Is Your Business Experiencing Extreme Financial Distress?
If a Proposal or Plan of Arrangement is not a viable restructuring option, you may need to consider corporate bankruptcy. In extreme financial distress, bankruptcy is a good option to protect the interests of creditors and other stakeholders. Corporate bankruptcy proceedings under the Bankruptcy and Insolvency Act (“BIA”) can be commenced by debtors or creditors for the purpose of:
Providing for the orderly and fair realization and distribution of a bankrupt’s property among its creditors according to their order of priority
Facilitating the investigation into the affairs of a bankrupt
Setting aside preferential payments to certain parties and transfers at undervalue
After carefully reviewing your company’s financial circumstances, you may determine that your company is not viable as a going concern and, accordingly, decide that the best course of action is to cease operations by way of an assignment into bankruptcy (“Assignment”).
How It Works?
In a voluntary bankruptcy, a company assigns all its assets and liabilities to a Licensed Insolvency Trustee (“LIT”). The LIT files the Assignment documents with the Office of the Superintendent of Bankruptcy, at which time the LIT will be named as Trustee of the estate on an interim basis. The LIT will immediately, upon appointment, take possession of all of the company’s assets, undertakings and properties.
A meeting of creditors will be called by the LIT to be held within 21 days of the date of bankruptcy. The purpose of the meeting of creditors is to affirm the appointment of the Trustee, consider the affairs of the debtor company and appoint inspectors. Only creditors with claims against the estate that have been proven prior to the meeting may participate in the meeting of creditors.
Once the assets have been liquidated, the Trustee adjudicates the claims received and distributes the funds to the proven creditors based on the order of priority established by the BIA.
Creditors have the option of petitioning (Petition) a company into bankruptcy. The first step is for the petitioning creditor to obtain consent from a LIT to act as Trustee of the estate. The petition is then served to the company, and there is a hearing after the expiration of a ten-day notice period. The company may challenge the application if it believes it is not insolvent. If the Court agrees with the petitioner, a Bankruptcy Order will be granted.
How It Works?
Once the Court makes a Bankruptcy Order, the LIT will be appointed to take possession of the bankrupt estate’s assets, undertakings and properties. Once appointed, the Trustee is obligated to complete certain statutory duties and cannot simply resign if there are insufficient funds in the bankrupt estate to pay its reasonable fees and disbursementsTherefore, in most circumstances, the petitioning creditor would be required to provide a retainer to the Trustee or indemnify the Trustee for its fees and costs prior to the application to Court.
Once a company is bankrupt, either by Assignment or Petition, the administration of the estate is the same from that point forward.
How Can We Help?
At Crowe MacKay & Company, we help our clients with business options and debt solutions. For over 60 years, we have been serving our customers in Vancouver and Surrey. If you are dealing with any financial difficulties and need an expert’s consultation, we have you covered. When you’re filing for corporate bankruptcy in Vancouver, reach out to our licensed insolvency trustees. We guide you through the legal process, help you with the documentation and explain debt relief options.
To find out if bankruptcy is the right choice for you, please contact one of the professionals at Crowe MacKay & Company. Schedule a free consultation with us today.
What Are Your Options for Clearing Your Debt?
What Are the Alternative Debt Solutions?
Who Will Know if I File for Bankruptcy in Vancouver and Surrey? A Complete Guide to Your Privacy Concerns
How Does Bankruptcy or a Consumer Proposal Affect Student Loans?
Book a Free Consultation
Crowe MacKay & Company follows the practices laid out by the Canadian Anti-Spam Legislation and respects the privacy concerns of our clients and contacts.