Remission Order for Certain Fees Under the Bankruptcy and Insolvency General Rules from March 31 to August 31, 2020: SI/2022-11

Canada Gazette, Part II, Volume 156, Number 5

Registration
SI/2022-11 March 2, 2022

FINANCIAL ADMINISTRATION ACT

Remission Order for Certain Fees Under the Bankruptcy and Insolvency General Rules from March 31 to August 31, 2020

P.C. 2022-103 February 10, 2022

Her Excellency the Governor General in Council, considering that it is in the public interest to do so, on the recommendation of the Treasury Board and the Minister of Industry, pursuant to subsection 23(2.1) footnote a of the Financial Administration Act footnote b, remits the excess from the adjustment of any fees referred to in paragraphs (a) to (c), by operation of section 17 of the Service Fees Act footnote c:

EXPLANATORY NOTE

(This note is not part of the Order.)

Proposal

The Treasury Board and the Minister of Industry recommend an order in council on behalf of the Superintendent of Bankruptcy for the remission, pursuant to subsection 23(2.1) of the Financial Administration Act, in the amount of $123,327 as a result of waiving the collection of an incremental adjustment to certain fees under the Bankruptcy and Insolvency General Rules from March 31 to August 31, 2020.

Objective

Due to special circumstances arising from COVID-19, it was necessary for the Office of the Superintendent of Bankruptcy (OSB) to waive the collection of an incremental adjustment of certain fees under the Bankruptcy and Insolvency General Rules (C.R.C., c. 368) as required by subsection 17(1) of the Service Fees Act (S.C. 2017, c. 20, s. 451).

The collection of the incremental fee adjustment of 2.2% was waived from March 31 to August 31, 2020, which resulted in $123,327 in foregone revenue. The collection of this debt now would not be in the public interest and, in many cases, is not possible. As a result, this proposal seeks a remission order to forgive the debt owed to the Crown.

Background

The OSB is led by the Superintendent of Bankruptcy, a Governor in Council appointee, with independent statutory and quasi-judicial authorities. It is responsible for the administration of the Bankruptcy and Insolvency Act (BIA), as well as certain duties under the Companies’ Creditors Arrangement Act (CCAA).

The Superintendent licenses and regulates private sector licensed insolvency trustees (LITs) to administer insolvencies in Canada. LITs use software to manage estate administration and electronically file all insolvencies with the OSB. On March 20, 2020, the OSB was informed that fee adjustments planned for March 31, 2020, as required by subsection 17(1) of the Service Fees Act (S.C. 2017, c. 20, s. 451), could not be implemented without potential service interruption to a third party or proprietary software used by LITs to electronically file insolvency filings. An attempted implementation could have caused system problems and prevented some Canadian individuals and businesses from securing the protection of an insolvency filing when demand was expected to be significant due to the economic challenges resulting from the COVID-19 pandemic.

The OSB considered that maintaining the ability for LITs to file insolvencies at a time when demand was expected to be significant was of the highest priority. The OSB was also concerned with placing additional burden on LITs when they were entirely focused on how to comply with federal and provincial directions for their workplaces given the COVID-19 outbreak, while continuing to help debtors deal with the financial impacts of the pandemic. Given the urgency as well as the unforeseen and unprecedented circumstances arising from the COVID-19 outbreak, the OSB determined that it was necessary to waive the collection of the incremental fee adjustment until it could be assured that its implementation would cause minimal disruption.

On March 30, 2020, the OSB communicated through its external website that it was seeking to waive the collection of the incremental fee adjustment until further notice. Once it was assured that implementation would not disrupt insolvency registration, the OSB published a notice on its website to inform stakeholders that the incremental fee adjustment of 2.2% pursuant to subsection 17(1) of the Service Fees Act (S.C. 2017, c. 20, s. 451) would be collected starting September 1, 2020.

Implications

Between March 31 and August 31, 2020, the OSB registered over 32 000 insolvencies which were subject to an increase of $1.54 to $3.30 (2.2%) in filing fees payable to the OSB. During this same period, over 12 000 estates were subject to an increase of $4.40 (2.2%) on levy payable to the OSB.

The following tables summarize the fees under the Bankruptcy and Insolvency General Rules where it is proposed to waive the collection of the 2.2% fee adjustment from March 31 to August 31, 2020.

Table 1.1: Summary of fees under the Bankruptcy and Insolvency General Rules where it is proposed to waive the collection of the 2.2% fee adjustment from March 31 to August 31, 2020
Administration type Provision of the Bankruptcy and Insolvency General Rules Number of estates affected Fee or levy Adjustment 2.2% Foregone revenue
Summary 132(1)(a) 8 690 $75.00 $1.65 $14,338.50
Summary — Previous bankruptcy 132(1)(a) 2 303 $150.00 $3.30 $7,599.90
Ordinary 132(1)(a) 799 $150.00 $3.30 $2,636.70
Proposals 132(1)(b) 293 $150.00 $3.30 $966.90
Proposals 132(1)(c) 20 215 $100.00 $2.20 $44,473.00
Other 132(1)(d) 0 $75.00 $1.65 $0.00
Receiverships 136 206 $70.00 $1.54 $317.24
Total N.A. 32 506 N.A. N.A. $70,332.24
Table 1.2: Summary of fees under the Bankruptcy and Insolvency General Rules where it is proposed to waive the collection of the 2.2% fee adjustment from March 31 to August 31, 2020 — Maximum levy rate payable at 100%
Administration type Provisions of the Bankruptcy and Insolvency General Rules Number of estates affected Fee or levy Adjustment 2.2% Foregone revenue
Summary administration 123(3)(a) and 123(3)(b) 12 044 $200 $4.40 $52,993.60
Total N.A. 12 044 N.A. N.A. $52,993.60
Table 1.3: Summary of fees under the Bankruptcy and Insolvency General Rules where it is proposed to waive the collection of the 2.2% fee adjustment from March 31 to August 31, 2020 — Total
Description Number of estates affected Foregone revenue
(rounded up to the nearest dollar)
Total from Table 1.1 32 506 $70,333
Total from Table 1.2 12 044 $52,994
Total 44 550 $123,327

It is not feasible to collect the fee adjustment retroactively given the volume of transactions, the low-dollar value of the fee adjustment and the administrative burden it would create for LITs. In many cases, the insolvencies have concluded, their funds have been distributed amongst creditors, and both the debtor and LIT have been discharged from their obligations. Given the low-materiality of the foregone revenue, it is in the public interest to remit the debt owed to the Crown.

Consultation

The Treasury Board Secretariat and the Department of Justice were consulted on this remission order. No issues or concerns were raised about the remission of these low-dollar value fee adjustments. External consultations were not conducted, as it would have been inappropriate based on the low-materiality of the foregone revenue.

Contact

Cheryl Ringor
Acting Deputy Superintendent
Office of the Superintendent of Bankruptcy
Innovation, Science and Economic Development Canada
410 Laurier Avenue West
Ottawa, Ontario
K1A 0H5
Telephone: 343‑542‑6729