February 2018

Disposition of assets

Disposition of assets in a bankruptcy, a proposal (Division I), or a notice of intent

The Act goes into some detail about how various interested people may dispose of property, depending on the context. These people are the Licensed Insolvency Trustee (LIT) in cases of bankruptcy and the debtor in cases of proposals (including the intent). Issues differ from one situation to another. (more…)

January 2018

November 2017

The 21 days before the meeting of creditors

21 Days Before the Meeting of Creditors

A creditors’ meeting is convened by the Licensed Insolvency Trustee (LIT) within 21 days following an assignment in bankruptcy (except in the case of summary administration). Once appointed, the LIT must take all necessary steps to administer the file until the first creditors’ meeting is held. Here are the statutory obligations of an LIT up to the creditors’ meeting. (more…)

September 2017

Application for a receiving order

Application for a receiving order: Declaring a Corporate Entity Bankrupt

A corporate entity owes you $1,000 or more. Are payments no longer received as they are due? Has property been transferred, or intention to commit fraud demonstrated? To recover a sum of money, you have recourse to the Bankruptcy and Insolvency Act (BIA) by submitting an application for a bankruptcy order. According to the BIA, it is possible to file an application against any corporate entity incorporated in Canada or that has facilities, activities, or goods in Canada. To file this application, unsecured creditors must allege that the debtorOwes more than $1,000; and Has committed an act of bankruptcy within the six (6) months preceding the filing of the application.The court may then issue a bankruptcy order at its own discretion to [...]

May 2017

Director's limited liability

Directors of an insolvent company: Is limited liability a myth?

We have previously discussed the director’s liability (Quebec – Ontario). But what options are available to limit their liability? Here are possible solutions for six types of responsibilities that may be placed on the director of an insolvent company. 1- Fiscal liability of directors This responsibility is a result of tax law. It includes situations in which the company fails to pay amounts owed for GST/HST, QST, and source deductions. In Quebec, amounts owed to the CNESST must also be included. In Ontario, outstanding amounts for WSIB and Employer Health Tax may also be claimed against the director of an insolvent company. 2- Receipt of a notice of personal assessment for the company’s debts The director can choose to personally contest the notice within [...]

March 2017


Bankruptcy Inspector

In the normal course of a bankruptcy, the Licensed Insolvency Trustee (LIT) must call a meeting of creditors in order to allow examination of the affairs of the bankrupt person. The meeting of creditors must also allow for the confirmation of the LIT’s role, the appointment of inspectors and the opportunity to provide instructions to the LIT that the creditors or inspectors may consider appropriate. The inspector’s role is important although nebulous. That is why it is appropriate to clarify the work of the inspector during a bankruptcy. Appointment of Inspectors (section 116 of the Bankruptcy and Insolvency Act) At the first meeting of creditors, the Licensed Insolvency Trustee asks the creditors to suggest nominations to the board of inspectors. The appointment of [...]

January 2017

Priority claims and corporate assets

Priority claims and corporate assets

Priority claims and corporate assets When a corporation files for bankruptcy, there can be different classes of creditors making claims against the assets of the bankrupt company. Who has priority on these assets? The following are examples of the usual types of creditors involved in a bankruptcy process: Secured creditor This is a creditor who holds a mortgage, pledge, charge or lien on or against some or all of the assets or property of the debtor as guarantee of payment. To qualify for an operating loan with a lending institution, a company may have signed a general security agreement, commonly referred to as a GSA in Ontario, or a Movable Hypothec on a Universality of Movable Assets in Quebec. This means that this creditor [...]

November 2016


Business restructuring – what are your options?

Even if it is viable in the long-term, a company may experience short term financial problems. For example, a temporary situation such as a reduction in clientele, the loss of a contract, or a non-profitable market segment can impact the availability of funds to repay suppliers, the government, or the bank. (more…)

September 2016


What Rights and Recourses do Creditors have in a Bankruptcy?

What rights and recourses do creditors have in a bankruptcy? The Bankruptcy and Insolvency Act (BIA) allows an honest but unlucky debtor to find a way back to financial health. Through this process, debtors can be freed of their financial burden as long as they respect their obligations under the Act. (more…)

April 2016

Resiliation of commercial leases

Company reorganization and resiliation of commercial leases

Resiliation of commercial leases with a notice of intention or settlement proposal The Bankruptcy and Insolvency Act (BIA) allows a company being restructured to resiliate one or several leases. (Subsection 65.2(1) BIA) The request for resiliation must be made between the time the notice of intention is filed and the settlement proposal is submitted. A company with several places of business can therefore resiliate leases and close non-profitable establishments that are the cause, in whole or in part, of its financial difficulties. Said requests for resiliation must be done with 30 days advance notice to the lessor and the latter can contest this request in the 15 days following the advance notice. If the lessor contests the resiliation request, the debtor (the [...]

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