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What is a proposal?

A proposal is an alternative to commercial bankruptcy. A company experiencing financial difficulties can propose an agreement with their creditors to repay debts in accordance to their ability. If accepted, the agreement protects the company against seizures, recovery measures, and legal procedures. Thus, the company can improve their financial situation while continuing their commercial activities.

Advantages of filing a proposal

Protects your company from seizure.

Prevents procedures from being initiated, with some exceptions.

Suspends liabilities.

Discharges administrators from their statutory liabilities for outstanding government debt (GST and QST).

Helps to maintain commercial activities during financial adjustments.

Cancels commercial leases in accordance to certain conditions.

Enables measures to be carried out in order to save jobs.

Allows you to negotiate an agreement with your creditors.

Suspends all creditors’ recourse.

Here is how a proposal works?

  1. Preliminary meeting and analysis of the situation of the company.
  2. Document preparation and filing with the Office of the Superintendant of Bankruptcy Canada (OSB).
  3. A notice to creditors to attend a meeting within 21 days following the filing of the proposal.
  1. Creditor meeting and vote on the proposal.
  2. Approval by the court.
  3. Issuance of a certificate of full performance by the Licensed Insolvency Trustee (LIT).

Approving a proposal

 

A proposal is approved if the majority of creditors—that is, 50% +1—accept the offer. However, these creditors must also represent at least two thirds of the total value of debt obligations. If they do not, the proposal will not be approved and the company will be deemed bankrupt.

When a proposal is accepted, an application is sent to the court for approval. The trustee is responsible for this step of the process, while you continue the activities of your company according to the terms of the proposal.

Ginsberg Gingras, assistance with proposals

If the financial situation of your company concerns you, a proposal may be an ideal solution. Our advisors can educate you about this process in clear terms and answer all your questions.

If this solution becomes necessary for your company, we are prepared to help you develop a proposal that will be acceptable to all concerned parties and that will respect legal requirements. You could improve the financial situation of your company and initiate a new growth period without the burden of your old debts.

Let’s begin with a consultation:

Contact us today to find a solution to the indebtedness of your company. You can schedule a consultation with our professionals by filling out the appointment form.

Contact one of our advisors if you are considering a company restructuring.

At any time, they are available to answer your questions and help you make the right decision.

Fill out our quick financial analysis form or the appointment form that follows for a consultation.

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