SUPERIOR COURT OF JUSTICE
IN BANKRUPTCY and INSOLVENCY
COURT FILE NO.: 33-1252182
DATE: 20120213
Ontario
SUPERIOR COURT OF JUSTICE
IN BANKRUPTCY and INSOLVENCY
IN THE MATTER OF THE PROPOSAL OF
GARRY WAYNE POWELL
OF THE CITY OF OTTAWA
IN THE PROVINCE OF ONTARIO
JOHN DEMPSTER,
DEPUTY REGISTRAR IN BANKRUPTCY
HEARD: October 13, 2011
APPEARANCES: Keith MacLaren, Counsel for the Trustee,
Doyle Salewski Inc.;
REASONS FOR DECISION
[ 1 ] Pursuant to the provisions of Division I of the Bankruptcy and Insolvency Act, R.S.C. 1985, c.B-3 (the “BIA”), Garry Wayne Powell (the “Debtor”) filed a proposal to his creditors on August 29, 2009 (the “Proposal”). Doyle Salewski Inc. was named as the Trustee (the “Proposal Trustee”). The Proposal was subsequently refused at the reconvened First Meeting of Creditors on September 17, 2009 as a result of which the Debtor was deemed to have made an assignment in bankruptcy effective September 17, 2009. The Proposal Trustee brings this motion to obtain a Court Order that its fees and disbursements in the amount of $5,845.26 be paid out of the bankrupt estate and be treated as a preferred claim pursuant to s. 136(1) (b) of the BIA.
[ 2 ] Where a trustee acts in a proposal and the proposal has not been accepted by the creditors, the trustee can obtain an order that his fees and disbursements be paid out of the bankrupt estate as a preferred claim pursuant to s 136(1)(b). Re Space-Pak International Ltd. (1972), 17 CBR (NS) 120 (Ont SC) and Re Allan King Associates Canada Limited, 1973 CarswellOnt 71 .
[ 3 ] In considering whether or not and to what extent such an order should be made, I agree with the comments made by Registrar Poultney in Re Allan at para. 4:
In fixing the quantum of the fee to be allowed to the trustee for acting in a proposal not approved by creditors, care must be exercised to insure that the trustee is only claiming for services properly performed in bringing the proposal before the creditors and the Court if necessary. The trustee must also show that the proposal was a reasonable one in the circumstances and that the debtor did not file a spurious proposal simply to prolong what was inevitable, that is becoming a bankrupt. The trustee may well have performed other services for the debtor which may have appeared related to the proposal, but which were not necessarily incidental to the formulation of, and application for approval of the proposal. For these services the trustee could only file an unsecured claim against the bankrupt estate.
[ 4 ] In this matter it is clear that the amount claimed by the trustee is reasonable under the circumstances, that the work was properly performed to bring the proposal to the creditors, and that the proposal was a reasonable one in the circumstances. The projected return to the creditors in the proposal was significantly greater than either the projected or the actual return to the creditors in the bankruptcy which ensued following the creditors’ refusal of the proposal.
[ 5 ] The Motion is therefore granted as requested in the Notice of Motion.
[ 6 ] Pursuant to the provisions of s. 66 and 151 of the BIA , the trustee is required to provide the creditors, the OSB and the Debtor with copies of the final statement of receipts and disbursements, the dividend sheet and a notice in prescribed form. Pursuant to s. 192(1) (k) of the BIA, this Court has jurisdiction to determine matters related to practice and procedure. As a matter of practice, therefore, I would expect when providing the documents set out in s. 151 of the BIA, that Trustees also provide a copy of the Order fixing its fees and disbursements and directing that they be paid out of the bankrupt estate as a preferred claim pursuant to s. 136(1) (b) of the BIA. That way the right to object set out in s. 151(6) would include the right to object to the Order obtained.
February 13, 2012
John D. Dempster
Deputy Registrar
File No. 33- 1252182
SUPERIOR COURT OF JUSTICE
IN BANKRUPTCY AND INSOLVENCY
IN THE MATTER OF THE PROPOSAL OF
GARRY WAYNE POWELL
OF THE CITY OF OTTAWA
IN THE PROVINCE OF ONTARIO
REASONS FOR DECISION
Released: February 13, 2012