Many of our clients do research on our site prior to calling or emailing us to arrange a free, face-to-face, consultation. The Bankruptcy / Insolvency Act utilizes a lot of terminology that might not, at first, be completely clear to someone who has never gone through the bankruptcy or proposal process before. With that in mind, we have provided an abridged version of the Glossary of Terms. If you are unsure about any definition or entry, please do not hesitate to contact us for further information, or book a free, non-obligatory consultation.


An act committed by a debtor as defined under the Bankruptcy and Insolvency Act. One of the most common is if a debtor ceases to meet his liabilities generally as they become due. A creditor with a provable claim of $1000 and over may file a petition for a receiving order if the debtor has committed such an act within the six months preceding the filing of the petition.

A voluntary written declaration of facts affirmed or sworn under oath before an authorized officer such as a Notary Public or Commissioner of Oaths.

An application to a court of law made by creditors in order to put the debtor in bankruptcy.

In the context of bankruptcy it means all the property of the debtor available for distribution for the general benefit of creditors (available for paying debts).

Voluntary assignment by an insolvent person of all of his property to a trustee for the general benefit of creditors.


A person who acts on behalf of any other person in the repossession or seizure of property

A natural person or corporation who has made a voluntary assignment in bankruptcy or against whom a receiving order has been made.

The state of being bankrupt or the fact of becoming bankrupt.

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


A document issued by the trustee or administrator once a debtor has fully performed his or her obligations under the proposal.

Property that is pledged as security against a debt.

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.

In specific provinces, an order handed down by a provincial court to combine the debts of an insolvent person pursuant to the Orderly Payment of Debt Regulations in Part X of the Bankruptcy and Insolvency Act.

A simplified process to make a proposal for repayment of debt to creditors, available 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.

A provable claim in bankruptcy that may or may not become a debt depending upon the result of some future event.

A process under which services of a qualified counsellor are made available to assist and educate bankrupts and/or relatives of bankrupts, or consumer debtors, on good financial management, including prudent use of consumer credit and budgeting principles; in developing successful strategies for achieving financial goals and overcoming financial setbacks; and at any time, where appropriate, making referrals to deal with non-budgetary causes of insolvency (e.g.: gambling, addiction, marital and family problems, etc.).

One to whom a debt is owed; in insolvency matters, a person having a claim provable under the Bankruptcy and Insolvency Act.

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”)

An encumbrance, lien or financial obligation attached to property.

Companies’ Creditors Arrangement Act

Chartered Insolvency and Restructuring Professional; a professional designation given by CAIRP (Canadian Association of Insolvency and Restructuring Professionals), to those who meet the Association’s standards for admission, complete the prescribed course of study and pass the required examinations.


A specific sum of money due by agreement or otherwise.

One who owes money to another.

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.

Failure to pay or perform a legal or contractual obligation.

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. (See ‘

Absolute: Is effective immediately when it is granted by the Bankruptcy Court and means that you are no longer responsible for the debts you had, except for those Debts “not released” described below.

Adjourned: Any objection to the granting of a discharge order will, in most cases, cause the hearing to be postponed to a later date.

Conditional: Conditions may be imposed by the Court that will have to be met before your discharge becomes absolute. For example, you may have to pay a certain sum of money to the Trustee for distribution to your creditors.

Suspended: Same as an Absolute Order but with a delay before coming into effect.

Refused: While the Court has the right to refuse a discharge, it rarely exercises this power.

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

Obligations that must be performed by a bankrupt. For example, provide the trustee with a statement of the bankrupt’s affairs showing the particulars of his or her assets and liabilities, the name of all his creditors etc.

Debt that has payments overdue. The borrower has failed to make the required payments by the required date.


A claim or liability that is attached to property or some other right that may lessen its value, e.g. a lien or mortgage.


A legal process whereby a creditor requires a third party to turn over to the creditor, a debtor’s property such as wages or bank accounts.

A person (see definition of “person“) who takes on financial responsibility for another’s debt.


The condition of being unable to pay debts as they become due, or in the ordinary course of business, or having liabilities that exceed the total value of assets.

A trustee appointed by the court to safeguard the estate assets and perform such other functions as the court may order for such time period as the court may determine.


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.

A formal decision issued by a court on a matter under its consideration.


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.

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

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

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


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


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.


The offences and sanctions provisions are contained in Part VIII of the Bankruptcy and Insolvency Act. These are criminal or quasi-criminal violations of law; a person guilty of an offence is liable to a fine or imprisonment.

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

A procedure prescribed in Part X of the Bankruptcy and Insolvency Act, governed by provincial courts, which allows a person to pay debts.

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.

Office of the Superintendent of Bankruptcy, 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.


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.

A legal instrument (document) setting out explicitly an individual’s authority to act as the agent of the person giving the power of attorney.

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.

A creditor who has been given priority under the Bankruptcy and Insolvency Act over other creditors in the distribution of dividends.

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

A creditor’s written statement that is submitted to prove the creditor’s claim; used as the basis for paying dividends, if accepted by the trustee.

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

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.

A document signed by a creditor granting another person the authority to represent them at creditors’ meetings. The proxy holder can exercise the creditor’s right to vote.


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.


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, usually to seize and sell the property of the debtor.

An Officer of a provincial court appointed by the Chief Justice with the powers and jurisdiction as specified under the Bankruptcy and Insolvency Act.

Persons who are connected by a blood relationship, marriage, adoption or common law partnership; while so 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.


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 him from the debtor.

Property or asset given or pledged to guarantee the fulfilment of an obligation, e.g. for the payment of a loan.

The act of taking possession of property by legal right or process.

Includes 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.

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 and voting on the resolution.

A statement detailing the receipt and disbursement of funds, interest received, fees charged by the trustee, all the dividends distributed to the creditors and particulars of property that is not sold.

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.

A federally appointed official who oversees the administration of the Bankruptcy and Insolvency Act in Canada.

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.

Money loaned with collateral security—commonly is sued for the purchase of a house or car. In the case that the borrower cannot repay the money, the house or car can be seized.


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

A person licensed by the Superintendent of Bankruptcy to administer bankruptcy and proposal estates.


A creditor who advances credit without taking any rights against the property of the debtor.

Money loaned without collateral security. This means if the borrower is unable to pay the money back, such as in the case of bankruptcy, then lender is at a loss.


A document in which a creditor with a provable claim registers his vote for or against a proposal.


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.

A legal procedure by which some portion of a person’s income is required to be withheld by an employer for the payment of a debt.

Please note: our glossary terms and explanations have been simplified for ease of understanding and are intended to provide general information only.

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