Question 1

The Superintendent of Bankruptcy has the power to

Accepted Answer

The Superintendent of Bankruptcy has a wide range of powers, including the ability to investigate potential bankruptcy offences, issue directives to trustees or receivers, intervene in bankruptcy court proceedings, and suspend or cancel a trustee's license. Therefore, all of the options listed in the question are correct.

Question 2

Use the fact situation in Q2 to answer the related question that follows. In order to recover the amount of George's shareholders loan,the trustee in bankruptcy of General Widgets will

Accepted Answer

In order to recover the amount of George's shareholders loan, the trustee in bankruptcy of General Widgets will apply to the court to have the transaction nullified. This is because George's loan would be considered a voidable preference, as it favored one creditor (himself) over the others. Therefore, the court can void the transaction and the trustee can recover the money from George. None of the other options offered are applicable to this situation.

Question 3

Use the fact situation in Q2 to answer the related question that follows. Assume that by March 2009,the company's business was starting to recover,but the company was still insolvent.In this case,instead of voluntarily assigning itself into bankruptcy,General Widgets could have

Accepted Answer

Making a commercial proposal would be the best option for General Widgets as it is still insolvent but its business is starting to recover. A commercial proposal is a proposal made by a business to its creditors for the settlement of its debts while continuing to operate. It allows the company to avoid bankruptcy while still addressing its financial difficulties. Starting winding-up proceedings, making a consumer proposal, or obtaining a receiving order would not be appropriate in this situation as they all involve bankruptcy or liquidation.

Question 4

Use this fact situation to answer the related questions that follow. General Widgets is a large provincial manufacturing company that has been in business for a number of years,but when the economic recession began in 2008,the company found itself experiencing a lack of sales,which affected its ability to pay its suppliers.George is the principal shareholder of the company and has an outstanding shareholders loan of $100 000.00.Between January 2008 and February 2008,the company was managing to pay its creditors,although slowly,and its assets were sufficient to satisfy its indebtedness,but by the end of January 2008 its assets have shrunk well below its debt load.In March 2008,George ensures that the company repays his shareholders loan.Thereafter,in December 2008,the company actively decides to pay only its major creditor,a supplier with whom George is good friends.Also in December 2008,seeing that General Widgets is sinking deeper and deeper into debt,George decides to incorporate a new company into which he transfers $300 000.00 of General Widgets' assets.On March 1,2009,General Widgets makes a voluntary assignment in bankruptcy.
In this case,the fact that between January and February 2008 the company was just managing to pay its creditors probably means that

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Question 5

Regarding bankruptcy,public policy would be primarily concerned with

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Question 6

The Steamboat Co.is Charlie's sole creditor.He owes them $6500 from his sign painting business.In order to obtain a receiving order,Steamboat must

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Question 7

Use the fact situation in Q2 to answer the related question that follows. Assume that the company was located in Ontario.In order to recover the assets of General Widgets that George transferred to the new company,the trustee in bankruptcy would

Accepted Answer

The trustee in bankruptcy would likely ask the court to set aside the transaction as a fraudulent conveyance. This is because the transfer of assets from General Widgets to the new company was done with the intention of avoiding creditors, which makes it a fraudulent conveyance under Ontario's Fraudulent Conveyances Act. The trustee may also seek to review the transaction and gather evidence to support a case for fraudulent conveyance.

Question 8

Use the fact situation in Q2 to answer the related question that follows. In light of the history of the company prior to its bankruptcy,in determining whether the payment made to the largest supplier is a fraudulent preference,the court will also consider

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Question 9

Jumping Jellyfish Corporation is a Canadian business that is indebted to a number of persons and entities.On January 2,2003,the accountant of Jumping Jellyfish examines the books and makes the determination that the current debts of the corporation total $2 million,and the assets and cash total only $200 000.The accountant concludes that the corporation will be unable to pay its debts as they become due.The corporation is

Accepted Answer

The corporation is insolvent, as its debts exceed its assets and it is unable to pay its debts as they become due. However, it has not yet declared bankruptcy or entered into a formal insolvency process such as appointing a trustee or receiver.

Question 10

Use the fact situation in Q2 to answer the related question that follows. Assume that the bank is a secured creditor of General Widgets and that its security is greater than the amount that the company owes to the bank,which enforces its security.In such a case,

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Question 11

Use the fact situation in Q2 to answer the related question that follows. In light of the bankruptcy of General Widgets,the payment of George's shareholders loan is probably

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Question 12

Under the Bankruptcy and Insolvency Act,the claims of unpaid employees against the assets of a bankrupt employer rank in priority

Accepted Answer

Unpaid employees are considered as preferred creditors in a bankruptcy scenario. This means that they rank ahead of unsecured creditors but not ahead of secured creditors. Their claims are partly privileged, and they might receive some preference over other creditors.

Question 13

Danny is thinking of bankruptcy for his business,but so far he has not made an assignment,nor is the business subject to a receiving order.Yet,because Danny meets all the requirements of bankruptcy,the Bankruptcy and Insolvency Act refers to Danny as

Accepted Answer

The fact that Danny meets all the requirements of bankruptcy means that he is unable to meet his financial obligations as they become due, which makes him an insolvent person under the Bankruptcy and Insolvency Act. He is not yet bankrupt, nor has he applied for bankruptcy, hence options A, C, D, and E are incorrect.

Question 14

Use the fact situation in Q2 to answer the related question that follows. Given the bankruptcy of General Widgets,the payment to the company's largest supplier is probably

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Question 15

James had made a consumer proposal (Division II)to his creditors.He wanted a reduction and extension of time for the payment of his debts.A formal meeting was not requested by any of the creditors.Now the administrator must

Accepted Answer

The administrator must notify and file the consumer proposal with all creditors, as this is a necessary step in the process. A public notice is not required if a formal meeting is not requested by any of the creditors. Approval from the court may be necessary, but this is not specified in the scenario. Counselling to the debtor and ensuring compliance with Division I rules are not relevant to a Division II consumer proposal.

Question 16

A commercial proposal made by an insolvent person is an offer made by the debtor to its creditors

Accepted Answer

A commercial proposal made by an insolvent person is a formal proposal to settle the debts owed to its creditors. The proposal usually involves an offer to make an orderly repayment of debts or a portion of debts over a period of time. The objective of the proposal is to avoid bankruptcy and reach an agreement with creditors for repayment of the debts. Therefore, option D is the best choice as it describes the purpose of the commercial proposal made by an insolvent person.

Question 17

Use the fact situation in Q2 to answer the related question that follows. Also in this case,the date on which it can be argued that the company is insolvent is

Accepted Answer

Based on the fact that the company's liabilities exceed its assets as of January 31, 2008, it can be argued that the company is insolvent at the end of January 2008.

Question 18

In a bankruptcy proceeding,the creditors can,if they wish,appoint

Accepted Answer

In a bankruptcy proceeding, the creditors have the power to appoint a substitute trustee who will oversee and manage the assets of the bankrupt entity. This trustee is appointed in the event that the original trustee is unable or unwilling to perform their duties. The substitute trustee is responsible for managing the property of the bankrupt entity, including selling it, managing its affairs, and paying off creditors.

Question 19

Laura had made a commercial proposal (Division I)to her creditors.They have accepted it by a two-thirds vote.The next step is for the trustee to

Accepted Answer

After the creditors have accepted the commercial proposal by a two-thirds vote, the trustee must apply to the court to have the proposal declared binding upon all the creditors. This is done to ensure that the proposal is legally binding and enforceable, and that all creditors are bound by its terms. The other options listed are not the next step in the process of having a commercial proposal accepted by creditors.

Question 20

Use the fact situation in Q2 to answer the related question that follows. Given the bankruptcy of General Widgets,the incorporation of the new company by George is

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Quiz 29: Creditors Rights

The Superintendent of Bankruptcy has the power to

Use the fact situation in Q2 to answer the related question that follows. In order to recover the amount of George's shareholders loan,the trustee in bankruptcy of General Widgets will

Use the fact situation in Q2 to answer the related question that follows. Assume that by March 2009,the company's business was starting to recover,but the company was still insolvent.In this case,instead of voluntarily assigning itself into bankruptcy,General Widgets could have

Regarding bankruptcy,public policy would be primarily concerned with

The Steamboat Co.is Charlie's sole creditor.He owes them $6500 from his sign painting business.In order to obtain a receiving order,Steamboat must

Use the fact situation in Q2 to answer the related question that follows. Assume that the company was located in Ontario.In order to recover the assets of General Widgets that George transferred to the new company,the trustee in bankruptcy would

Use the fact situation in Q2 to answer the related question that follows. In light of the history of the company prior to its bankruptcy,in determining whether the payment made to the largest supplier is a fraudulent preference,the court will also consider

Use the fact situation in Q2 to answer the related question that follows. Assume that the bank is a secured creditor of General Widgets and that its security is greater than the amount that the company owes to the bank,which enforces its security.In such a case,

Use the fact situation in Q2 to answer the related question that follows. In light of the bankruptcy of General Widgets,the payment of George's shareholders loan is probably

Under the Bankruptcy and Insolvency Act,the claims of unpaid employees against the assets of a bankrupt employer rank in priority

Danny is thinking of bankruptcy for his business,but so far he has not made an assignment,nor is the business subject to a receiving order.Yet,because Danny meets all the requirements of bankruptcy,the Bankruptcy and Insolvency Act refers to Danny as

Use the fact situation in Q2 to answer the related question that follows. Given the bankruptcy of General Widgets,the payment to the company's largest supplier is probably

James had made a consumer proposal (Division II) to his creditors.He wanted a reduction and extension of time for the payment of his debts.A formal meeting was not requested by any of the creditors.Now the administrator must

A commercial proposal made by an insolvent person is an offer made by the debtor to its creditors

Use the fact situation in Q2 to answer the related question that follows. Also in this case,the date on which it can be argued that the company is insolvent is

In a bankruptcy proceeding,the creditors can,if they wish,appoint

Laura had made a commercial proposal (Division I) to her creditors.They have accepted it by a two-thirds vote.The next step is for the trustee to

Use the fact situation in Q2 to answer the related question that follows. Given the bankruptcy of General Widgets,the incorporation of the new company by George is