Official Receiver (2)

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:
Bruno Marchand
Georges E. Marchand
Marchand Syndics Inc.

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 with the general power to supervise the administration of all estates and matters to which the Act applies;

Whereas the exercise of the powers of the Superintendent of Bankruptcy set out in paragraph 5(3)e) of the Act revealed that the trustees have an abnormally high number of files that have been open more than three years;

Whereas the trustees are also the subject of an investigation under the provisions of section 14.01 of the Act;

Whereas on August 5, 2003 a letter was sent to the trustees giving them 15 business days in which to submit an acceptable closing plan intended, among other things, to reduce to 10% of their inventory the percentage of summary administration files open for more than 36 months and to 40% of their inventory the number of ordinary administration files open for more than 36 months, or to provide the Superintendent of Bankruptcy with a satisfactory explanation as to why the number of files older than three years exceeds these levels;

Whereas despite repeated requests, the trustees did not submit, within the prescribed time, a detailed closing plan in compliance with the requirements of the Superintendent of Bankruptcy;

Whereas the trustees effectively refused to submit a detailed closing plan, submitting only a plan that does not accord any priority to the oldest files, nor to those with large bank balances, and which plan does not even set time lines for the various stages of closing, the trustees in question instead chose to challenge the authority of the Office of the Superintendent to require such a closing plan;

Whereas moreover the trustees did not even respect their own closing plan, which had not, for the reasons set out above, been accepted by the Office of the Superintendent;

Whereas the trustees lacked diligence in closing their files, of which the number of ordinary administration estate files open for more than three years, as of February 3, 2004, was 69 administered by the corporate trustee and Bruno Marchand (99% of his total inventory of ordinary administration files), and 133 by the corporate trustee and Georges E. Marchand, 35 of which were under the personal licence of Georges E. Marchand (98% of his total inventory of ordinary administration files);

Whereas some of these estates contain large sums of money which the trustees are not distributing to the creditors;

Whereas the trustees' conduct is prejudicial to the creditors, who are being subjected to undue delays in the payment of their dividends;

Whereas the trustees refuse or neglect to complete the administration of these files, and in so doing, are not rendering their accounts as required by the Act;

Whereas it is not permissible for a fiduciary, such as a bankruptcy trustee, to refuse or neglect to account for his administration;

Whereas the Superintendent of Bankruptcy has reasonable grounds to believe that the estate files require protection and that the administration of these files should be completed as soon as possible;

Whereas the Superintendent of Bankruptcy may, in order to protect estates, exercise the powers set out in subsection 14.03(1) of the Act, under the circumstances anticipated in subsection 14.03(2) of the Act;

Whereas the Superintendent of Bankruptcy has delegated to the undersigned, in accordance with subsection 14.01(2) of the Act, in certain situations mentioned in subsection 14.03(2), the Superintendent's 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;

Whereas subsections 14.03(1)a) and b) and (2)b) of the Bankruptcy and Insolvency Act apply;

I, the undersigned, Sylvie Laperrière, in my capacity as Senior Analyst, Professional Conduct, direct:

The Official Receiver to not appoint Bruno Marchand, Georges E. Marchand and Marchand Syndics Inc. to administer any new ordinary administration estates;

These directions take effect immediately and will stay 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 directions bind their addressees, who must comply with them;

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

Signed, in the City of Sainte-Foy, Quebec
February 10, 2004

Sylvie Laperrière
Senior Analyst, Professional Conduct

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