Multiple Assignments by Undischarged Bankrupts

It has come to the attention of the Office of the Superintendent of Bankruptcy (OSB) that a number of undischarged bankrupts are filing assignments.

This is contrary to the Bankruptcy and Insolvency Act (BIA), which, at subsection 49(1), states that "An insolvent person … may make an assignment of all of the insolvent person's property for the general benefit of the insolvent person's creditors" (emphasis added). Section 2 of the BIA defines an "insolvent person" as "a person who is not bankrupt …" (emphasis added). As such, a bankrupt who is undischarged from bankruptcy is not eligible to make an assignment under subsection 49(1) of the BIA.

Multiple assignments by the same debtor can be avoided if trustees routinely conduct a "Name Search" with the OSB prior to filing a new assignment, as instructed on the "New Filing" page in the e-filing system. By conducting a name search, trustees can verify whether or not a debtor is currently in bankruptcy.

Trustees can use the Bankruptcy and Insolvency Records service free of charge. They must first register and open an account with the OSB. Once registered and in receipt of a client number, trustees are required to call the OSB at 1-866-941-2863 in order to link their client number with their Registered Industry Canada Username (this confirms that the trustee is a "non payable" client).

Where an assignment is made by an undischarged bankrupt, the responsible trustee must immediately take steps to correct the situation. This is typically done by applying to court for an annulment of the subsequent assignment.

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