Directions to the Trustee

Canada

In the matter of:
Donna M. Leitch

Amended Directions for Conservatory Measures
(Section 14.03 of the Bankruptcy and Insolvency Act)

Whereas the Bankruptcy and Insolvency Act (the Act) provides the Superintendent of Bankruptcy (the Superintendent) with the general power to supervise the administration of all estates and matters to which the Act applies;

Whereas Donna M. Leitch (the trustee) is the holder of an individual license as trustee in bankruptcy;

Whereas an investigation made by the Superintendent pursuant to section 5(3)(e) of the Act revealed that the trustee had a number of deficiencies in her administration and control of estate trust funds;

Whereas the trustee had failed to maintain employee fidelity insurance or a bond or other suitable financial arrangement, which is a condition of practice but has now rectified this situation;

Whereas a Practice Review commenced in March of 2006 revealed a number of banking and financial deficiencies detailed below;

Whereas the trustee withdrew funds without authorization from the consolidated trust account;

Whereas in her administration of the summary bankruptcy consolidated trust account, the trustee failed to comply with subsection 25(2) of the Act, which requires that all payments made by a trustee be by cheque drawn on the estate account;

Whereas the trustee failed to comply with the provisions of Directive 5R, Estate Funds and Banking, which sets out the minimum standards for the accounting for and proper custody of estate trust funds, particularly by:

• failing to maintain up-to-date books and records, including a control ledger, of estate funds;
• failing to advise the Division Assistant Superintendent, in writing, of all outstanding errors that have not been corrected within seventy-five (75) days of the bank statement date;
• failing to adequately document the monthly bank reconciliation with a complete, detailed list of outstanding cheques and deposits, including any cheques outstanding for more than six (6) months, as required;
• permitting the payment of personal expenses from a trust account;
• permitting trust accounts to be overdrawn and not immediately correcting the transactions that caused the overdraft; and
• maintaining a sub-account within the consolidated trust account;

Whereas the deficiencies in the operation and administration of the consolidated trust account identified above, resulted in a reconciliation that is unverifiable;

Whereas the trustee failed to provide a requested response to an Audit Report that was issued to her on May 27, 2004, which identified a number of similar issues as described in these Directions;

Whereas the trustee failed to ensure that adequate human resources are available to satisfactorily conduct and conclude the administration of estates under the trustee's supervision;

Whereas the trustee has cooperated with the Superintendent and has made some progress since the imposition of the original restrictions to rectify many of the deficiencies noted herein;

Whereas it is believed to be in the best interests of the insolvency system, and in the business interests of the trustee, to allow the trustee to file a limited number of new estates, on a trial basis;

Whereas I believe on reasonable grounds that the estates continue to require protection;

Whereas the Superintendent may, for the protection of an estate, exercise the powers set out in subsection 14.03(1) of the Act, in the circumstances referred to in section 14.03(2) of the Act;

Whereas the Superintendent has delegated to me, in accordance with section 14.01(2) of the Act, the powers of the Superintendent as specified at section 14.03(1) of the Act, in the circumstance referred to in section 14.03(2)(b);

I, Fred Sheeler, in my capacity as delegate for the Superintendent, direct:

That, pursuant to section 14.03(1)(a) and (b) of the Act, the trustee shall comply with the directions regarding new estates, and shall not seek appointment as trustee or administrator for new estates or proposals exceeding an amount equal to thirty (30) in any consecutive three month period, commencing May 1, 2007 until a decision is made under subsection 13.2(5) or 14.01(1), or until such time as the undersigned is satisfied that the estates no longer require protection. For greater certainty, if at the end of a three month period the trustee has not opened thirty (30) new estates, the number of estates which may be opened in the next three (3) month period will nevertheless not exceed thirty (30);

That these directions take effect May 1, 2007, and will stay in effect until such time as the undersigned is satisfied that the estates no longer require protection;

That, pursuant to section 14.03(4) of the Act, a person who complies with this direction is not liable for any act done by that person only to comply with this direction.

Signed this 13th day of April, 2007.

Fred Sheeler
Assistant Superintendent, Trustee Compliance