How long does a bankruptcy last?

The length of the bankruptcy depends on a few factors – whether you have ‘surplus income’ (see below) and whether you have been bankrupt before. If you have no surplus income and have never been bankrupt before, you will be eligible for an automatic discharge after nine months.

How long does the Consumer Proposal last?

A Consumer Proposal must be completed within 5 years. Usually the payments are monthly (over 60 months), but a Consumer Proposal can also include a lump sum payment, or a combination of the two. If your finances allow, you can pay it off sooner than the agreed-upon payment schedule lays out.

What is a bankruptcy?

A bankruptcy is a legal process to discharge your debts. It is a declaration that your debts are too high for you to repay – and far better than the old concept of a ‘debtor’s prison’! It allows for a fresh start, while giving your creditors some return on what’s owed only if you have a level of income that allows for payments to be made to them, or unprotected assets that can be liquidated (however, most common assets are protected during this process – see below for more information on protected personal assets).

What is a Consumer Proposal?

A Consumer Proposal is an offer to your creditors to pay back a percentage of what you owe them, based on your ability to pay. It is governed by the Bankruptcy and Insolvency Act, administered by a Licensed Insolvency Trustee. Unlike other negotiated debt settlement plans, it is legally binding on all creditors and usually involves paying back less than the total amount of your debt.

What is a Licensed Insolvency Trustee (LIT)?

Licensed Insolvency Trustees (LITs) are federally regulated professionals who provide advice and services to individuals and businesses to reorganize and resolve financial difficulties with expertise and compassion. LITs help individuals or businesses make informed choices to deal with their financial difficulties. They are the only professionals able to administer bankruptcies or proposals.

Receiverships | Campbell Saunders Insolvency Trustee

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A secured lender or creditor may appoint a Receiver pursuant to the terms of a General Security Agreement (GSA) granted by the debtor company to the lender which captures all of the security or assets of the debtor. If a Receiver believes there will be a conflict with the debtor company or a creditor, the Receiver can also be appointed by Court order.

Before a Receiver can be appointed, the secured creditor must provide the debtor company with a minimum of 10 days’ statutory notice (i.e., a Notice of Intention to Enforce Security) pursuant to the provisions of the Bankruptcy and Insolvency Act to allow adequate time for the debtor company to repay its indebtedness.

Only after the expiry of the minimum 10-day period can a secured creditor enforce its security, unless the 10-day period is waived by the debtor company. At any time prior to the expiry of the 10-day notice, a debtor company is able to file a Notice of Intention to Make a Proposal to its creditors, which would stay and prevent a secured creditor from enforcing its security for an initial 30-day period.

Upon appointment, the Receiver is entrusted with the responsibility to take possession and secure the debtor company's assets. The primary objective is to manage these assets in a manner that facilitates the repayment of the secured creditor or the liquidation of the company's assets to settle the outstanding secured loan.

While the Receiver represents the interests of the secured lender, they also have a fiduciary duty to the debtor company and all its stakeholders. This entails acting in good faith, preserving and securing the assets of the debtor, and maximizing the realization of assets. However, the Receiver is not obligated to continue the operations of the debtor if it is financially unreasonable to do so.

Once the secured creditor has been repaid its debts and related costs, any remaining assets are returned to the debtor company.
If you or your company have received a Notice of Intention to Enforce Security from a secured lender, we strongly advise you to seek immediate consultation with one of our insolvency professionals. Failing to do so may severely limit your ability to restructure your business once the 10-day notice period expires.