Glossary of Terms Used in Insolvency


Absolute Discharge 
See Discharge from Bankruptcy.

Act of Bankruptcy (Acte de faillite)
An act committed by a debtor as defined under the Bankruptcy and Insolvency Act. One of the most common is a debtor ceasing to meet his liabilities as they come due. A creditor with a provable claim of $1,000 and over may file a petition for a receiving order if the debtor has committed such an act within six months preceding the filing of the petition.

Administrator (Administrateur)
A person designated by the Superintendent of Bankruptcy who is responsible for the administration of a consumer proposal under the Bankruptcy and Insolvency Act.

Affidavit (Déclaration sous serment)
A voluntary written declaration of facts affirmed or sworn under oath before an authorized officer such as a notary public or a commissioner of oaths.

Arm’s Length (Sans lien de dépendance)
Describes dealings between two parties who are not related by blood or marriage and are presumed to have approximately equal bargaining power.

Application for Bankruptcy Order (Requête en faillite)
An application to a court of law made by creditors in order to put a debtor in bankruptcy.

Assets (Éléments d’actif)
In the context of bankruptcy the term means all the property of the debtor available for distribution for the general benefit of the creditors.

Assignment in Bankruptcy (Cession de biens)
A voluntary assignment by an insolvent person of all of his property to a trustee for the general benefit of creditors.

Automatic Discharge 
See Discharge from Bankruptcy.


Bailiff (Huissier)
A person who acts on behalf of any other person in the repossession or seizure of property

Bankrupt (Failli)
A person or a corporation that has made a voluntary assignment in bankruptcy or against whom a receiving order has been made.

Bankruptcy (Faillite)
The state of being bankrupt or the fact of becoming bankrupt.

The Bankruptcy and Insolvency Act is a federal statute governing bankruptcy and insolvency in Canada, which is applicable to all provinces and territories.


The Canadian Association of Insolvency and Restructuring Professionals is the national professional organization representing trustees in bankruptcy, receivers, agents, monitors and consultants in insolvency matters.

Canada Revenue Agency (formerly known as Canada Customs and Revenue Agency (“CCRA”)

Certificate of Full Performance of Proposal (Certificat d’exécution intégrale d’une proposition)
A document issued by the trustee or administrator once a debtor has fulfilled all of his obligations under the proposal.

Charge (Droit)
An encumbrance, lien or financial obligation attached to a property.

This stands for “Companies’ Creditors Arrangement Act”, which is a law that allows insolvent corporations to restructure their financial affairs and businesses if  they owe their creditors more than 5 million dollars.

This stands for “Chartered Insolvency and Restructuring Professional”, which is a professional designation given by CAIRP to those who meet the association’s standards for admission, complete the prescribed course of study and pass the required examinations.

Claim, Provable
See Provable Claim.

 (Bien donné en garantie)
Property that is pledged as security against a debt.

Conditional Discharge
See Discharge From Bankruptcy .

Conditional Sale
 (Vente conditionnelle)
The sale of goods where the buyer receives possession of goods or property but does not receive title to them until specific conditions are fulfilled.

Consolidation Order
 (Ordonnance de fusion)
In certain provinces this is an order that is handed down by a provincial court to combine the debts of an insolvent person made pursuant to the Orderly Payment of Debt Regulations in Part X of the Bankruptcy and Insolvency Act. (See voluntary deposit scheme).

Consumer Proposal
 (Proposition de consommateur)
A simplified process to make a proposal for repayment of debt to creditors under the Bankruptcy and Insolvency Act to a consumer debtor whose aggregate debts, excluding any debts secured by the person’s principal residence, do not exceed the amount prescribed in the Bankruptcy and Insolvency Act.

Contingent Claim
 (Réclamation éventuelle)
A provable claim in bankruptcy that may or may not become a debt depending upon the result of a future event.

 (Personne morale (société))
A legal entity, (usually a business), that is distinct from its shareholders and has the authority to act as a natural person.

A process under which services of a qualified counsellor are made available to assist and educate bankrupts, relatives of bankrupts or consumer debtors on good financial management. This may include guidance in regards to consumer credit and budgeting principles, how to develop successful strategies for achieving financial goals and how to overcome financial setbacks and at any time, where appropriate, providing referrals to deal with non-budgetary causes of insolvency such as gambling, addiction, marital and family problems, etc.

A person to whom a debt is owed. In terms of insolvency matters, a person, (see definition of “person“), having a claim provable under the Bankruptcy and Insolvency Act.


Debt (Dette)
A specific sum of money due by agreement.

Debtor (Débiteur)
One who owes money to another.

Deemed Trust (Fiducie présumée)
A trust established by statute. For example, income tax deducted at source as prescribed by the Income Tax Act is deemed to be held in trust for the Crown.

Default (Manquement)
Failure to pay or perform a legal or contractual obligation.

Discharge From Bankruptcy (Libération de faillite)
The release of a debtor from the obligation to repay his or her debts. A bankrupt’s discharge may be automatic, suspended, conditional or absolute. A bankrupt may also be refused discharge.

  • Automatic Discharge
    A debtor whose discharge is not opposed by the Superintendent of Bankruptcy, the trustee or a creditor and who has not refused or neglected to receive counselling is automatically discharged after 9, 21, 24 or 36 months. The amount of time depends on whether it is a first or a second bankruptcy. The discharge also depends on whether or not the bankrupt is required to pay a portion of his or her surplus income into the bankruptcy estate per the standard established by the OSB.
  • Order of Absolute Discharge
    This is an official document issued by the court that relieves the debtor of the debts incurred before declaring bankruptcy, taking under consideration the exceptions provided in the Act.
  • Order of Conditional Discharge
    A court may impose certain conditions that must be met before a person’s discharge becomes absolute. For example, a court may require you to pay an amount to your trustee for distribution to your creditors.
  • Order of Suspended Discharge
    The court orders a delay so that the discharge will not be effective until a certain date.

Dividend (Dividende)
The proportional share of a bankrupt’s estate paid out by the trustee to creditors who have proven claims against that estate.

Duties of a Bankrupt (Obligations d’un failli)
Obligations that must be performed by a bankrupt. For example, he must provide the trustee with a statement of his affairs showing the particulars of his assets and liabilities, the name of all his creditors etc.


Encumbrance (Grèvement)
A claim or liability that is attached to property or some other right that may lessen its value such as a lien or a mortgage.

Equity (Avoirs propres)
The difference between the market value of an asset and the secured debt against it.

Estate (Actif)
All the property of a person or the file in bankruptcy.

Examination (Interrogatoire)
Questioning of the bankrupt under oath with respect to the bankrupt’s conduct, causes of bankruptcy and disposition of the bankrupt’s property. The examination may be conducted by an Official Receiver, a trustee, a creditor or another interested person in accordance with conditions prescribed in the Bankruptcy and Insolvency Act.

Exempt Asset (Bien exempté)
Assets defined as exempt by provincial legislation that are not available to the trustee for the benefit of creditors.


Garnishment (Saisie-arrêt)
A legal process where a creditor requires a third party to turn over to the creditor a debtor’s property such as wages or bank accounts.

General Rules (Règles générales)
Rules created pursuant to the Bankruptcy and Insolvency Act for the administration of this statute.

Guarantor (Garant)
A person, (see definition of “person“), who takes on the financial responsibility of another’s debt.


Hypothec (Hypothèque)
A right on a property given to a creditor as performance for an obligation. The creditor then has a right to follow the property even if it undergoes successive changes of ownership.


Inspector (Inspecteur)
Inspectors are appointed by creditors to represent them before the trustee during the administration of proposals and bankruptcies. They are expected to assist the trustee by virtue of their experience and are required to supervise certain aspects of the trustee’s administration.

Insolvency (Insolvabilité)
The condition of being unable to pay debts as they become due or in the ordinary course of business. It can also refer to having liabilities that exceed the total value of assets.

Interim Receiver (Séquestre intérimaire)
A trustee appointed by the court to safeguard the estate assets and perform other functions as the court may order for a time period that the court may determine.


Joint and Several Liability (Obligation conjointe et solidaire)
The liability of more than one individual that may be enforced against them all by a joint action or against any one of them by an individual action.

Judgment (Décision judiciaire)
A formal decision issued by a court on a matter under its consideration.


Levy (Prélèvement)
A fee payable to the Superintendent of Bankruptcy for the purpose of defraying the expenses of the supervision by the Superintendent in the administration of estates.

Liabilities (Obligations)
Financial obligations or debt of an individual or a business, including unpaid taxes, salaries, accounts payable etc.

Lien (Droit de rétention)
A legal right or interest that a creditor has in a debtor’s property, lasting usually until the debt that it secures is satisfied.

Liquidation (Liquidation)
The act of converting assets to cash, especially in bankruptcy or in the dissolution of a business.


Mortgage (Hypothèque)
A lien against a property that is registered on title, which is granted to secure an obligation such as a debt.


Notice of Intention to Enforce Security (Avis d’intention d’exécuter la garantie)
A legal document under the Bankruptcy and Insolvency Act where a secured creditor provides 10 days notice to an insolvent debtor of its intention to enforce its security.

Notice of Intention to File a Proposal (Avis d’intention de déposer une proposition)
A legal document filed with the Official Receiver stating that the debtor intends to file a proposal. The document is to include the name and address of the licensed trustee who has consented in writing to act as the trustee under the proposal and the names of the creditors who are owed $250 or more and the amounts of their claims. The filing of this document triggers the protection afforded to insolvent debtors under the Bankruptcy and Insolvency Act.


Offences (Infractions)
The offences and sanctions provisions are contained in Part VIII of the Bankruptcy and Insolvency Act. These are criminal or partial criminal violations of the law and a person guilty of an offence is liable to a fine or imprisonment.

Official Receiver (Séquestre officiel)
The Official Receiver is a federal government employee in the Office of the Superintendent of Bankruptcy and is appointed by the Governor in Council. The Official Receiver, amongst other things, accepts the documents that are filed in proposals and bankruptcies, examines bankrupts under oath and chairs meetings of creditors.

Orderly Payment of Debts (Règles sur le paiement méthodique des dettes)
A procedure prescribed in Part X of the Bankruptcy and Insolvency Act, governed by provincial courts, which allows a person to pay debts.

Ordinary Resolution (Résolution ordinaire)
A resolution carried by the majority of votes, (one vote for each dollar of debt), of claims of creditors at a meeting of creditors. Disallowed claims do not have votes.

this is the Office of the Superintendent of Bankruptcy and an agency of Industry Canada. The Office of the Superintendent of Bankruptcy supervises the administration of the Bankruptcy and Insolvency Act. The OSB has Division Offices throughout Canada.


Person (Personne)
Includes a natural person (human being), a partnership, and a corporation that is recognized by law as having the same rights and duties as a natural person.

Power of Attorney (Mandat)
A legal instrument, a document, that sets out an individual’s authority to act as the agent of the person giving the power of attorney.

Preferential Treatment (Traitement préférentiel)
The payment of money or the granting of security by an insolvent debtor that benefits one or more creditors to the detriment of the other creditors.

Preferred Creditor (Créancier privilégié)
A creditor who has been given priority under the Bankruptcy and Insolvency Act over other creditors in the distribution of dividends.

Priority (Priorité)
The order in which creditors are ranked for payment of claims provable under the Bankruptcy and Insolvency Act.

Proof of Claim (Preuve de réclamation)
A creditor’s written statement that is submitted to prove his claim and is used as the basis for paying dividends, if accepted by the trustee.

Provable Claim (Réclamation prouvable)
Any liability of the debtor for a debt incurred before the date of the bankruptcy.

Property (Bien)
Includes money, goods, land and every description of property, whether real or personal, situated in Canada or elsewhere.

Proposal (Proposition)
An offer to creditors to settle debts under conditions other than the existing terms. It is a formal agreement under the Bankruptcy and Insolvency Act.

Proxy (Procuration)
A document signed by a creditor granting another person the authority to represent him at any creditor meetings. The proxy holder can exercise the creditor’s right to vote.


Quorum (Quorum)
The minimum number of creditors who must be present in person or by proxy to conduct business or to take a vote. At a meeting of creditors, one creditor present, in person or by proxy, who has duly proven a claim with the trustee prior to the meeting, constitutes a quorum.


Receiver (Séquestre)
A person who has taken possession pursuant to a security agreement of substantially all of the inventory, accounts receivables or the other property of the debtor. “Receiver” also includes a person who has been appointed privately pursuant to a security agreement or by an order of the court for the protection or collection of property that is the subject of diverse claims, and usually to seize and sell the property of the debtor.

Registrar (Registraire)
An officer of a provincial court appointed by the Chief Justice with the powers and jurisdiction as specified under the Bankruptcy and Insolvency Act.

Related Persons (Personnes liées)
Persons who are connected by a blood relationship, marriage, adoption or common-law partnership. While related they are deemed not to deal with each other at arm’s length. The Act provides that the definition of related persons extends to corporations, shareholders and directors in certain specified situations.

Registered Education Savings Plan

Registered Home Ownership Savings Plan

Registered Retirement Savings Plan


Secured Creditor (Créancier garanti)
A person holding an instrument such as a mortgage or a lien on or against the whole or part of the property of a debtor as security for a debt due to him from the debtor.

Security (Garantie)
A property or asset given or pledged to guarantee the fulfilment of an obligation such as the payment of a loan.

Seizure (Saisie)
The act of taking possession of property by legal right or process.

Sheriff (Shérif)
Includes a bailiff and any officer charged with the execution of a writ or other process under the Bankruptcy and Insolvency Act or any other Act or proceeding with respect to any property of a debtor.

Special Resolution (Résolution spéciale)
A resolution decided by a majority in number and three-fourths in value of the creditors with proven claims present, personally or by proxy, at a meeting of creditors that are voting on the resolution.

Statement of Affairs (Bilan)
The bankrupt’s financial statement or a balance sheet of assets and liabilities showing the estimated value of assets and the names and addresses of creditors and the amounts owed.

Statement of Receipts and Disbursements (État des recettes et des débours)
A statement detailing the receipt and disbursement of funds, the interest received, fees charged by the trustee, all the dividends distributed to the creditors and the particulars of any property that has not been sold.

Stay of Proceedings (Suspension des procédures)
A bar against any creditor for the recovery of a claim provable in bankruptcy against the insolvent person or the insolvent person’s property. No creditor shall start or continue any action, execution or other proceeding for the recovery of such claims.

Superintendent of Bankruptcy (Surintendant des faillites)
A federally appointed official who oversees the administration of the Bankruptcy and Insolvency Act in Canada.

Surplus Income (Revenu excédentaire)
The portion of an individual bankrupt’s income that is required to be paid into the bankruptcy estate during the bankruptcy as per standards established by the OSB.

Suspended Discharge 
See Discharge from Bankruptcy.


Taxation of Accounts (Taxation des comptes)
Application for court approval of the fees and disbursements of the trustee, interim receiver or legal counsel.

Trust (Fiducie)
A property interest held by one person at the request of another for the benefit of a third party.

Trustee in Bankruptcy (Syndic de faillite)
A person licensed by the Superintendent of Bankruptcy to administer bankruptcy and proposal estates.


Unsecured Creditor (Créancier non garanti)
A creditor who advances credit without taking any rights against the property of the debtor.

Voting Letter (Formule de votation)
A document in which a creditor with a provable claim registers his vote for or against a proposal.

Voluntary Deposits Scheme (Dépôt volontaire (Loi Lacombe))
For the residents of Québec, a proceeding where the debtor makes a monthly payment based on his income and number of dependents to the court who will distribute theses payments to the creditor. (See Consolidation Order).

Warranty (Garantie)
A written guarantee of performance from a vendor to a purchaser stating that the item being sold is good and fit for its intended use by the purchaser.

Source: Office of the Superintendence of Bankruptcy Canada web site