Decisions affecting the licence of Licensed Insolvency Trustees

An investigation into a Licensed Insolvency Trustee (LIT)’s professional conduct is initiated when there is information to suggest that the LIT has not properly performed the duties of an LIT or there has been improper administration of an estate or lack of compliance with the Bankruptcy and Insolvency Act (BIA).

In some cases, the findings are sufficiently serious to support a recommendation for sanctions against the LIT’s licence (cancel or suspend an LIT’s licence (subsection 13.2(5) of the BIA) or impose conditions or limitations (subsection 14.01(1) of the BIA)).

The professional conduct decision is deemed to be a decision of a federal board, commission or tribunal and may be judicially reviewed by the federal court.

A licence may be cancelled or suspended through a summary adjudication proceeding in certain circumstances, as per subsection 13.2(5) of the BIA, where an LIT is found guilty of an indictable offence that would impair the LIT’s capacity to perform their fiduciary duties, fails to comply with conditions or limitations imposed on their licence, ceases to act as an LIT or makes a request to cancel or suspend their licence.

The Superintendent will notify the LIT of the intended licensing decision 10 days before the decision will take effect. Procedures applicable to professional conduct proceedings set out in section 14.02 of the BIA do not apply to summary adjudication proceedings.

The summary adjudication decision is deemed to be a decision of a federal board, commission or tribunal and may be judicially reviewed by the federal court.

The Superintendent of Bankruptcy puts in place conservatory measures when a bankruptcy or insolvency estate needs protection. It might be in cases of 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.

In the course of an investigation into an LIT’s professional conduct, if the investigator has concerns, based upon reasonable grounds, that the LIT may have committed an offence as set out in the Bankruptcy and Insolvency Act or in the Criminal Code, the matter may also be referred to the Royal Canadian Mounted Police for investigation. Charges leading to judgment and sentencing may be filed against the LIT.