Directive No. 25

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Directive No. 25

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Realization of Estate Assets

Issued: August 14, 2009

(Supersedes Directive No. 22 issued on July 23, 1993, on the same topic)


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

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 outline the position of the Superintendent with regard to realization of estate assets.


  1. Except for property held in trust by the bankrupt or property exempt from execution or seizure, all property of the bankrupt, wherever situated at the date of bankruptcy or that may be acquired by or devolve on him or her before the discharge, is available for the creditors within the meaning of section 67 of the Bankruptcy and Insolvency Act. The trustee must therefore take possession of the assets and realize upon them for the benefit of the estate unless:
    1. the asset is specifically exempt from seizure or execution under the law;
    2. a specific applicable jurisprudence renders the asset exempt;
    3. a specific order has been obtained from the Court to exempt the asset; or
    4. in the opinion of the trustee, there would be no financial benefit to the estate as the cost of realization would exceed or equal the realizable value of the asset. In such a case, a document of explanation should be kept in the estate file.
  2. The onus of having an asset declared exempt from execution lies with the bankrupt, at the bankrupt's own expense, and not at the expense of the estate.

Realization of Assets

  1. The following are examples of minimum requirements in the realization of certain assets by trustees. This list is not exhaustive as there are many other types of assets to be realized in the administration of estates, some of which are already covered under other directives (i.e. surplus income, tax refunds, etc.).
    1. Motor Vehicle

      Although exemption provisions vary from one province to another, the fundamental principles are the same: unless exempted by the applicable legislation or applicable jurisprudence, a motor vehicle constitutes an asset of the estate and there is a statutory obligation on the part of the trustee to realize the asset.

      If expedient, a trustee may choose to sell the motor vehicle back to the bankrupt. Before doing so, the trustee must obtain the consent of the inspectors and/or the creditors and document the file on the method by which the value of the vehicle was obtained (e.g. written appraisal, black book or other source).

      Any payment for the motor vehicle made by the bankrupt to the estate shall not be considered as part of the payments from surplus income but rather from that portion of the bankrupt's income that he or she is entitled to retain.

    2. Life Insurance

      Although insurance legislation varies from one province to another, generally the trustee in bankruptcy is entitled to realize the proceeds of a life insurance policy if payable to the estate of the bankrupt.

      If a life insurance policy exists, as a minimum, the trustee must examine the bankrupt's life insurance policy, which may include a request to the insurance company for a written statement on the status of the policy to ensure that all moneys available for distribution to the creditors are paid to the estate.

    3. Registered Retirement Savings Plan

      Under section 67 of the Act, amounts held in RRSPs are exempt from seizure in bankruptcy, subject to a possible clawback for contributions made in the 12 months preceding bankruptcy that will comprise property of the bankrupt's estate. Where provincial legislation exempts RRSPs from execution, the provincial legislation will apply. Where provincial legislation is silent regarding the treatment of RRSPs, they will be exempt subject to the clawback referred to above.

Supporting Documents

  1. As it is a statutory obligation on the part of a trustee to realize on all assets for the benefit of the estate, it is therefore expected that a trustee will document the files as much as possible in support of the receipts, disbursements and actions taken on all the transactions. The official receiver may, at his or her discretion, request from the trustee a copy of that documentation.

Coming into Force

  1. This Directive comes into force on September 18, 2009.
  2. For any questions pertaining to this Directive, please contact your local OSB office.

James Callon
Superintendent of Bankruptcy

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.