Professional Conduct Decision
What is a professional conduct decision?
An investigation into a Licensed Insolvency Trustees (LIT)'s professional conduct is initiated when there is information to suggest that the LIT has not properly performed the duties of a trustee 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 a 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.
Trustee License Limitation and Conditions Order Issued
Under the Bankruptcy and Insolvency Act
In the Matter of Frank Sheldon Kisluk and Frank S. Kisluk Limited
Licensed Trustees in the Province of Ontario
Whereas Frank Sheldon Kisluk (the "Trustee") has operated in the Province of Ontario since 1978 and Frank S. Kisluk Limited (the "Corporate Trustee") has operated in the Province of Ontario since 1985;
Whereas Abubakar Khan, a Senior Bankruptcy Analyst with the Office of the Superintendent of Bankruptcy ("OSB"), submitted a Report on the administration of a number of estates by the Trustee dated (the "Report") pursuant to a general delegation under subsection 14.01(1) of the Bankruptcy and Insolvency Act ("BIA");
Whereas the Report identified a number of deficiencies where the Trustee failed to fulfill his statutory duties, especially with respect to a number of estates opened in or before 1995 (the "Aged Estates");
Whereas the Trustee had previously been directed to engage the services of David E. Crack, C.A. (the "Auditor") to prepare reports on the Aged Estates and that work is ongoing;
Whereas the Trustee agreed to many of the material facts in the Report in an Agreed Statement of Facts dated ;
Whereas I granted an Order on based on a joint submission by the parties, which outlined the corrective measures the Trustee was required to complete by (the "2006 Order");
Whereas the Trustee failed to complete many of the corrective measures outlined in the 2006 Order by the due date and therefore was in default of the Order;
Whereas the Trustee sought an extension of time to complete the corrective measures in the 2006 Order and I heard submissions on this issue at a hearing on ;
Whereas the Trustee advised just prior to the hearing that he had arranged for $100,000 to be deposited with Fasken Martineau DuMoulin LLP ("Faskens") for the purpose of dealing with all costs relating to the closure of the Aged Estates, including paying the continued services of the Auditor and another trustee Chee-Kong Leong and his legal costs;
Whereas the hearing was adjourned prior to its completion so that the parties could try to settle the matter through a new joint submission;
Whereas the Trustee and Serge Ciardullo, who replaced Abubakar Khan as Senior Bankruptcy Analyst with the OSB on this case (the "Senior Analyst"), have submitted to me a new draft joint submission, which in my opinion is fair and reasonable in the circumstances and consistent with public policy;
Whereas the Trustee and the Senior Analyst have agreed that as of the date of the new draft joint submission, the Trustee is responsible for 150 outstanding Aged Estates, a list of which is attached to the joint submission;
By these Reasons:
I the undersigned, Perry Meyer, Delegate of the Superintendent of Bankruptcy by virtue of the powers delegated to me under section 14.01 of the BIA, order:
That the Trustee must abide by and fulfill the following conditions of license:
- The Trustee shall continue to engage and assist the Auditor to prepare individual reports on each estate as presented so that the Auditor may file an interim status report with respect to the process of reconciling the consolidated bank accounts including the dividend clearing account by ;
- that the Trustee must submit to the Senior Analyst final Statements of Receipts and Disbursements ("SRDs") and applicable Auditor's Reports for all Aged Estates that have funds by ;
- that the Trustee must submit to the Senior Analyst final SRDs and applicable Auditor's Reports for all other Aged Estates where SRDs are necessary by ;
- that the Trustee must satisfy all documentation and information requests, including explanations sought by the Senior Analyst in relation to final SRDs, within ten business days of receiving such requests;
- that the Trustee must apply to the Court for taxation on Aged Estates (where applicable), and confirm this application with the Senior Analyst, within three weeks of receiving the Senior Analyst's Letter of Comment on final SRDs;
- that the Trustee will reimburse any of the Aged Estates within thirty days should it be discovered that any unauthorized draws, unreasonable bank charges or fees or overdrawn amounts have resulted in a loss to the estate;
- that all funds received by the Trustee as compensation after taxation by the Court, including reimbursement of disbursements, from Aged Estates, will be held in trust by the Trustee and applied against any unauthorized draws, unreasonable bank charges or fees or overdrawn amounts that have resulted in a loss to the estate or against lost interest;
- that the Trustee will be able to administer the Aged Estates for the next twelve months from the date of this Order or until they are all closed and will provide a monthly accounting of all funds held in trust for the benefit of the Aged Estates commencing and continuing until the Aged Estates are closed;
- that within ten business days of this Order being signed, the Trustee will deposit $82,180.14 into a trust account of Faskens to be used exclusively to pay lost interest on Aged Estates;
- that within ten business days of the $82,180.14 being deposited into the trust account of Faskens, the Trustee will direct Faskens to distribute this total amount to the accounts of effected Aged Estates where lost interest has been identified by the Auditor;
- that the Senior Analyst or another identified OSB employee shall ensure the validity and justification of all payments for expenses, fees, remuneration, etc. from the estate trust bank accounts in the name of, administered by or any other way in the control of the Trustee or the Corporate Trustee that are presented for payment subsequent to the issuance of these directions, and if said payments are justified, that the Senior Analyst or the OSB employee must co-sign all cheques, bills of exchange, bank drafts, certificates of deposit and fund transfers payable out of the estate trust bank accounts in the name of, administered by or any other way in control of the Trustee or the Corporate Trustee for the next twelve (12) months or until the Aged Estates are closed;
- that within thirty business days after the terms of paragraphs 1–10 have been completed, the Trustee must take the requisite steps to have the license of the Corporate Trustee cancelled;
- that after the terms of paragraphs 1–10 have been completed, the Trustee will voluntarily agree to operate under a restricted individual trustee license, which includes the following restrictions:
- that the Trustee not file any estates under his individual trustee license; and
- that the Trustee not handle any trustee banking responsibilities as outlined in the BIA, regulations or Superintendent's Directives (the "Restricted License");
- that before any restrictions on the Restricted License may be removed, the Trustee must take and pass an Oral Board Examination;
- that the Trustee may have his license associated with another Trustee in order to earn his income provided that his activities are within the scope of activities allowed under the Restricted License;
- that if the Trustee fails to meet any of the requirements in paragraphs 2–10 he is deemed to have waived his right to a hearing on the merits of the Report under sections 14.01–14.02 of the BIA and is only entitled to make submissions to the Delegate on:
- the need for an extension of time because of a serious medical problem substantiated by a doctor's certificate,
- whether there has been a breach of this Order, and if so
- the appropriate sanctions.
- if there is full compliance by Mr. Kisluk with the terms of this Order, there will be no further sanctions imposed on him as a result of the deficiencies identified in the Report of Abubakar Khan.
The Trustee and Senior Analyst hereby agree to the above joint submission through their respective counsel
Signed at Toronto, Ontario on the
David E. Baird
Counsel for the Trustee
Counsel for the Senior Analyst
This document has been reproduced as submitted by the delegate of the Superintendent of Bankruptcy.