Well, it’s as fine a day as any to get down into the murky and confusing waters of federal legislation. Plumbing these deep and dark depths determine our dearest desires to determine the answer to a very simple question:
how much do Licensed Insolvency Trustees (LITs) make?
An Investigation Begins
Ah, perhaps we are getting too far ahead of ourselves. First, let us set up some exposition so that you can follow along with the full scope of our investigation. LITs are federally regulated and licensed financial individuals who facilitate consumer proposals, bankruptcies, and debt consolidations for private individuals and businesses in Canada. They provide a necessary service that does away with many of the predatory and underhanded options that exist to make problems worse, not better, like payday and short-term lenders.
This is the layman’s explanation and does a fine job of conveying the general purpose of LITs. However, if you were to speak directly with one of these individuals, they’d more likely than not tell you that they are “…responsible for administering the Bankruptcy and Insolvency Act (BIA), as well as certain duties under the Companies Creditors Arrangement Act (CCAA).” In fact, this is a quote taken directly from the Office of the Superintendent of Bankruptcy’s (OSB) website, which is the governing body for Licensed Insolvency Trustees.
Okay, so the first part of our investigation is complete. We know that the federal government regulates LITs and, in turn, they are responsible for administering the BIA. All signs point to this document being the lynchpin in our investigation, and, since it’s public record, a cursory search through our favorite search engine gets us to the Government of Canada webpage with the entire act.
Reading the Bankruptcy & Insolvency Act
Like all good documents, the BIA starts with a convenient table of contents. This is a great boon since the PDF reader informs us that the document is a whopping 300 pages long and written in a suitably dense, legislative, and judicial manner. The table of contents shows that the act is broken down into 14 parts. Ah-ha, and what’s this? Part 1 (I) is titled “Administrative Officials”. It seems we are hot upon the trail.
Skimming through the various sections, it’s easy to dismiss the superintendent, public records, and official receivers, but the trustees look promising. It’s the largest section in this part, as a matter of fact. Oh my, it seems that the trade winds are truly at our back today! Section 39, Remuneration of Trustee, is just the ticket!
The Secrets of Section 39
Our tantalizing tale is coming to a rapid close with the advent of this new information. In fact, Section 39 is composed of only five subsections, which is a much more palatable read than the initial 300-page slog we arrived at. Though, the first subsection does actually raise more questions, as it states, “The remuneration of the trustee shall be such as is voted to the trustee by ordinary resolution at any meeting of creditors.” What the heck is an “ordinary resolution”? Like, just an agreement by the majority?
We’ll come back to that. Much more tantalizing for our purposes is the second subsection, which tells us that the trustee can insert his remuneration as not more than 7.5% of the amount remaining after all debtor claims are satisfied. This is a simplification of the slightly longer paragraph, but that’s about the gist of it. So, there’s at least one answer for us.
What’s Meant By an Ordinary Resolution
This wording sticks out like a sore thumb, right? Thankfully, most acts come with a definitions section for just such occurrences, so we’ll just navigate on over there. One moment, please. Ah, here it is. “Resolution or ordinary resolution means a resolution carried out in the manner provided by section 115…” Alright, to section 115 we go!
BOOM! Called it. Section 115 does describe majority voting by the creditors as the means of producing a resolution. There are some necessary stipulations in there as well, but again, that’s the main statement. For more information or to find this information yourself, just follow the path laid out!