Directive No. 24
Coming into force September 18, 2009

PDF version

Directive No. 24

2.9 MB, 8 pages

Information to be Provided to Creditors in Commercial Proposals


(Supersedes Directive No. 20 issued on , on the same topic)


  1. In this Directive,
    • "Act" means the Bankruptcy and Insolvency Act;
    • "OSB" means the Office of the Superintendent of Bankruptcy;

Authority and Purpose

  1. This Directive is issued pursuant to the authority of paragraphs 5(4)(b) and (c) of the Act.
  2. The purpose of this Directive is to establish the Superintendent's standards as to the information to be provided to creditors in a commercial proposal with a view to ensuring that the creditors have the necessary information to make a well-informed decision on the acceptance or refusal of the proposal.


  1. In all commercial proposals, the trustee must prepare a written report to the creditors to provide them with the necessary information to make a well-informed decision.
  2. The suggested format in Appendix A should serve as a guideline to the trustee for the preparation of this report.
  3. Trustees are encouraged to send the report and/or the pertinent information available along with the notice to creditors so that the creditors, including those who will not be attending the meeting but will vote by proxy or voting letter, will be able to study the report and be well informed.

Coming into Force

  1. This Directive comes into force on


  1. For any questions pertaining to this Directive, please contact your local OSB office.

James Callon
Superintendent of Bankruptcy

Appendix A

Trustee's Report on the Proposal

  1. Background

    Explain the evolution of the debtor's position through the current situation and mention the main factors of that evolution. Also, names of the principal shareholder(s) and of the directors of the company should be mentioned if applicable, together with the percentage of shares owned and the positions occupied. Any related or associated corporations of the debtor, if pertinent, as well as any third party associated with the proposal should be disclosed.

  2. Summary of Proposal

    If appropriate, a brief summary of the proposal is to be made.

  3. Financial Position and Causes of Difficulties

    Comply with subsection 50(5) of the Bankruptcy and Insolvency Act as to the appraisal and investigation of the affairs and property of the debtor to estimate with reasonable accuracy the debtor's financial situation and the causes of his or her difficulties.

    Where the operations of the debtor's business are significant to the proposal, the status of these operations should be reported on, including whether they are to be continued or discontinued.

    Advise the creditors as to the availability of the most recent financial statements and make comments if applicable. Such comments should include a brief synopsis of the general order of the financial statement(s) and what degree of reliance, if any, was placed upon the financial statement(s) by the trustee.

  4. Interim Receiver

    If an interim receiver has been appointed, the creditors should be advised as to any pertinent information arising from this appointment.

  5. Identification and Evaluation of Assets

    For the purpose of projecting the realization in a bankruptcy situation, attempt to evaluate the assets of the debtor by class and disclose the basis of evaluation. If such an evaluation has not been done, mention that such is the case and give the reasons for not evaluating the assets. Also, attempt to identify and report to creditors on any encumbrances against the said assets.

  6. Conduct of the Debtor

    Attempt, to the best of your ability, to identify any preferential payment, settlement or reviewable transaction that the debtor may have been a party to and report to the creditors. The trustee should also disclose the extent of the work performed in identifying these transactions. If no work has been done in this area, provide an explanation to the creditors.

    Report to the creditors on any offences under the Bankruptcy and Insolvency Act that might have been noted.

  7. Creditors' Claims

    Report on the proofs of claim received and on material differences with the liabilities indicated on the Statement of Affairs, if any.

    Bring to the attention of the creditors all claims in the estate involving parties related to the debtor as well as the nature of the review of the trustee to ascertain the validity of the transactions.

    Attempt to identify any trust claim and report accordingly to the creditors as to the implications in a bankruptcy situation.

    Indicate whether or not a legal opinion has been obtained on the validity of the securities if there are secured creditors.

  8. Previous Business Dealings with the Debtor

    State if the trustee or a firm with whom he or she is related:

    1. has provided previous services to the debtor (i.e. interim receiver, auditor, accountant, consultant, agent, receiver, etc.); and
    2. may be in a possible conflict of interest situation as a result of having provided these services.

    Disclose all previous dealings with the debtor, including any remuneration received.

  9. Informal Meetings with Major Creditors

    Information regarding previous meetings with major creditors may be provided to the other creditors.

  10. Remuneration of Trustee

    An estimated fee in the proposal could be shown in a Statement of Realization;


    Trustees should disclose their fees in the proposal. If the fees aren't disclosed in their entirety, trustees should disclose the basis on which they will recover their fees and also the existence of any deposit, guaranty or private arrangement.

  11. Other

    Any other pertinent facts, such as legal proceedings or contract arrangements in which the debtor is involved, should be mentioned to the creditors as these could influence their decision.

  12. Statement of Estimated Realization

    A statement of estimated realization should be included in the report. The statement should show both scenarios (i.e. in the eventualities of accepting the proposal and of bankruptcy). The format is at the trustee's discretion; however, there should be as much disclosure as possible to indicate the amount that would be available for distribution to unsecured creditors.

  13. Recommendations

    It is the trustee's duty to inform the creditors in an objective and professional manner. The trustee must state whether or not, in his or her opinion, the proposal is to the advantage of the creditors. To this end, the trustee may take into account not only the terms of the proposal but also some other factors, such as the volume of business that the debtor could bring to the creditors in the future. If no recommendation is made in the report, the trustee must indicate the reasons for this situation.

Important notice:

The HTML version of this Directive is not the official version. In the event of an inconsistency between the HTML and PDF versions of this Directive, the PDF version prevails. Users are required to exercise due diligence with respect to the HTML version.