Edward Bryce Quon; Quon & Associates Ltd.
Directions for Conservatory Measures to the Official Receiver—February 24, 2006

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:
Quon and Associates Ltd.
Edward Bryce Quon


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 Edward Bryce Quon (the trustee) is the holder of an individual license as trustee in bankruptcy;

Whereas Quon andAssociates Ltd. (the trustee) is the holder of a corporate trustee license;

Whereas the investigations made by the Superintendent pursuant to paragraph 5(3)(e) of the Act revealed that the administration of all the open estates filed under the trustee's licence had been ongoing for a period exceeding three years;

Whereas the investigations made by the Superintendent pursuant to paragraph 5(3)(e) of the Act revealed a number of contraventions in the trust fund banking and general administration aspects of the trustee's administration of his estates;

Whereas the Toronto Division Office of the Superintendent of Bankruptcy conducted a monitoring of Quon and Associates Ltd on August 20 and 21, 2002 where cash receipts were identified without being deposited to their respective estate trust bank accounts;

Whereas the Toronto Division Office of the Superintendent of Bankruptcy did not receive a satisfactory response from the trustee regarding discrepancies between estate ledgers, cash receipts book records, bank deposit slips and estate bank statements following correspondence exchanged in August 2002;

Whereas the Toronto Division Office of the Superintendent of Bankruptcy requested a special audit of Quon and Associates Ltd to determine the extent of the serious deficiencies discovered during the monitoring visit of August 2002;

Whereas the special audit started on September 23, 2002 and on October 6, 2002, the auditor reported in part that:

  • further cash receipts were not deposited to their respective estate trust bank accounts in accordance with the requirements of the Act;
  • a significant number of bank accounts are not held in trust;
  • a significant sum of money is invested in GIC's without being able to match the amount invested to the estate ledgers or estate bank statements;

Whereas a review of the estate files on December 19, 2005 revealed that the trustee has failed to remedy many of the problems reflected in the earlier audit;

Whereas the trustee has allowed the corporate charter to lapse and has failed to take any steps to rectify the situation as required by the Acting Senior Division Assistant Superintendent in her letter of November 22, 2004;

Whereas the trustee has failed to provide proof of insurance coverage for liability and fidelity or employee dishonesty and this, together with the lapse of the corporate charter, raises serious concerns as to the availability of such insurance, as required under the Bankruptcy and Insolvency Act;

Whereas the trustee has a large number of estates which have remained open for an excessive period of time;

Whereas the trustee failed to submit a Closing Plan, as required by the Acting Senior Division Assistant Superintendent, most recently in her letter of November 22, 2004;

Whereas recent information has raised concerns that the individual trustee may not be solvent, as required by the Bankruptcy and Insolvency Act;

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 in 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;

Whereas subsections 14.03(1)(b) and (c) and (2)(b) the Act apply;

I, Ann Speers, Assistant Superintendent, Trustee Compliance, in my capacity as delegate for the Superintendent, direct:

The Official Receiver, to take possession and control of the property of the bankruptcy and proposal estates and the estate files, and also of accounting and electronic data related to estate files administered by Edward Bryce Quon and Quon and Associates Ltd., as listed Appendix A (PDF version, 385 KB, 21 pages) or as identified as requiring administration, wherever they may be located, particularly at the following location:

23 Westmore Drive, Unit 408, Etobicoke, Ontario, M9V 3Y7

and to remit them to Mr. Glenn Steiner, agent of the Office of the Superintendent of Bankruptcy, 600 – 25 St. Clair Avenue East, Toronto, Ontario, M4T 1M2.

To enforce these directions, the Official Receiver may seek the help of all the persons he or she considers necessary.

These directions take effect immediately and will stay in place until further notice.

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 at the City of Toronto Ontario this 24th day of February, 2006.

Ann Speers
Assistant Superintendent, Trustee Compliance

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