The bankruptcy trustees
are individuals or legal entities that are licensed by the Superintendent of Bankruptcy. Corporate bodies which hold trustee licenses may exercise the duties and powers of trusties only via a director or an officer of the company who is granted a license as a trustee. The corporate entities will be assigned licenses only in case that most of their employees have obtained such licenses. The main task of the trustees is to hold in trust and to distribute the property of bankrupt individuals among their unsecured debt creditors. The distribution is formally authorized under the Bankruptcy and Insolvency Act.
Bankrupt individuals and persons in the possession of bankrupt property should transfer their property rights to a trustee. He will contact the creditors, inform them of the proceedings, and compile and send all requested information. Two days after receiving a request, the trustee is obliged two provide a copy of opinion to the Superintendent and to each creditor who has made a request. The creditors have the right to substitute the trustee at any given time. The court may remove a trustee and assign another trustee on his place. This can happen if circumstances necessitate a transfer of responsibilities. The trustee is not required to assume duties in relation to any particular bankruptcy
case. However upon the acceptance of an appointment, he should perform his duties until discharge or until the appointment of another trustee.
The trustee may provide unverified information only upon the inclusion of a disclaimer of responsibility or an explanation of the source of the information in question. The trustee will sell the debtor’s assets and use the received amount to repay any outstanding debts. In addition to that, the bankruptcy trustee will offer debt counseling
, assist in the preparation of consumer proposals
to the creditors, negotiate settlements with them, and take care of arrangements on behalf of the debtors.
It is in the discretion of the trustee to offer an advice by an insolvency lawyer. The trustee may come up with an alternative to bankruptcy. Obviously, they are familiar with the Canadian bankruptcy laws and can assist individuals to the best settlement of their debt arrangements
. Approximately one thousand of licensed trustees work in Canada. It is less costly to use the services of bankruptcy trustees, compared to debt consultants, because their fees are standardized by the government.
The bankruptcy trustees are subject to a strict code of ethics, as a part of the General Rules of the Bankruptcy and Insolvency Act. The trustees should disregard any external influence or relationships that blunt their capacity for professional judgment. The rules of the Code aim to protect bankrupt
individuals by specifying the information that trustees need to provide to the creditors. The Code regulates the management of the entrusted funds and the sale of properties, held by individuals and legal entities. Furthermore, the trustees may not purchase the entrusted property of the debtors. They cannot sell the property to other trustees and persons who are related to them in any manner.
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