Directions to the Official Receiver in the matter of Ronald George McMahon; Todd McMahon Inc.

Conservatory Measures

What is a conservatory measure?

The Superintendent of Bankruptcy puts in place conservatory measures when a bankruptcy or insolvency estate needs protection. It might be in cases of Licensed Insolvency Trustee (LIT) malfeasance or if serious wrongdoing on the part of an LIT puts estate files at risk. Conservatory measures may also be put in place if an LIT becomes ill or dies without a valid succession agreement. Finally, conservatory measures may be put in place if an LIT, for whatever reason, has allowed the administration of his or her practice to become substandard.

CANADA

Directions to the Official Receiver

In the matter of:
Ronald George McMahon
Todd McMahon Inc.


Directions for Conservatory Measures

(Section 14.03 of the Bankruptcy and Insolvency Act)


Whereas the Bankruptcy and Insolvency Act (the Act) provides the Superintendent of Bankruptcy
(the Superintendent) with the general power to supervise the administration of all estates and matters to which the Act applies;

Whereas Ronald George McMahon is the holder of an individual licence as trustee under the Act (1062);

Whereas Todd McMahon Inc. is the holder of a corporate licence as trustee under the Act (2782);

Whereas Ronald George McMahon carries out his professional activities within Todd McMahon Inc. (together the "LIT");

Whereas to ensure the practices of the various trustees across the country are compliant, the Superintendent carries out monitoring activities to ensure that trustees administer files in accordance with legal requirements and carry out their responsibilities with care and diligence;

Whereas the LIT operates individual and consolidated bank accounts with total inventory as of June 21, 2022, as follows: individual Division I proposal bank accounts consisting of 0 files; a consolidated Division II Proposal account consisting of 391 files; a consolidated summary administration bankruptcy bank account consisting of 72 files; and ordinary administration bankruptcy bank accounts consisting of 1 file;

Whereas rule 60 of the Bankruptcy and Insolvency General Rules (the Rules) requires an LIT to apply to a taxing officer for a date for a taxation hearing within 30 days of receiving a Letter of Comment from the Superintendent;

Whereas the Superintendent has issued a total of 28 negative Letters of Comment (“NLOC”) between the dates of August 2020 to April 2022 on estates administered by the

LIT. The requirement under rule 60 of the Rules was included in each of the Letters issued to the trustee and repeated requests were made for taxation hearing dates. To date, no court dates have been set nor has the LIT applied for any dates for a taxation hearing despite multiple follow-up communications by the Office of the Superintendent of Bankruptcy (the “OSB”).

Whereas section 34(2) of the Act requires an LIT to report to the court on estates that have not been fully administered within three years of the bankruptcy if requested to do so by the Superintendent, as soon as practicable after receiving the request from the Superintendent.

Whereas in September 2021, the OSB conducted an analysis of the LIT’s estates and identified 18 estates (10 summaries and eight (8) Division II proposals) where debtor discharges or certificates of completion were expected to occur/to be issued between 2019 and 2020 but have not been issued by the LIT, nor has any notice been sent regarding oppositions or proposal annulments.

Whereas on , the OSB issued a letter pursuant to s.34(2) of the BIA to the LIT requesting that the LIT report to the court in relation to the 18 identified estates. The LIT did not schedule a court date despite repeated requests to do so by the OSB.

Whereas rule 36 of the Rules requires that LITs shall perform their duties in a timely manner and carry out their functions with competence, honesty, integrity and due care.

Whereas in March 2021, the LIT’s inventory of aged estates was over the risk threshold established by the OSB and the LIT provided a closing plan that was initially accepted by the OSB.

Whereas the March 2021 closing plan overlooked estates that would be aged by the end of the calendar year and, in August 2021, it was determined that the LIT’s Division II estates were also over threshold and that the percent of aged summary administrations had increased.

Whereas the LIT was informed verbally and in writing on that a new closing plan was required.

Whereas on , the OSB reiterated its requirement for a new closing plan and the LIT agreed to provide such a plan by .

Whereas to date, no new closing plan has been received and there has been no further communications from the LIT regarding the aged estates.

Whereas the number of aged estates in the LIT’s inventory continue to be over the risk thresholds as of the date of this Conservatory Measure and a review shows that both the number and percentage of aged estates in the LIT’s inventory have since increased in the past year.

Whereas rule 37 of the Rules states that LITs shall cooperate fully with representatives of the Superintendent in all matters arising out of the Act, these Rules or a directive.

Whereas I believe on reasonable grounds that the estates require protection;

Whereas the Superintendent of Bankruptcy may, for the protection of an estate, exercise the powers set out in subsection 14.03(1) of the Act, in the circumstances referred to in subsection 14.03(2) of the Act;

Whereas the Superintendent of Bankruptcy has delegated to me, in accordance with subsection 14.01(2) of the Act, the powers of the Superintendent as specified in subsection 14.03(1) of the Act, in the circumstance referred to in subsection 14.03(2), a copy of which delegation is attached, along with copies of sections 14.01, 14.02 and

14.03 of the Act;

Whereas paragraphs 14.03(1)(d) and 14.03(2)(b) of the Act apply;

I, Zaeed Buksh, in my capacity as delegate for the Superintendent direct:

That the Official Receiver not appoint Ronald George McMahon and Todd McMahon Inc., in respect of any new estates and not accept any new estate filings from Ron McMahon and Todd McMahon Inc. by mail, facsimile or electronically;

These instructions are effective immediately and will remain in effect until such time as the undersigned determines that the estates no longer require protection.

In accordance with subsection 14.03(3) of the Act, these directions bind the Official Receiver, who must comply with them.

Pursuant to subsection 14.03(4) of the Act, a person who complies with these directions is not liable for any act done by that person only to comply with these directions.

Signed at the City of Vancouver, in the province of British Columbia, this 15th day of July 2021.

space to insert signature

Zaeed Buksh
Senior Advisor
Integrity & Enforcement
Office of the Superintendent of Bankruptcy