Financial Institutions

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 , followed up with supplementary compliance reviews conducted on and , 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 the Financial Institutions noted above and listed at Schedule "A" as follows:

That, pursuant to sections 14.03(1)(b) and (c) of the Act,

  1. provide, by close of business day on , a list of estate trust bank accounts in the name of, administered by or any other way in the control of Frank Sheldon Kisluk / Frank S. Kisluk Limited to Karen Smith-Kozlowski, Office of the Superintendent of Bankruptcy, 25 St. Clair Avenue East, Suite 600, Toronto, Ontario, M4T 1M2;
  2. to consider upon receipt of the present directions, Diane Tung and Abubakar Khan, employees of the Office of the Superintendent of Bankruptcy, as the only two authorized co-signatories as relate to any operations of the funds credited to the estates of bankruptcies and proposals administered by Frank Sheldon Kisluk / Frank S. Kisluk Limited;
  3. make no debit, payment or transfer of funds credited to, or which ought to have been credited to, the estates of bankruptcies and proposals administered by Frank Sheldon Kisluk / Frank S. Kisluk Limited without the countersignature of either Diane Tung or Abubakar Khan;
  4. not pay out of these accounts: cheques, bills of exchange, bank drafts or other instruments, issued before the receipt of these directions which are presented for payment after the receipt of these directions, without these cheques, bills of exchange, bank drafts or other instruments being countersigned by either Diane Tung or Abubakar Khan;
  5. submit all statement of accounts, accepted cheques and other documents or information having to do with the above-mentioned estate trust bank accounts, to Karen Smith-Kozlowski, Office of the Superintendent of Bankruptcy, 25 St. Clair Avenue East, Suite 600, Toronto, Ontario, M4T 1M2;

That these directions take effect immediately and will stay in place until such time as I am satisfied that the estates no longer require protection or until a decision is made under subsection 13.2(5) or 14.01(1) of the Act;

That in accordance with section 14.03(3) of the Act, these directions bind the Financial Institutions listed in Schedule A , which must comply with them;

That in accordance with section 14.03(4) of the Act, a person who complies with these directions is not liable for any act done by that person only to comply with these directions.

Signed at the City of Toronto Ontario, this .

Karen Smith-Kozlowski


Schedule "A"

(Financial Institutions & Branches where Estate Trust Accounts are maintained)

Schedule A: Financial Institutions & Branches where Estate Trust Accounts are maintained
Name of Financial Institution & Branch Address
1. Canadian Imperial Bank of Commerce ("CIBC") 1100 Ellesmere Road, Toronto, Ontario, M1P 2X3
2. CIBC 595 Bay Street, Toronto, Ontario, M5G 2C2
3. CIBC 939 Lawrence Avenue East, Toronto, Ontario
4. TD Canada Trust 1470 Don Mills Road, Toronto, Ontario, M3B 2X9
5. TD Canada Trust 5762 Highway # 7, Markham, Ontario, L3P 1A8
6. TD Canada Trust 500 Highway 7E, Richmond Hill, Ontario, L4B 1J1
7. Royal Bank of Canada 2 Bloor Street East, Toronto, Ontario, M4W 1A8
8. Royal Bank of Canada 20 King Street West, Toronto, Ontario, M5H 1C4
9. Royal Bank of Canada 33 City Centre Drive, Mississauga, Ontario, L5B 2N5
10. Bank of Montreal 877 Lawrence Avenue East, Toronto, Ontario, M3C 2T3
11. Bank of Montreal 2210 Yonge Street, Toronto, Ontario, M4S 2B8
12. Hong Kong Shanghai Bank of Canada ("HSBC") 70 York Street, Toronto, Ontario, M5J 1S9
13. HSBC 170 Atwell Drive, Etobicoke, Ontario, M9W 5Z5
This document has been reproduced as submitted by the delegate of the Superintendent of Bankruptcy.
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