Office of the Superintendent of Bankruptcy

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Lynn McCarthy
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1 Office of the Superintendent of Bankruptcy Update at 2017 CAIRP Insolvency and Restructuring Forum Building a prosperous and innovative Canada

2 Update Insolvency Trends BIA volumes BIA corporate volumes Consumer proposals Distribution of receipts Licensing trends Key Initiatives OSB Priorities for

3 BIA Volumes Open Inventory - Proposals Open Inventory - Bankruptcies New Files Closed Files 160, , K 262K 243K 223K 206K 194K 181K 179K 425, ,000 Number of New and Closed Files 130, , ,000 85,000 70,000 55,000 40,000 95K 117K 138K 160K 179K 197K 213K 228K 325, , , , ,000 75,000 Number of Open Files 25, ,000 3 Source: Office of the Superintendent of Bankruptcy Canada Note: BIA volumes include Consumer, Sole Proprietor and Corporate files.

4 BIA Corporate Volumes 12,000 Open Inventory - Corporate Proposals New corporate insolvencies filed during year Open inventory - Corporate Bankruptcies Corporate insolvencies closed during year 3,500 Open Corporate Files 10,000 8,000 6,000 4,000 2, ,960 9,721 9,424 8,642 8,542 8,562 8,649 8,619 1,742 1,726 1,726 1,735 1,846 1,947 2,090 2, ,000 2,500 2,000 1,500 1, New and Closed Corporate Files 4

5 Large Corporate Restructurings Number of Files BIA CCAA

6 Distribution of Receipts - Percentage Summary Bankruptcy Division II Proposals % Dividends to Creditors 80% 60% 40% 20% 0% % Cost of Administration 20% 40% 60% 80% Other Levy LIT fees Dividends

7 Distribution of Receipts Amounts Summary Bankruptcy Division II Proposals $600 $500 $27 ($ million) $400 $300 $200 $100 $0 $21 $350 $55 $55 $55 $50 $51 $17 $49 $262 $82 $90 $100 $100 $100 $12 $75 $11 $11 $10 $10 $202 $10 $9 $9 $152 $18 $7 $125 $14 $162 $175 $179 $181 $167 $168 $89 $11 $7 $8 $143 $5 $110 $43 $57 $67 $ LIT Fees OSB Dividends Other 7

8 Licensing Trends 2014/ / /2017 Number of Candidates PASS FAIL 30 (42%) 22 (68%) 16 (80%) (36%) 14 (82%) 10 (76%) (46%) 38 34* (83%) 7 4* (57%) 3 1st Time Repeat 1st Time Repeat 1st Time Repeat CNIE Oral Boards CNIE Oral Boards CNIE Oral Boards 8 * Preliminary board assessment only

Key 2016-17 Initiatives Licensed Insolvency Trustee Implementation of New Designation and Advertising Directive Compliance validation /

TIB discontinued on April 1, 2017 Consumer Awareness Campaign Promote awareness among Canadians regarding the role and services offered by an LIT

9 Key Initiatives Licensed Insolvency Trustee Implementation of New Designation and Advertising Directive Compliance validation / monitoring program for use of Licensed Insolvency Trustee designation, signage and advertising. TIB discontinued on April 1, 2017 Consumer Awareness Campaign Promote awareness among Canadians regarding the role and services offered by an LIT Support informed decision making through insolvency videos, brochures, paid advertising and social media campaign (e.g., Your Money Matters Facebook and Twitter s ItPaysToKnow Twitter page) 9

10 Key Initiatives Review of LIT business practices in consumer insolvency administration OSB reviewed LIT practices in assessment of debtors, provision of counselling, development of statutory documentation, and service provision A focus on nature and extent of LIT reliance on debt consultants for fulfillment of LIT duties Quantitative analysis, file review, sampling, interviews, debtor exams Division II proposals Early step taken in November 2016 to address proposal discount clauses with all 35 LITs ceasing the practice by February 2017 Full OSB Report provides observations and identifies risks to integrity of insolvency process / LIT profession Prevalence:17% of Division II filings, involving 13 firms, 50 LITs 10

11 Key Initiatives OSB Review findings Numerous insolvency system integrity risks identified: Debtors Understanding of their insolvency, Advice, cost, service, Rehabilitation/counselling Creditors Disclosure / objectivity of investigation of debtor financial situation Accuracy of assets, liabilities, income, expenses Returns on proposals Licensed Insolvency Trustees Integrity of statutory documentation and process Fulfillment of Duties, due diligence Objectivity & Code of Ethics 11

12 Priorities for LIT consumer insolvency administration Regulatory Measures to address risks of LIT business practices in consumer insolvency Improvements integrity of process through amendments to directives on assessment, service provision, and BIA forms Initiating renewal of BIA counselling, including LIT role and accountability Ensuring a level playing field through clarity on requirements and standards -- Who, what, where, when, how. LIT compliance Vigorous and sustained monitoring of implementation New compliance measures to enforce amended directives a focus on any remaining high risk business practices 12

13 Priorities for OSB Licence Administration Application (OLAA) Online application for LITs and candidates Licence applications, renewals, fee payment and administrative requests Used for 2017 Oral Boards applications (43 candidates) application tracked status of their request Accurate public registry of LIT information available to the public By December 2017 LITs to validate information addresses, licence status, districts etc. 13

14 Priorities for Modernized Insolvency Record Search Application Beta version to launch in Fall 2017 Increased protection of personal information Measures promote intended use Improved public access Proposed to remove $8 search fee Modern functionality Find individual estate records easily through search and filtering capability Print, and/or fax search results Phase II download frequently requested volume estate documents 14

Re: Consultation on the Draft Directive NO. 1R4, Counselling in Insolvency Matters

Re: Consultation on the Draft Directive NO. 1R4, Counselling in Insolvency Matters CANADIAN ASSOCIATION OF INSOLVENCY AND RESTRUCTURING PROFESSIONALS ASSOCIATION CANADIENNE DES PROFESSIONNELS DE L INSOLVABILITÉ ET DE LA RÉORGANISATION November 23, 2017 Mr. Bill James Superintendent of