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.

Corporate Bankruptcy | Campbell Saunders Insolvency Trustee

Home » Corporate Bankruptcy

When a company faces financial distress, there are three primary pathways into bankruptcy:

Voluntary Assignment into Bankruptcy: This is initiated by the company itself.
Creditor Petition: A creditor can file a petition for the Court to force the company into bankruptcy.
Failure of a Division I Proposal or NOI Filing Requirements: If a Division I Proposal fails (through creditors voting to reject it, or the company failing to meet the provisions of the Proposal) or the company does not meet the necessary NOI (Notice of Intention to Make a Proposal) filing requirements and deadlines, it will result in the company being deemed to have made an assignment into bankruptcy.

Bankruptcy provides a company with the following:

Equitable Asset Distribution: Assets are distributed fairly among creditors.
Financial Investigation: An in-depth examination of the company's financial affairs occurs.
Transaction Review: Transactions, including preferences and asset transfers, are scrutinized.

Assignments into Bankruptcy

Choosing voluntary bankruptcy may not always be the sole option. Our team of Licensed Insolvency Trustees will guide you in evaluating the best course of action for your company. During this consultation, we will also assess any personal obligations you may have, both as a company Director and as a personal guarantor for company debts. Directors are personally liable for unpaid GST, employee remittances, wages, corporate taxes on dividend payments, and any debts for which they have signed personal guarantees.

In an assignment into bankruptcy, the debtor company assigns all its assets to the Trustee. The Trustee assumes control, evaluates the business, and determines the optimal strategy for asset realization. While in some cases, the company may continue to operate briefly, in most instances, it is wound up.

Under the Bankruptcy and Insolvency Act, company directors have specific responsibilities during the bankruptcy process. This includes attending the first Meeting of Creditors, where creditors inquire about the company's financial affairs, appoint inspectors, affirm the Trustee's appointment, and provide directions if necessary. Once the company's assets are liquidated, the Trustee distributes the net proceeds pro-rata among proven creditors, and concludes the administration of the bankruptcy process.

Petitioning a Company into Bankruptcy

Creditors may opt to seek a Court Order to petition an insolvent company into bankruptcy for various reasons. To do so, the petitioner must demonstrate that the requirements of the Bankruptcy and Insolvency Act have been met in order to have the company declared bankrupt.

The costs associated with filing the Court petition and the Trustee's administration expenses are covered by the petitioning creditor. Upon the company's forced entry into bankruptcy, the Trustee's duties mirror those in a voluntary assignment into bankruptcy.