Section 64.1 — Bankruptcy and Insolvency Act: Security or charge relating to director’s indemnification

On application by a person in respect of whom a notice of intention is filed under section 50.4 or a proposal is filed under subsection 62(1) and on notice to the secured creditors who are likely to be affected by the security or charge, a court may make an order declaring that all or part of the property of the person is subject to a security or charge —

in an amount that the court considers appropriate —

in favour of any director or officer of the person to indemnify the director or officer against obligations and liabilities that they may incur as a director or officer after the filing of the notice of intention or the proposal, as the case may be. The court may order that the security or charge rank in priority over the claim of any secured creditor of the person. The court may not make the order if in its opinion the person could obtain adequate indemnification insurance for the director or officer at a reasonable cost. The court shall make an order declaring that the security or charge does not apply in respect of a specific obligation or liability incurred by a director or officer if in its opinion the obligation or liability was incurred as a result of the director’s or officer’s gross negligence or wilful misconduct or, in Quebec, the director’s or officer’s gross or intentional fault.