Abstract
Restructuring of Insolvent Corporations in Canada
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
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