Insolvency professionals get a new name: Licensed Insolvency Trustee

Office of the Superintendent of Bankruptcy (OSB) announces change to the designation of insolvency professionals across Canada

TORONTO – Wednesday, December 02, 2015 – The federally licensed professionals who administer debt relief services to consumers and companies across the country will have a new name.

The Office of the Superintendent of Bankruptcy (OSB) today announced a formal change in the professional designation that those currently known as Trustees in Bankruptcy must use in advertising. As of April 1, 2016 these professionals will be known as Licensed Insolvency Trustees.

The Canadian Association of Insolvency and Restructuring Professionals (CAIRP), which represents nearly 1,500 trustees and associates across the country,welcomes this change. CAIRP and its members have for many years sought a new designation that more accurately describes the breadth of services they provide to consumers and businesses.

“Canadians need to know exactly where to turn when they can no longer handle their debt payments. The Licensed Insolvency Trustee is the only professional licensed by the federal government to deal with debt restructuring,” said David Wood, Chair of CAIRP.

“CAIRP is pleased that the new designation helps to position its members as the ‘go-to’ professionals best suited to help Canadians understand their options for restructuring debt,” said Mr. Wood.

The new designation also highlights the fact that Licensed Insolvency Trustees offer Canadians a wide range of services and helps to overcome the misperception that they provide only a service of last resort.

Almost one in four Canadians (23%) have personally used or know someone who has used the services of a Trustee in Bankruptcy, according to a recent Ipsos Reid poll conducted on behalf of CAIRP.

The poll also showed that while Canadians trust licensed professionals more than those who are not licensed, a large proportion of Canadians don’t know who has a license and who doesn’t – six in ten (60%) mistakenly agreed that employees of debt settlement companies and credit counselling agencies are federally or provincially licensed debt-relief professionals.

CAIRP is committed to providing consumers with better information about the options offered by Licensed Insolvency Trustees to assist consumers and businesses in financial difficulty, and to clearly distinguish our members from unlicensed service providers.

“The work performed by Licensed Insolvency Trustees is critical to the efficient functioning of the Canadian economy,” said CAIRP President and Chief Operating Officer Mark Yakabuski.

“Thousands of Canadian consumers and businesses are able to make a fresh start because of the services that only these licensed professionals provide,” said Yakabuski.

Economists from Canada and around the world, including those of the International Monetary Fund, have warned that the debt-to-income ratio in Canada is extremely high and could result in increased economic hardship if interest rates rise, or if consumers’ ability to service this debt is challenged by difficult economic conditions.

“Consumers and business owners need to know that when they need help, the Licensed Insolvency Trustee is there to help them fully understand all options available – trustees do not just administer bankruptcies, as the previous title suggested, but have more options at their disposal to assist Canadians in financial difficulty,” Yakabuski said.

The OSB and CAIRP worked together to bring about the official name change. CAIRP repeatedly surveyed its members over the past few years and a large majority agreed that a new designation was necessary.

The new directive will go into effect on April 1, 2016. Canada’s trustees will have a 12-month compliance period at the end of which all forms of their advertising must comply with the OSB directive.

1Findings are from an Ipsos Reid poll conducted between October 20 and October 23, 2015, on behalf of Canadian Association of Insolvency and Restructuring Professionals. For this survey, a sample of 1,005 Canadians from Ipsos’ online panel was interviewed online. The poll is considered accurate to within +/ – 3.5 percentage points, 19 times out of 20, had all Canadian adults been polled.

Do you owe money to the Canada Revenue Agency (CRA)?

taxYou may have received a letter from the CRA advising you of an unpaid tax amount and it will speak of “legal actions” to come if you do not call and arrange a repayment. The types of legal action that CRA may take are varied and the letter will warn that these legal actions may be taken without further notice.

What you may not be aware of that the Canada Revenue Agency has a powerful set of collection tools at its disposal if you fail to pay unpaid taxes. These tools include a range of recovery devices like garnishments, seizure & sale of your property, third party assessments and in 1999, the CRA also gained the ability to certify your debt in Federal Court and then register your tax debts against your assets. The registration of these tax debts against your real and personal property effectively creates a charge or security interest in your assets.

It’s worth knowing too that the CRA may register against your real and personal property whenever your tax debt exceeds a specific threshold dollar amount (as low as $10,000) and/or whenever your repayment will take an extended period of time. In many such cases the CRA does not notify you of the registration and you will be unaware of the registration until you attempt to refinance, sell/dispose of the asset that has become encumbered by CRA. Once CRA registers a lien or security interest against your property it then becomes a secured creditor that expects full payment before it will release your asset.

This change from unsecured creditor to secured creditor may effectively prevent you from resolving those tax type debts in either a bankruptcy or proposal administration. To find out if the CRA has registered against any of your assets, you can contact the CRA directly or go to a Service Ontario office nearest you.

To sum up, if you have a large tax debt or know that you are about to be assessed a significant tax liability you may wish to urgently consult with a tax attorney and/or a Licensed Insolvency Trustee to discuss and review your options.

What is “Director’s Liability?”

I put my life and savings into my incorporated business and it failed.  Now the tax Agency says I owe for something called Director Liability? I have no money or assets to pay such a debt…what can I do?

This is a fairly common scenario.  Simply stated, Director’s Liability is the liability that can be created against a director(s) in situations where the corporation that he or she directed, failed to pay or remit such taxes as net sales tax, GST/HST amounts collected and payroll source deductions taken. The Canada Revenue Agency and other tax authorities by way of the legislation that they administer views the director(s) as the person(s) responsible to ensure that these monies are sent to the tax authority by their corporations; when they are not, they can be held jointly, severally and solely responsible for the remitting of these amounts.

Your situation may be unique and generally speaking if you lack the ability or resources to pay these amounts immediately or in the future, they do not assess you or make your liable.  If they do decide to make you as a director liable, they will need to take specific steps to do that.

As for your options, these type of liabilities can usually be addressed in a bankruptcy filing or a proposal made under the Bankruptcy and Insolvency Act.  It is best if you promptly seek the guidance and advice of a Licensed Insolvency Trustee in these situations as the Trustee is best able to explain and assist your options.

Can I still make a Consumer Proposal if I owe Canada Revenue Agency Taxes?


Yes, most amounts owed by you to Canada Revenue Agency (CRA) and various tax authorities can be included in your consumer proposal.

The starting point of your consumer proposal (or an assignment in bankruptcy) is when you make a full disclosure of the totality of your debts.  Creditors will want to know what is owed and how they will share in the proposal.  It is for this reason that if you have taxes owing and/or tax returns & reports that are overdue, that the Canada Revenue Agency and trustee will expect  you to prepare and file all of your outstanding personal income tax returns. Similarly if you operated a sole-proprietorship business, you may also file a consumer proposal and again you will be required to complete and file all of your outstanding business related returns.

The Canada Revenue Agency will not usually give favorable consideration to any proposal where returns and reports are outstanding.

In the end, the Canada Revenue Agency takes a common sense approach to considering your proposal. It seeks to maximize recovery of the amounts you owe (as do all creditors), while recognizing your ability to pay and taking measure of the recovery potential of your proposal versus a bankruptcy filing. The nature of the Canadian insolvency proposal processes is one of recovery and rehabilitation and that said, creditors including the Canada Revenue Agency may request that you agree to certain non-monetary terms and conditions throughout the proposal period. These terms are of equal importance as they serve to show your commitment to take full advantage of this situation and to start anew on a path to reestablishing good money and credit management practices.

The trustee will work in partnership with you, the Canada Revenue Agency and your creditors to prepare a consumer proposal arrangement that is practical for you and beneficial for all of your creditors.  Call Paul J. Pickering Limited to have a no cost discussion about your financial situation and your consumer proposal options.

Giving Back

On November 6, 2013 Mission Services of London is having its annual Fall Banquet at the London Convention Centre.  Paul J. Pickering Limited is a proud sponsor of the Mission Services of London organization.  Mission Services of London is a Christian faith-based social service agency with a focus on serving those who struggle with poverty and homelessness: men, women and children. They provide food, shelter, clothing, crisis intervention and rehabilitation among others.

Mission Services of London opened its doors in January 1951 when fourteen Mennonite families purchased and renovated a home at 536 Talbot Street to be a mission providing shelter, food and care for homeless men.

Since that time, Mission Services of London has helped thousands of people of all ages and backgrounds. Today it operates two emergency shelters, an addiction treatment program, a thrift store/outreach program and Community Mental Health Programs for consumers/survivors of the mental health system. Many men and women have had their lives changed significantly as a result of the love, care and respect they received from Mission Services of London during difficult periods of their lives. A little help made a great deal of difference.

Paul J. Pickering Limited is honored to be able to support the work of Mission Services of London.