CONSUMER SERVICES

CONSUMER PROPOSALS

A Consumer Proposal is usually a viable alternative for most people, however the final decision on which insolvency process suits your particular circumstances is ultimately a decision between you and your Trustee. This process permits you to:

  • – stop the accrual of late fees and interest charges;
  • – stop garnishment of your wages or bank account;
  • – make a negotiated settlement with all your creditors at the same time, which once approved is legally binding;
  • – pay your creditors something less than what you owe, while offering the creditors a higher recovery than they would get from a bankruptcy;
  • – keep control over all of your assets;
  • – pay over a period of up to 5 years;
  • – rebuild your credit rating faster than you could in a bankruptcy

*Certain conditions apply and will be assessed and explained to you by your Trustee

PERSONAL BANKRUPTCY

The Canadian insolvency laws are designed to assist honest debtors, who find themselves in financial difficulty. This option is not a punishment, but a fresh start with a clean financial slate. Sometimes, filing a Bankruptcy Assignment is the only viable option in your circumstances.

A bankruptcy will:

  • - stop collection calls;
  • - stop garnishment of your wages or bank account;
  • - allow you to keep your personal effects*, household furnishings*, tools necessary to earn a living*, certain investments such as RRSP’s*, locked in pension funds and a vehicle*
  • - in most circumstances, bankruptcy does not result in the sale of your home*

The time frame of the duration of the bankruptcy process will depend upon your personal circumstances, which will be assessed by your Trustee.

  • - a first time bankruptcy can be as short as 9 months or as long as 21 months;
  • - you may be required to pay a portion of your household income to the Trustee*, in partial compensation of your creditors

*Certain conditions apply and will be assessed and explained to you by your Trustee.

BUSINESS SERVICES

PROPOSAL

For businesses, a Proposal is also an alternative to Bankruptcy. Again you offer creditors a settlement of sorts, instead of filing for Bankruptcy. Again a majority vote in favour is binding on all creditors. Your business usually keeps going with a fresh start. A Proposal by a business is a bit more complicated than a Consumer Proposal and is usually made in order that a company can keep operating, which is in everyone’s best interests. Employees can keep their jobs. Suppliers and others can get a settlement and the opportunity to keep your business as a customer, if they wish. You don’t lose your investment in your business, and have the opportunity to turn it around.

A Proposal must offer your creditors a better return than they would get in a bankruptcy. Certain creditors must be dealt with in priority to others. As stated above, this is a complex process, often involving negotiations with your bankers, CRA, suppliers, employees and others (collectively, the “Stakeholders”).

If you believe this is a solution for your business, contact us today to discuss your options.

RESTRUCTURING

There are many restructuring options available for a struggling enterprise. For example, what you have heard called “bankruptcy protection” which is not bankruptcy.
Large businesses can rely on the Companies Creditors Arrangement Act to restructure. This form of restructuring is usually done in partnership with the Stakeholders, with the intent of arriving at the best solution for everyone, in the circumstances.

The business Proposal discussed above is another restructuring option. A more informal approach would be to engage us on a consultancy basis to negotiate privately with the Stakeholders. Sometimes this involves helping you obtain refinancing, either from your existing bankers, from new banking institutions, or from private capital investment.

BANKRUPTCY & RECEIVERSHIP

Always the last option, like in a personal bankruptcy, sometimes it is the only one. We’ll help you through the process. It is necessary to discuss the fact that a business bankruptcy and a business receivership are two very different things.

A business can either file for bankruptcy voluntarily, or can be forced into bankruptcy by one or more unpaid creditors. Usually it is the former. Bankruptcy is a legal, Court process. The purpose of a bankruptcy is a formal liquidation of the business’ assets, and the distribution of the proceeds to creditors. Some asset liquidations involve selling the business as a going concern, and others involve selling off the assets. Each situation is unique. Some creditors rank in priority to others, all as laid out in the Bankruptcy and Insolvency Act.

One such creditor holding a priority is likely to be your bank. Most bankers take security over the assets of a business when they lend money to it, usually in the form of a General Security Agreement. That agreement provides that, if your company gets into financial difficulty, the bank can appoint a Receiver (hence “Receivership”), either by contract, or by an application to the court. With some exceptions (including certain employee and government debt) the bank’s security pretty much ranks ahead of everybody else’s.

A Receivership would be initiated by your bank, and not you, but sometimes it is best to be proactive with your banker, and approach the banker with the problem early in the game, and with potential solutions. We can help you with that. Often the banker will work with you without appointing a Receiver, if you consent to your business being monitored by insolvency professionals (such as us).