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 Licence 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 Mr. 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 (SBA), of the Office of the Superintendent of Bankruptcy (OSB) has submitted a Report on the administration of a number of estates by the Trustee, pursuant to a general delegation under subsection 14.01(1) of the Bankruptcy and Insolvency Act (BIA);
Whereas the Report identifies a number of deficiencies where the Trustee has failed to fulfill his statutory duties, especially in respect of the administration of a number of estates that have not been administered despite being opened since 1995 or before (the Aged Estates);
Whereas the Trustee has been directed to engage the services of Mr. David E. Crack, C.A., (the "Auditor") to prepare reports on the Aged Estates and that work is ongoing;
Whereas the Trustee and SBA have agreed to the material facts in this matter in an Agreed Statement of Facts dated ;
Whereas the parties have jointly submitted to me the draft of this decision which in my opinion is fair and reasonable in the specific circumstances of this case and consistent with public policy, and there is no reason to derogate from it;
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 Bankruptcy and Insolvency Act, order:
That the licence held by the Trustee be limited for a period of twelve (12) months and that the Trustee must abide by and fulfill the following conditions of licence:
- 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 , and a final report confirming the reconciliation of the consolidated accounts by .
- The final Statements of Receipts and Disbursements together with the Auditor's report for all files presently at the OSB waiting for final letters of comment will be amended and resubmitted to the OSB by .
- The Trustee will deliver Final statements of Receipts and Disbursements for all of the remaining Aged Estates, including the Auditor's reports to the OSB at the rate of twenty (20) files per month commencing and ending on provided that all files are completed by .
- Additionally, the Trustee will satisfy all documentation and information requirements and will tender all explanations sought by the OSB in relation to the final statements of Receipts and Disbursements within 30 days after any such request. After the issuance of the letter of comment the Trustee will continue to taxation and trustee's discharge hearing in accordance the provisions of the BIA.
- The Trustee will reimburse any of the Aged Estates within sixty (60) 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.
- The Trustee shall also continue to engage and assist the Auditor to prepare a report setting out the calculation of total interest lost in the Aged Estates as a result of not investing funds ("Lost Interest") to be submitted to the OSB by . The amount of Lost Interest will be calculated at the rate of 3% per annum on a simple interest basis. When the Lost Interest is calculated a schedule for repayment of the Lost Interest will be agreed upon by the Trustee and the OSB within a further 30 days or referred to the Delegate for determination of a repayment schedule. The Trustee shall abide by the repayment schedule as a condition of this Order.
- All funds received by the Trustee as compensation after taxation by the Court, including reimbursement of disbursements, from the 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.
- The Trustee will pay from his personal earnings and/or borrowings the costs of the Auditor, the bookkeeper and any other legal or financial costs relating to the closing of the Aged Estates.
- The Trustee will be able to administer the Aged Estates for the next twelve (12) 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.
- The Trustee shall successfully complete an Oral Board Examination within the next twelve (12) months from the date of this Order.
- The Trustee may not accept a personal appointment as a trustee for the next twelve (12) months and may only accept a personal appointment as a trustee thereafter if he successfully completes the Oral Board Examination. In the event that the Oral Board Examination results are unsuccessful, then that matter will be considered at that time under the auspices of 13.2(5)(b).
- During the interval between the date of this Order and the successful completion of the Oral Board Examination, the Trustee may have his licence associated with another Trustee in order to earn his income provided that his activities are within the scope of activities agreed upon by the SBA and the Trustee (including, for instance conducting initial assessments).
- The SBA 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 SBA or other 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.
- The licence of the Corporate Trustee will be cancelled when all of the Aged Estates are closed and in the meantime no new estates shall be opened or administered under the name of the Corporate Trustee from the date of this Order.
That in the event the Trustee does not comply with the Order herein, the Trustee shall be in default pursuant to paragraph 13.2(5)(b) of the Act and subject to suspension or cancellation thereunder.
The Trustee and SBA hereby agree to the above Joint Submission being submitted to Justice Perry Meyer for his signature.
Signed at Toronto,
David E. Baird
Counsel for the Trustee
Signed at Ottawa,
Counsel for the SBA
This document has been reproduced as submitted by the delegate of the Superintendent of Bankruptcy.