To vote on a Consumer Proposal or bankruptcy without attending in person, Canadian creditors can appoint a proxy. You must submit a completed Form 31 (Proof of Claim) and Form 36 (General Proxy) to the Licensed Insolvency Trustee before the Meeting of Creditors begins. Your proxy, often a lawyer or collection agent, will then vote on your behalf.
When a debtor files for insolvency in Canada, the Licensed Insolvency Trustee (LIT) may call a Meeting of Creditors. For busy business owners, banks, or out-of-province suppliers, attending a meeting in Toronto, Calgary, or Vancouver in person is often completely impractical. 📍
Fortunately, the federal Bankruptcy and Insolvency Act (BIA) provides a clear solution: you can appoint a proxy. A proxy is a designated representative-such as your commercial lawyer, an accountant, or a specialized collection agent-who is legally authorized to attend the meeting, ask the debtor tough questions, and cast a vote on your behalf. This guide explains exactly how to correctly document and utilize a proxy in Canada. 💼
Step-by-Step Process in Canada
Ensuring your proxy is legally recognized by the LIT requires strict adherence to federal forms and deadlines. Missing a single signature can result in your representative being denied the right to vote. ⚔️
Step 1: Receive the Notice of Meeting
When the insolvency is filed, the LIT will mail or email a Notice of Meeting of Creditors to all known creditors. This package will include the date, time, and location (or video conference link) of the meeting, alongside blank copies of the mandatory Office of the Superintendent of Bankruptcy (OSB) forms. 📜
Step 2: Complete Form 31 (Proof of Claim)
Before you can appoint a proxy, you must legally prove that you are owed money. You must fill out Form 31, detailing exactly how much the debtor owes you in CAD, and attach your supporting documents, such as unpaid invoices, signed contracts, or court judgments. 📈
Step 3: Complete Form 36 (General Proxy)
Next, you will complete the Proxy form. This document explicitly names the individual or firm you are authorizing to act on your behalf. You can provide them with a general mandate (allowing them to vote however they see fit) or specific instructions (e.g., “Vote NO to the Consumer Proposal”). 💰
Step 4: Submit Documents to the Trustee
Do not wait until the day of the meeting. The completed Proof of Claim and the signed Proxy form must be delivered to the LIT’s office prior to the meeting’s scheduled start time. Most Trustees now accept these documents via secure email or fax, but always verify their specific submission rules. 🏦
Step 5: The Proxy Attends the Meeting
Your appointed proxy will join the meeting, register their attendance with the Official Receiver or Trustee, and review the debtor’s statement of affairs. They will use your voting power-which is weighted heavily based on the dollar amount of your accepted claim-to influence the outcome of the insolvency proceedings. 📑
How Much Does it Cost?
Filing the actual paperwork with the LIT is completely free, but hiring a professional to act as your proxy involves fees. Here are the common costs in CAD for representation: 💵
- Trustee Fees: $0. The LIT cannot charge you a fee to submit a Proof of Claim or a Proxy form.
- Commercial Lawyer Fees: Having a lawyer attend the meeting as your proxy generally costs $350 to $700 per hour.
- Collection Agency Fees: Some agencies charge a flat fee of $150 to $400 CAD to attend the meeting on your behalf, or they take a percentage of any future dividends you receive.
- In-House Staff: If you appoint your own employee (like an Accounts Receivable manager) as the proxy, the only cost is their standard hourly wage.
How Long Does the Process Take?
The timeline is very strict. Once a Consumer Proposal is filed, a meeting of creditors must be requested within 45 days. When a meeting is called, creditors typically receive 5 to 21 days’ notice depending on the type of filing. The actual meeting usually lasts between 1 and 2 hours. Your proxy forms must be processed before the chairman calls the meeting to order. ⏱️
Attending in Person vs. Using a Proxy
| Feature | Attending in Person | Appointing a Proxy |
|---|---|---|
| Convenience | Requires taking time out of your workday. | Highly convenient; business continues as usual. |
| Expertise | You must understand BIA voting rules. | Lawyers/agents know exactly what questions to ask. |
| Cost | Free (excluding travel/time). | Requires paying professional hourly or flat fees. |
| Flexibility | You can change your mind on how to vote during the meeting. | Must provide clear instructions if using a specialized agent. |
Frequently Asked Questions (FAQ)
Can I appoint anyone to be my proxy?
Yes, you can generally appoint any adult to be your proxy, including your lawyer, your accountant, an employee of your company, or a professional debt collection agent. However, you cannot appoint the bankrupt debtor.
What happens if my proxy form is filled out incorrectly?
If the form is missing a signature, a date, or clear authorization, the Chairman of the meeting (usually the LIT or an OSB official) has the authority to reject it. Your representative will not be allowed to vote.
Can a proxy ask the debtor questions?
Absolutely. One of the main benefits of hiring a lawyer to act as your proxy is their ability to cross-examine the debtor about hidden assets, recent transfers of property, or the causes of their bankruptcy.
Do I still get the settlement money if I use a proxy?
Yes. The proxy only represents your voting rights at the meeting. Any future dividends or Consumer Proposal settlement cheques will be mailed directly to you or deposited into your business account by the Trustee.
Can I revoke a proxy after submitting it?
Yes. You can revoke a proxy at any time before the vote occurs by submitting a written notice of revocation to the Licensed Insolvency Trustee, or by attending the meeting in person to cast the vote yourself.
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