The End of a Business – Corporate Bankruptcy in Canada

This won’t be fun. Shutting down a company is rarely a “favourite” option but in a mature country like Canada, we have experience and methods to end a company and deal with its assets.

A Canadian Company Can Face Corporate Bankruptcy Either Voluntarily or Involuntarily

In order to become bankrupt voluntarily, the board of directors passes a resolution authorizing the company to file for Bankruptcy. Any company that owes at least $1,000 and is unable to pay its debts as they become due, or that has assets which at fair value are insufficient to discharge all of its liabilities, can file for Bankruptcy.

A company becomes bankrupt involuntarily when a proposal put forth by the company is rejected by its creditors, or if one or more creditors apply to the Court for an order to put the company into Corporate Bankruptcy.

Regardless of how a company becomes bankrupt, it is required in Canada to have a Licensed Insolvency Trustee (LIT) in Bankruptcy directly involved in the process.

Corporate Bankruptcy Will Be the End of the Company’s Existence.

Generally, upon the company becoming bankrupt, the Trustee will take possession or control of the company’s assets.

Secured creditors, providing that they have properly registered their security, are generally entitled to obtain possession of their collateral from the Trustee and then proceed to realize (sell or liquidate) that collateral to recover their loans.

The Trustee will proceed to “realize” upon the company’s other assets (those not held as security for a loan) in consultation with the inspectors of the bankruptcy estate. The Trustee will also review all claims filed against the bankruptcy estate and admit them or disallow them, in whole or in part. Once all of the assets have been liquidated and claims determined, the Trustee will make its final distribution to creditors and proceed to close the administration of the bankruptcy estate.

The company will end. It’s not a good time, but there is a way out of a bad business situation in Canada.

Interesting Note: There are different types of bankruptcy. Learn about the different types of bankruptcy here.

Powell Associates Ltd. is a Licensed Insolvency Trustee. We are experienced, hands-on insolvency practitioners who understand the personal impacts of significant financial stress;

• You won’t be stuck in an assembly line process.

• You will expect and receive prompt responses and resolution of issues from our supportive and experienced team.

• We will review your debt solution options, including filing a consumer proposal or personal bankruptcy.

• We help Canadians with overwhelming debt get fresh financial starts.

Once you file a consumer proposal or personal bankruptcy, we deal directly with your creditors on your behalf. Your unsecured creditors are required to stop contacting you or continuing legal proceedings against you. Contact us for a free consultation.

We offer free consultations to review your financial situation and practical debt resolution options. Contact us to discuss your situation over the phone, a video chat, or in-person in Saint John, Moncton, Fredericton, Charlottetown, Dartmouth, or Miramichi.