Section 262 — Bankruptcy and Insolvency Act: Allocation and distribution of cash and securities in customer pool fund

Cash and securities in the customer pool fund shall be allocated in the following priority: for costs of administration referred to in paragraph 136(1)(b), to the extent that sufficient funds are not available in the general fund to pay such costs; to customers, other than deferred customers, in proportion to their net equity;

and to the general fund. Where a person has, under the terms of an eligible financial contract with the securities firm, deposited property with the firm to assure the performance of the person’s obligations under the contract, and that property is included in the customer pool fund pursuant to paragraph 261(2)(a), that person shall share in the distribution of the customer pool fund as if the person were a customer of the firm with a claim for net equity equal to the net value of the property deposited that would have been returnable to the person after deducting any amount owing by the person under the contract. To the extent that securities of a particular type are available in the customer pool fund, the trustee shall distribute them to customers with claims to the securities, in proportion to their claims to the securities, up to the appropriate portion of their net equity, unless the trustee determines that, in the circumstances, it would be more appropriate to sell the securities and distribute the proceeds to the customers with claims to the securities in proportion to their claims to the securities. Subject to subsection (2), the trustee may satisfy all or part of a customer’s claim to securities of a particular type by delivering to the customer securities of that type to which the customer was entitled at the date of bankruptcy. For greater certainty, the trustee may, for that purpose, exercise the trustee’s power to purchase securities in accordance with section 259. Property in the general fund shall be allocated in the following priority: to preferred creditors in the order set out in subsection 136(1); rateably to customers, other than deferred customers, having claims for net equity remaining after distribution of property from the customer pool fund and property provided by a customer compensation body, where applicable, in proportion to claims for net equity remaining, where applicable, to a customer compensation body to the extent that it paid or compensated customers in respect of their net equity, and to creditors in proportion to the values of their claims; rateably to creditors referred to in section 137;

and to deferred customers, in proportion to their claims for net equity.