on February 18, 2005 and March 24, 2005, documenting the following serious and recurring estate administration deficiencies with respect to a number of estates:

  • failure to maintain proper and complete estate administration records;
  • failure to periodically reconcile the consolidated and individual estate trust accounts;
  • failure to ensure that estate trust accounts are not overdrawn;
  • failure to comply with the provisions of Bankruptcy and Insolvency Rules prescribing the tariff;
  • failure to ensure that estate trust funds are not subjected to unreasonable charges and fees;
  • failure to ensure that estate trust funds earn interest at a competitive rate or, are appropriately invested;
  • failure to obtain estate bond in the matter of the Atwell Fleming Young Ltd. estate;
  • failure to obtain the approval of the estate inspectors for actions including the disbursement of the trustee's fees and legal expenses;
  • failure to complete the administration of estates in a timely manner;
  • failure to submit a closing plan addressing the matter of the estates under administration for more than three years; and
  • failure to administer proposals filed under Division-I, Part III of the Act, in a proper and timely manner;

Whereas I believe on reasonable grounds that the estates require protection;

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

Whereas the Superintendent has delegated to me, in accordance with section 14.01(2) of the Act, the powers of the Superintendent as specified at section 14.03(1) of the Act, in the circumstance referred to in section 14.03(2)(b), a copy of which delegation is attached, along with copies of sections 14.01, 14.02 and 14.03 of the Act;

I, Karen Smith-Kozlowski, in my capacity as delegate for the Superintendent, direct:

That, pursuant to section 14.03(1)(a) and (b) of the Act, Frank Sheldon Kisluk and/or Frank S. Kisluk Limited take all reasonable steps to comply with the directions, which are attached to these directions for conservatory measures, and to aid in their completion;

That, pursuant to section 14.03(1)(a) of the Act, Frank Sheldon Kisluk and/or Frank S. Kisluk Limited shall not open any new trust accounts;

That, by close of business on May 27, 2005, pursuant to section 14.03(1)(a) and (b) of the Act, Frank Sheldon Kisluk and/or Frank S. Kisluk Limited shall submit to me a detailed closing plan, acceptable to the Office of the Superintendent of Bankruptcy (OSB), that will address the matter of the estates under administration for more than three years old and that will ensure the closing of all estates files within the next 12 months;

That, by close of business day on June 13, 2005, pursuant to section 14.03(1)(a) and (b) of the Act, Frank Sheldon Kisluk and/or Frank S. Kisluk Limited enter into a signed contract with an auditor suitable to the OSB (the "Auditor"), who must be approved by the undersigned and who will agree to provide the following services:

  • the Auditor will reconcile all of the trust accounts for all open estate matters currently being administered by Frank Sheldon Kisluk and/or Frank S. Kisluk Limited; the reconciliation must comply, at a minimum, with all provisions set out in the Directive 5R - Estate Funds and Banking issued November 1st, 2004;
  • the Auditor will prepare and provide to me documentary evidence of the reimbursement of all estate trust accounts in the name of, administered by or any other way in the control of Frank Sheldon Kisluk and/or Frank S. Kisluk Limited;
  • the Auditor will agree to submit monthly progress reports in a manner and of sufficient detail to satisfy the undersigned and in accordance with provisions of the BIA, Rules and Directives;
  • the Auditor will agree to undertake to complete the work within the next 6 months, unless otherwise instructed by the OSB;

That all expenses related to the Auditor and to compliance with these directions shall be borne by Frank Sheldon Kisluk and/or Frank S. Kisluk Limited.

Signed at the City of Toronto Ontario, this .

Karen Smith-Kozlowski

Att.

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