Lloyd Murphy  — April 11, 2023

OSB   File No.: 1016207

Before Elisabeth Lang, Superintendent of Bankruptcy

In the matter of the cancellation of trustee licences pursuant to paragraphs 13.2(5)(b), (c) and (d) of the Bankruptcy and Insolvency Act concerning:

Superintendent of Bankruptcy 

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Lloyd Murphy, individual trustee licence number 1067

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L.W. Murphy Ltd., corporate trustee licence number 3286

Section 13.2(5) Decision

  1. This decision is taken based upon consideration of the following: 
    1. Lloyd Murphy is the holder of an individual licence as trustee under the Bankruptcy and Insolvency Act (the “BIA”), and L.W. Murphy Ltd. is the holder of a corporate licence as trustee under the BIA (the “Individual Licensee”, the “Corporate Licensee”, and collectively the “Licensees”);
    2. pursuant to paragraphs 5(4)(d) and 13.1(c) of the BIA, the licenses of the Licensees are subject to conditions and limitations (the “Conditions of Licence”), some of which are set out in Directive No. 13R7, Trustee Licencing (the “Licensing Directive”);
    3. the Licensees are subject to conservatory measures dated May 26, 2021, May 27, 2021, May 28, 2021, June 1, 2021, and July 30, 2021 issued pursuant to section 14.03 of the BIA (the “Conservatory Measures”), the contents of which are incorporated into this decision;
    4. subsequent to the issuance of the Conservatory Measures, a Senior Analyst (the “Investigator”) was appointed to conduct an investigation into the conduct of the Licensees pursuant to paragraph 5(3)(e) and subsection 14.02(2) of the BIA;
    5. the Investigator shared a summary of her investigation conclusions dated October 4, 2022 with the Licensees;
    6. the Investigator and the Licensees wish to bring this matter to a conclusion by way of licence cancellations under the following paragraphs of subsection 13.2(5) of the BIA:

Whereas a licence issued under the BIA may be cancelled pursuant to paragraph 13.2(5)(b) of the BIA for non-compliance with the Conditions of Licence;

  1. Adequate Facilities and Personnel

Whereas it is a Condition of Licence pursuant to paragraph 29(g) of the Licensing Directive that the Corporate Licensee “shall have adequate facilities and personnel to administer professional engagements in the districts(s) in which he or she is entitled to act;”

Whereas the Investigator has determined that, inter alia, the Corporate Licensee’s Estate Manager has resigned, its insolvency software provider has closed its account and its commercial lease has been terminated;

  1. Insurance     

Whereas it is a Condition of Licence pursuant to paragraph 29(h) of the Licensing Directive that the Corporate Licensee “shall have adequate professional liability insurance and adequate employee dishonesty (also known as fidelity) insurance;”

Whereas the Investigator has determined that there was a gap in professional liability insurance coverage from February 5, 2020 to March 25, 2021; the last period of coverage for professional liability insurance was for March 25, 2021 to March 25, 2022; there was no employee fidelity insurance coverage after July 20, 2019; and that there is currently no insurance coverage for either professional liability or employee fidelity;

Whereas a licence issued under the BIA may be cancelled pursuant to paragraph 13.2(5)(c) of the BIA “if the trustee has ceased to act as a trustee;”

Whereas the Investigator has determined that the Licensees have ceased to act as trustees, at the latest on May 20, 2021, when, as set out in the Conservatory Measure issued May 26, 2021, the Individual Licensee advised:

“… that it would be best to turn over the files to the OSB given that:

  1. It appears that the Estate Manager will not be returning to administer the ongoing operations of the Firm and will not communicate with the trustee;
  2. no other assistant is available with UBERbase experience to fulfill the role as the trustee’s assistant;
  3. the maintenance of business operations has been difficult since the Estate Manager’s departure; and
  4. the landlord has terminated the lease and is awaiting confirmation of arrangements to remove the files;”

Whereas a licence issued under the BIA may be cancelled pursuant to paragraph 13.2(5)(d) of the BIA “at the request of the trustee;”

And whereas on December 14, 2022 the Licensees requested that their licenses be cancelled;

  1. On March 31, 2023, a notice pursuant to subsection 13.2(6) of the BIA of the reasons for the Superintendent’s intended decision was served.
  2. Therefore, LIT licence numbers 1067 (individual licence of Lloyd Murphy) and 3286 (corporate licence of L.W. Murphy Ltd.), are hereby cancelled pursuant to paragraphs 13.2(5)(b), (c) and (d) of the Bankruptcy and Insolvency Act.

Signed at Ottawa, Ontario, on April 11th, 2023 pursuant to paragraphs 13.2(5)(b), (c) and (d) of the Bankruptcy and Insolvency Act.

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Elisabeth Lang
  Superintendent of Bankruptcy

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