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 Restructuring | Campbell Saunders Insolvency Trustee

You’ve recognized that your current financial situation diverges from your business plan. In pursuit of sustaining your business operations, you've sought avenues for equity investment, yet traditional bank loans remain elusive and private investors hard to come by. Despite these challenges, your company's potential remains intact, and your aspiration is to curtail the debt burden, rendering your business not only cash-sufficient but also viable.

At Campbell, Saunders Ltd., we have assisted many businesses like yours, evaluating the feasibility of a corporate proposal – a structured approach that could redefine your financial trajectory. A Division I Proposal, operating within the framework of the Bankruptcy and Insolvency Act, provides a formal platform to gradually repay your debts, or a portion of your debts. This legal procedure, under the guidance of a Licensed Insolvency Trustee, empowers you to drive your company's restructuring while steering it towards renewed financial strength.

Tailored Financial Solutions for Diverse Corporate Scenarios

Your circumstances might vary: from emerging out of a prolonged sluggish phase with a promising forecast of increased sales, managing an underperforming business unit or retail outlet, to over-aggressive creditors taking legal action, or even addressing potential employee severance obligations during operational cutbacks. Each of these scenarios can warrant a formal restructuring.

Flexible Corporate Proposal Formats

A corporate proposal assumes multiple forms, including but not limited to:

Lump sum payment, often facilitated by a third party.
Extended payment plans for creditors.
Strategic liquidation of business assets.
Debt-to-equity conversion.

The Corporate Proposal Process

Should legal actions by secured or unsecured creditors loom or have commenced, filing a Notice of Intention to Make a Proposal (NOI) can mark the initial step. The NOI imposes a Stay of Proceedings against creditors, providing a minimum of 30 days (extendable by Court order) to collaborate, facilitated by an LIT, in shaping the terms of the Proposal. Proposals are often filed within the 30 day period with no need for extensions.

Failing to file a Proposal within the NOI timeframe results in the company being deemed to have filed an assignment into bankruptcy.

When a Proposal is filed, a creditor meeting is convened within 21 days. A comprehensive report, detailing the factors contributing to your financial situation, along with our recommendation concerning the Proposal's terms are presented at the meeting for the consideration of the creditors.

At the creditor meeting, either in person or by proxy, creditors can vote on the Proposal. This interactive session allows for questioning and negotiation as the Trustee conducts the voting process. The Proposal necessitates approval from creditors representing 2/3 of the total dollar value, and a majority of creditors by number. For instance, if a company owes $500,000.00, votes in favour must represent at least $333,333.34 of the debt, and among 7 creditors, a minimum of 4 must vote in favour. Failure to meet either criterion results in Proposal rejection and an automatic deemed bankruptcy.

Approved proposals require subsequent Court approval, which will be a separate application to Court.