What is
The Companies’ Creditors Arrangement Act
The Companies Creditors Arrangement Act (CCAA) is Canada’s similar to the U.S. Chapter 11 proceedings, which involves the debtor maintaining control of its assets and a stay of proceedings on all creditors’ actions. At the same time, a workable plan of arrangement is formulated for the creditor and, ultimately, court approval.
What is the Difference Between a CCAA and BIA Proceeding?
There are several differences between formal restructuring proceedings under the CCAA and the BIA, but two main differences are:
Applications drive CCAA proceedings to the court, which can result in them having greater flexibility than debt restructuring under the BIA.
Lawyers play a more prominent role in CCAA proceedings. The LIT will act as a monitor to oversee and report on the company’s financial affairs during the stay of proceedings.
There are similarities to formal restructuring proceedings under the Bankruptcy and Insolvency Act (BIA) and the CCAA. A plan of arrangement under CCAA is very flexible and often includes a compromise of debt and/or an extension in time to pay. It can also involve releases from certain contractual obligations. The CCAA plan must similarly be accepted by the creditors and subsequently approved by the court. Failure to do so may result in the lifting of the stay and the revival of creditor collection remedies.
When Should I Choose a CCAA Plan of Arrangement?
CCAA proceedings are only available to federally or provincially incorporated companies with debts above $5 million. There is no such qualifying minimum in proposal proceedings under the BIA. CCAA proceedings are typically used in more complex situations and may incur greater costs due to ongoing court proceedings.
Discuss Your Debt Restructuring Options
If you have questions on your debt restructuring option, contact our Licensed Insolvency Trustees by calling (604) 591 6181, emailing [email protected], or filling in the form below.
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