Directive No. 18
Coming into force September 18, 2009

Unclaimed Dividends and Undistributed Funds

Issued: August 14, 2009

(Supersedes Directive No. 8 issued on July 23, 1993, on the same topic)

Interpretation

1. In this Directive,
   • "Act" means the Bankruptcy and Insolvency Act;
   • "OSB" means the Office of the Superintendent of Bankruptcy;
   • "Rules" means the Bankruptcy and Insolvency General Rules.

Authority and Purpose

2. This Directive is issued pursuant to the authority of paragraphs 5(4)(b) and (c) of the Act.
3. The purpose of this Directive is twofold:
   • (a) to minimize the amount of unclaimed dividends and undistributed funds in order to maximize dividends to creditors; and
   • (b) to reduce the number of unnecessary requests to the OSB for the return to creditors of money remitted as unclaimed dividends and undistributed funds.

Unclaimed Dividends

4. Trustees, when proceeding to the discharge phase of their administration in those estates where a dividend will be payable, should:
   • (a) in a case of an ordinary administration, apply for a discharge hearing date that will allow a longer period of time for the cashing of cheques, hence reducing the number of returned cheques as a result of a stop-payment or closed account. It is suggested that this period should be 45 to 60 days after the mailing of the cheques to allow for most, if not all, of the outstanding cheques to be cashed. This becomes particularly important for those creditors from outside Canada. In the case of a summary administration, the sending of the certificate of compliance should be delayed by the same amount of time.
   • (b) make a reasonable effort to trace the current address for the local financial institutions or nationally known businesses (or those that have local branches) whose notice of trustee discharge or cheque has been returned by the postal services in order to forward the cheque to the proper address;
   • (c) include any reference account number found on the proof of claim or support document to facilitate the tracing by the receiving firm; and
   • (d) upon expiration of the above period and before proceeding to their discharge, trustees must, in conformity with subsection 154(1) of the Act, forward to the Superintendent all outstanding dividends remaining in their account.

Undistributed Funds

5. Trustees are encouraged to distribute all available funds to the creditors instead of remitting them as undistributed funds to the Superintendent.
6. Trustees are, however, not expected to distribute immaterial amounts available for distribution to a large number of creditors if the cost of the distribution would appreciably exceed the amount to be distributed. As a guideline, to determine what constitutes materiality, the following will apply to both preferred and ordinary creditors:
   • (a) if there is only one (1) creditor, the funds are to be paid to the creditor where the gross amount available in the estate exceeds $5;
   • (b) if there are two (2) to five (5) creditors inclusive, the funds are to be paid to the creditors where the gross amount available in the estate exceeds $50; and
   • (c) if there are more than five (5) creditors, the funds are to be paid to the creditors where the average dividend to ordinary creditors in the estate (total amount of dividends to ordinary creditors divided by the number of ordinary creditors) will exceed $10.

7. If additional interest is received after the preparation of the Statement of Receipts and Disbursements, the amount should be distributed to the creditors by way of an amended or additional dividend sheet if the amount available exceeds the guidelines provided in paragraph 6 above.

Coming into Force

8. This Directive comes into force on September 18, 2009.

Enquiries

9. For any questions pertaining to this Directive, please contact your local OSB office.

James Callon
Superintendent of Bankruptcy