1. Debtor Compliance Program Presentation to CAIRP Halifax, N.S. May 16, 2016 1

2. ©Grant Thornton Limited. A Canadian Member of Grant Thornton International Ltd. Trustee in Bankruptcy. All rights reserved. Debtor Compliance Program Useful to Trustees: Permits investigation when estates have little/no funds May reveal assets/transfers/transactions not disclosed by Debtor to Trustee Investigation performed by independent third party (OSB) Useful if parties (irate creditors?) are questioning neutrality of Trustee Can be relied upon as part of the Trustee’s support network Useful if the Debtor’s actions don’t pass the smell test 2

3. ©Grant Thornton Limited. A Canadian Member of Grant Thornton International Ltd. Trustee in Bankruptcy. All rights reserved. Debtor Compliance Program Report on offences to be made by trustee 205 (1) Whenever an official receiver or trustee has grounds to believe that an offence under this Act or under any other statute, whether of Canada or a province, has been committed with respect to any bankrupt estate in connection with which he has been acting under this Act, or that for any special reason an investigation should be had in connection with that estate, it is the duty of the official receiver or trustee to report the matter to the court, including in the report a statement of all the facts or circumstances of the case within his knowledge, the names of the witnesses who should in his opinion be examined and a statement respecting the offence or offences believed to have been committed, and to forward a copy of the report forthwith to the Superintendent. (emphasis added) 3

4. ©Grant Thornton Limited. A Canadian Member of Grant Thornton International Ltd. Trustee in Bankruptcy. All rights reserved. Debtor Compliance Program You receive DCP report – now what? Review OSB report What issues were identified in the report? What additional steps should you take as a result of the report? Questions? Call the person that performed the investigation If Debtor is being referred for prosecution: Prepare file – litigation hold Ensure every scrap of paper/email is retained Make sure all staff are aware of litigation hold! 4

5. ©Grant Thornton Limited. A Canadian Member of Grant Thornton International Ltd. Trustee in Bankruptcy. All rights reserved. Debtor Compliance Program Best practices: Make DCP referral as soon as possible If possible, start process as early as when Debtor first signs bankruptcy paperwork Give creditors/inspectors a chance to provide relevant questions Document file appropriately – everything in writing If Debtor’s offences relate to the administration of the estate, you may be called as a witness! If referred for prosecution, information contained in your file may/will form the evidence of the Crown Don’t want to accidentally impede investigation, interfere with chain of custody of evidence 5

6. ©Grant Thornton Limited. A Canadian Member of Grant Thornton International Ltd. Trustee in Bankruptcy. All rights reserved. Spencer (Re) [2009] N.S.J. No. 49 Comments from Registrar Cregan: 9 This report is submitted to the court with copies to the trustee and the bankrupt. In effect this report constitutes an objection to discharge by the Superintendent. In the interest of helping the court in determining how best to set conditions of discharge, to assure the integrity of the process, to assert appropriate censure of the bankrupt's behaviour, and to help the bankrupt rehabilitate, recommendations are given. In particular recommendations may be made regarding surplus income, suspension of discharge, prohibition of future use of credit cards, continued supervision by trustees, and payments to address special situations. It is usual for the officer who prepared the report to be present in court and to participate in the discussion. 6

7. ©Grant Thornton Limited. A Canadian Member of Grant Thornton International Ltd. Trustee in Bankruptcy. All rights reserved. Spencer (Re) [2009] N.S.J. No. 49 10 I have now heard several applications for discharge where the Superintendent has submitted such reports. In some applications I have found the submissions very helpful in my crafting conditions for discharge… 12 There have been other applications where I think the bankrupts have learned appropriately from their experiences. The recommendations of the Superintendent's report beyond what the trustee may have submitted are really not needed and in fact could be counterproductive to the bankrupt's rehabilitation. Here I am thinking of people whose bankruptcies have been caused by business failure, who have used their credit cards to keep the business going, or who have faced unemployment or other serious legitimate financial difficulty, e.g. illness. Credit cards are freely available. It takes only a few to give one the comfort of many thousands of dollars of credit. … 14 However, I must stress that the contribution to the discussion before me in court by the Superintendent's representative is very valuable, whether I follow the recommendations or not. The more thorough the discussion the better everyone understands the issues. 7

8. ©Grant Thornton Limited. A Canadian Member of Grant Thornton International Ltd. Trustee in Bankruptcy. All rights reserved. Stewart-Patterson (Re) [2008] N.S.J. No. 266 Comments from Registrar Cregan: 4. In answer to the question "Did you charge any amounts to your credit cards knowing that you would be unable to repay said amount? If so, please provide details." She wrote: No, I believed I would be able to make the minimum payment until I won enough to pay them off. A big jackpot. To the question, "Do you feel responsible for your bankruptcy?" She answered: Yes, and no. I have a mental illness, which is documented. I am on medication. The casino machines are made to be addictive, so government can make BILLIONS!! Registrar Cregan refused application for discharge for a period of one year and granted leave for her to reapply with proof that she has completed a gambling rehabilitation program acceptable to her trustee. 8

9. ©Grant Thornton Limited. A Canadian Member of Grant Thornton International Ltd. Trustee in Bankruptcy. All rights reserved. Donald Christopher Higgins Debtor files for bankruptcy (Grant Thornton) Debtor Compliance Investigation performed, OSB expressed intention to oppose his discharge All below information contained in news reports Charged with 48 counts of fraud, obtaining credit by false pretenses or fraud, and obtaining credit while bankrupt without advising lender that he was bankrupt Irate creditor lodged complaint with RCMP 9

10. ©Grant Thornton Limited. A Canadian Member of Grant Thornton International Ltd. Trustee in Bankruptcy. All rights reserved. Donald Christopher Higgins Records of Trustee were obtained by search order, formed part of the evidence of the Crown Trustee was interviewed by RCMP and Crown prosecutor re: technicalities of the BIA Trustee (Wayne Weber) was called as a witness at the Debtor’s trial Debtor found guilty Prior charges for impaired driving, fraudulent use of credit cards Sentenced to 4 months imprisonment and 12 months probation 10

11. ©Grant Thornton Limited. A Canadian Member of Grant Thornton International Ltd. Trustee in Bankruptcy. All rights reserved. Questions? www.freshstartatlantic.ca 1-888-455-6060 11