Section 1

General Issues

Sub-Section 1.1

Bankruptcy


Legislation


s. 46(1), The Landlord and Tenant Act
The Bankruptcy and Insolvency Act


Definitions

The definitions in this subsection are for the purpose of this policy only. They may not be the same as the definitions in The Bankruptcy and Insolvency Act.

Assignment in bankruptcy: a document compiled by a Trustee in Bankruptcy and signed by a debtor. The debtor also completes a Statement of Affairs to show their assets and liabilities. An assignment gives the Trustee control over the debtor’s assets, other than those assets which are exempt under The Executions Act. The Trustee may sell the assets so that dividends are payable to the debtor’s creditors. To establish a claim, creditors file a Proof of Claim with the Trustee. A creditor cannot prevent a debtor from filing an assignment in bankruptcy.

Claimant: a person who makes a claim against another.

Consumer proposal: a proposal prepared by a debtor and an administrator and filed with the Office of the Superintendent of Bankruptcy. The proposal lists the creditors and allows the debtor to negotiate with their creditors to reduce their debt or extend the time to pay it. A consumer proposal may be accepted or rejected by the creditors in accordance with the procedures established under The Bankruptcy and Insolvency Act.

Discharge in bankruptcy: first time bankrupts can be automatically discharged nine months following the date of bankruptcy, unless a creditor files a notice of objection. A court ordered discharge is required in all other instances.

Respondent: a landlord, tenant or co-signer against whom a claim is made.

Trustee in bankruptcy: a person who is licensed or appointed under The Bankruptcy and Insolvency Act. The powers and duties of a Trustee are set out in The Bankruptcy and Insolvency Act and numerous policy directives issued by the Superintendent of Bankruptcy.


Policy

An assignment in bankruptcy or a consumer proposal has an impact on how the Branch deals with disputes between landlords and tenants.

Application for an Order of Possession

An Order of Possession is not a claim provable in bankruptcy. The Branch can hear an application even though a tenant:

    • may have filed for bankruptcy;
    • may have filed a consumer proposal; or
    • is a discharged bankrupt.

  • assignment in bankruptcy: Whether a tenant filed an assignment in bankruptcy or is a discharged bankrupt, the Branch may grant an order of possession for rent owed from before or after the date of the assignment. The Branch may grant the order of possession even though the landlord may have filed a Proof of Claim for the rent with the Trustee in Bankruptcy. In these cases, the Branch can order the tenant to move, but can only award compensation for rent arrears from the date of the assignment. A claim for rent or other compensation which arose before the date of the assignment are claims provable in bankruptcy. The Branch does not have authority to deal with these claims as they are stayed under The Bankruptcy and Insolvency Act.

  • consumer proposal: If a consumer proposal has been filed and/or accepted, the Branch can’t grant an order of possession on rent owed from before the date of the proposal. The Branch can’t award compensation for rent or other claims for compensation which arose prior to the consumer proposal. A claim for rent or other compensation which arose before the date of the assignment are claims provable in bankruptcy. The Branch does not have authority to deal with these claims as they are stayed under The Bankruptcy and Insolvency Act.

  • If the consumer proposal was rejected, the Branch may grant an order of possession on rent owed from before the date of the proposal. The Branch may also award compensation for the rent or other claims.

    If a tenant does not pay rent as it becomes due, after filing a consumer proposal, the landlord may terminate the tenancy for non-payment of rent and apply for an order of possession and an order for compensation, if necessary.

Claim for compensation – damage, cleaning costs, other compensation

  • assignment in bankruptcy: If a tenant moves out of a rental unit after filing an assignment in bankruptcy, the Branch’s authority to issue an Order depends on when the claim arose. If the claim arose before the assignment in bankruptcy, the claim is a claim provable in bankruptcy. The landlord may file a proof of claim with the Trustee in Bankruptcy. If the claim arose after the assignment, the Branch may issue an Order. The Branch will determine when a claim arose based on the facts of each case.

    The Branch can’t award compensation if a tenant:

    • moves out and then files an assignment, or;
    • files an assignment after the landlord files a claim.

    The landlord may be able to keep the security deposit. But, they should talk to the Trustee about keeping the money. If the landlord has a claim for a larger amount, they would have to file a Proof of Claim with the Trustee.

    If a tenant files an assignment after the Branch issues an order to pay, the Branch will provide a certified copy of the Order on request. However, the landlord cannot file the Order in the Court of Queen’s Bench. The landlord should contact the Trustee in Bankruptcy to file a proof of claim for the compensation awarded in the Order.

  • consumer proposal: If a tenant moves out of a rental unit after filing a consumer proposal, the landlord may file a claim for compensation for damage, cleaning costs or other compensation. If the claim arose before the consumer proposal, the Branch can’t award compensation. If the claim arose after the consumer proposal, the Branch may issue an Order.

Claim for compensation – rent

  • assignment in bankruptcy: When a tenant files an assignment, the Branch can’t award compensation for rent the tenant owes from before the date of the assignment. The landlord may file a Proof of Claim for the rent with the Trustee. A landlord may make a claim for any rent the tenant owes after the date of the assignment.

  • consumer proposal: If a consumer proposal has been accepted, the Branch can’t award compensation for rent arrears from before the date of the consumer proposal. The Branch could award compensation for rent arrears after the date of the consumer proposal

Mediated agreements: If either a landlord or tenant agrees to pay some money and then files an assignment, the Branch can’t issue an order to pay the money. The claimant could file a Proof of Claim with the Trustee.

If a tenant agrees to pay or move out and then files an assignment, the Branch may still grant the landlord the order of possession.

Order to return a security deposit: If the Branch orders a landlord to return a security deposit and the landlord is already bankrupt or files an assignment, the Branch will file a Proof of Claim with the Trustee on behalf of the Security Deposit Compensation Fund.

The Branch does not refund a filing fee for a claim or order of possession if either the landlord or tenant files an assignment.



Procedure

Overview

A landlord or tenant files a claim with the Branch. The Branch receives information that the “respondent” filed an assignment in bankruptcy. The officer advises the “claimant” of the Branch’s authority to issue an Order.


Steps ▼

1.The officer receives information that either a landlord or tenant, named on a claim or order of possession, filed an assignment in bankruptcy.

2.The officer reviews the information and may contact the Trustee for advice.

3.If the Branch has the authority to issue an Order, the officer follows the procedures for:

    • mediation;
    • orders of possession; or
    • claims for compensation.

4.If the Branch is unable to issue an Order, the mediation officer contacts the person who filed the claim or order of possession to explain why the Branch can’t issue an Order. The mediation officer refers the claimant to the Trustee to file a Proof of Claim.


Forms & Form Letters


X-Referencing

For details on Mediation, see Mediation in this section.
For information on giving notice for unpaid rent, see Notice of Termination – For Non-payment of Rent in Section 7.
For information on claims, see Claims in Section 9.
For information on enforcing a security deposit order, see Enforcing An Order to Return a Security Deposit in Section 10.


Policy Developed

March, 2004*


Last Revision


May, 2015

Other Resources

None


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