In a recent issue of our Solutions Newsletter, we described the basic responsibilities of trustees in bankruptcy. In this issue, our team shares more information about the overall framework of the profession’s code of conduct and ethics.
As with every profession, the practice of being a bankruptcy trustee is subject to a strict code of conduct that is enshrined in the Bankruptcy and Insolvency Act (BIA). Since public confidence in the bankruptcy and insolvency system is necessary to its proper administration, trustees are bound by a number of basic mandatory standards of professional conduct and practice.
Bankruptcy trustees are also subject to inspection and oversight by the Office of the Superintendent of Bankruptcy (OSB), which applies several programs to ensure compliance with the code of conduct and other guidelines.
Most bankruptcy trustees in Canada are members of the Canadian Association of Insolvency and Restructuring Professionals (CAIRP). This not-for-profit association promotes the just, transparent and efficient administration of bankruptcy and insolvency cases, thereby fostering greater public confidence in the association’s members as insolvency and restructuring professionals.
The CAIRP imposes professional rules and standards of conduct on its members, which are designed to protect the public and ensure that bankruptcy and insolvency professionals act with respect, courtesy and integrity. The CAIRP exercises a supervisory function in this regard and can impose sanctions when required.
Conseil des Syndics de faillite du Québec
In recent years, a new organization called the Conseil des Syndics de faillite du Québec has been promoting the bankruptcy trustee profession and keeping the public informed about the Bankruptcy and Insolvency Act and the application of the profession’s statutory code of ethics.
The ethics and conduct of professional trustees in bankruptcy are thus very well supervised not only in Quebec, but right across Canada.
Here is a summary of the main rules or standards governing bankruptcy trustees.
- Maintain a good professional reputation and act with integrity and wisdom;
- Not help or advise anyone to commit an illegal or dishonest act;
- Be honest and impartial;
- Not purchase the property of any debtor for whom they are acting or sell such property to any of the trustees’ employees;
- Avoid any influence or relationship that could compromise their professional judgement;
- Carefully and conscientiously safeguard and administer funds and property, subject to the rights stipulated in the trust contract;
- Not pay any commission or compensation in order to obtain an insolvency case;
- Avoid any conflict of interest;
- Not disclose any confidential information unless legally required to do so.
In order to enforce compliance with the trustees’ code of ethics, the Superintendent of Bankruptcy can take a number of steps, including removal of a trustee’s licence, imposing disciplinary measures, supervising trustee conduct, auditing the administration of estates in bankruptcy, and carrying out investigations. Two programs are also applied by the OSB: an intervention program and an oversight program. The primary purpose of both these programs is to enable the Superintendent to intervene in certain situations in order to maintain the integrity of the insolvency process and provide adequate supervision.
Many insolvency professionals are also qualified in other ways, particularly as lawyers or accountants, and are thereby subject to the codes of conduct of those professions as well.
In a nutshell, trustees in bankruptcy are the professional bankruptcy and insolvency advisors who are in the best position to help people with serious financial problems.
Nathalie Rancourt, LL.B., CIRP, Trustee
Nathalie Rancourt is a trustee in bankruptcy at our Montreal office located at 1001 Maisonneuve Blvd, office 525, Montreal (Quebec) H2L 4P9 514-878-4545.
Ginsberg, Gingras & Associates Inc. is a member of DFK Canada and DFK International and is associated with the professional accountant firm of Ginsberg Gluzman Fage & Levitz, LLP Chartered Accountants.
For more information on this column or any other subject related to insolvability, contact one of our Trustees.