Abstract
This paper gives a very general outline of the formal restructuring of insolvent corporations in Canada. For a South African audience, it is important to understand that in Canada a distinction is made between an "insolvent person" and a "bankrupt". A "bankrupt" means a person who has made an assignment into bankruptcy (voluntarily), or against whom a bankruptcy order has been made. An "insolvent person" means a person who is not bankrupt and who resides, carries on business or has property in Canada, whose liabilities to creditors amount to $1 000, and who is for any reason unable to meet his obligations as they generally become due, or who has ceased to pay his current obligations in the ordinary course of business as they generally become due, or the aggregate of whose property is not, at a fair valuation, sufficient, or, if disposed of at a fairly conducted sale under legal process would not be sufficient to enable payment of all his obligations, due and accruing due. An "insolvent person" in Canada may avoid bankruptcy by resorting to restructuring processes created by statute. The fact that a person becomes insolvent does not necessarily spell bankruptcy. Canadians are fortunate to have access to bankruptcy courts and insolvency practitioners with a high level of commercial and legal skills to assist them in restructuring their financial affairs and avoiding bankruptcy.
Highlights
This paper gives a very general outline of the formal restructuring of insolvent corporations in Canada
For a South African audience, it is important to understand that in Canada a distinction is made between an "insolvent person" and a "bankrupt"
An "insolvent person" means a person who is not bankrupt and who resides, carries on business or has property in Canada, whose liabilities to creditors amount to $1 000, and who is for any reason unable to meet his obligations as they generally become due, or who has ceased to pay his current obligations in the ordinary course of business as they generally become due, or the aggregate of whose property is not, at a fair valuation, sufficient, or, if disposed of at a fairly conducted sale under legal process would not be sufficient to enable payment of all his obligations, due and accruing due
Summary
This paper gives a very general outline of the formal restructuring of insolvent corporations in Canada. It was anticipated that the proposal provisions of the BIA would become the primary means for restructuring financially distressed enterprises, the CCAA continued to be employed to restructure corporations and primarily large enterprises. This has given rise to the existence of dual commercial restructuring regimes, a highly distinctive feature of Canadian insolvency law. The rule-based approach of the BIA was viewed as being more suitable for small and medium-sized enterprises, where fewer court applications reduced the cost of restructuring These reforms continued to adhere to the policy of convergence under which differences between the two regimes were to be minimised. Many significant differences continue to exist between the two
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
