Mediation under Section 170.1 of the BIA

July 27, 2011

The objective of mediation under the Bankruptcy and Insolvency Act (BIA) is for the parties to arrive at a mutually acceptable agreement, thereby eliminating the need for a court hearing. Consistent with a principle-based approach, the Office of the Superintendent of Bankruptcy (OSB) should facilitate out-of-court resolutions to matters that are submitted for mediation under the BIA.

Mediation under section 170.1 of the BIA is mandatory if the trustee opposes the discharge of the bankrupt on the sole basis that the bankrupt has failed to comply with a requirement to pay imposed under section 68, and/or the bankrupt, if the bankrupt could have made a viable proposal, chose bankruptcy rather than a proposal to creditors as the means to resolve the indebtedness.

The OSB recognizes that mediation under section 68 of the BIA is available any time the amount of surplus income the trustee has determined the bankrupt must pay to the estate is in dispute. However, there may be circumstances where the parties to mediation under section 170.1 of the BIA wish to revisit the amount/quantum the bankrupt is required to pay to the estate. In such an event, the trustee must complete Form 60, Request for Mediation Made by Trustee, to reflect the scope of the mediation (i.e., by selecting the appropriate "boxes") and ensure that the notice requirements under the BIA and the Bankruptcy and Insolvency General Rules are respected to ensure a fair and transparent process.